A lender wrote a mortgage on a house that was defaulted. The lender waited for several years before foreclosing, instead of acting, say, after 90 days. Shortly thereafter, the borrower declared bankruptcy. The house is sold for more than the value of the principal, but less than the value of principal plus interest.
Is it true (as I've been told) that the lender has "different" rights to the principal and interest? E.g., the mortgage fully secures the principal, but the lender has to get in line with other unsecured creditors for the interest in bankruptcy?
Same house, a slightly different set of facts: A loan purchaser bought the loan for $1 million when the mortgage was for $3 million, because the mortgage was in default. The loan purchaser was found to be "negligent" either at the time of the loan purchase, and/or on subsequent loan modifications (didn't fully follow underwriting procedures). The mortgagor declared bankruptcy. Does the loan purchaser have "different" sets of rights and responsibilities with regard to the $1 million investment and $2 million potential profit.