Home sold due to foreclosure - Am I liable for second loan?

Hi carol,

welcome to our forums.

The person buying the property at the foreclosure auction does not become responsible for the first loan. Since the second lender wants to foreclose, either he or the borrower has to pay off the first loan. The second loan is subordinate to that of the first. So, the second lender and the borrower needs to talk to the first lender and inform them about the foreclosure. In most cases, the second lender has to satisfy the first and then recover his money from whatever is left behind.

Good luck

I am finding it difficult to make my mortgage payments and would like to know what are the financial and legal implications of a foreclosure

hi journvic,

foreclosure isn't the way out when you can't pay for the mortgage. i mean there are various other ways to choose from if you can't repay. you can opt for an alternative repayment plan or a loan modification. or you may even refinance to a lower rate so that you'll save in interest. just check out the 17 ways to avoid foreclosure .

take care

What is the liability to the borrower if they foreclose on their home. First time buyer, unable to meet mortgage payments and unable to get a fair price when selling. Can the lender attach paychecks and bank accounts?

Well, the lender can attach paychecks and bank accounts if you fail to pay off the deficiency payment, if any. However, if the lender hasn't declared foreclosure, I would suggest that you talk to him regarding any alternative options with which you can pay off the mortgage. You will find some of the alternative options at http://www.mortgagefit.com/foreclosure/17ways-avoid.html .

Good luck

MY PROPERTYS VALUE IS $650000.00 IN THIS MARKET. i OWE $725,000.00 ON THE 1ST AND $140000,00 ON THE 2ND. I am in modification on the 1st and 4 months behind on the payment. My 2nd is 2 months behind and the 2nd lien holder is going to foreclose on the property by the end of the month if i dont pay the past due amount. Can the 2nd foreclose? with the property being upside down and if the 2nd forecolses and can not sell the propoerty to satify the first what happens next? once the sale goes through and there is not an offer to satisfy the loans what is the position of the 2nd ? and what is the next step for them?
last question, where does this put me whan all this takes place? :? :?

Hi JOHN

Did you speak to your second lender about a loan modification or forbearance? I think you should first try to negotiate with the 2nd lender and see if he agrees to any of the options.

The 2nd lender can foreclose the property. But as far as I know, if they foreclose, they will have to pay off the dues of the 1st lender as well. If the lender forecloses the property your credit will be badly hurt. It will be lowered by 250 points.

Thanks.

don't pay for the 2nd loan is the ans.

we wouldn't do that. we just want out from under such a silly, very abusive loan. we're not trying to evade paying bills.

Hi Guest,

In my opinion, you should speak to your lender if you are not able to pay the mortgage dues. Once you inform the lenders, he may give you the option of loan modification. If you want to sell off the property, you can even apply for a short sale or a deed in lieu. You may even check given link to know more about ways to avoid foreclosure:
http://www.mortgagefit.com/foreclosure/17ways-avoid.html

Thanks

if i renegotiate my 1st mortgage loan and my 2nd mortgage loan is charged off, and I do a Bankruptcy and Keep the home, what happens to the Charged off 2nd mortgage, does it stay attached to the home?

Hi Sher,

It will depend upon the type of bankruptcy you file. You can request your second lender to withdraw the account from collections and include it in bankruptcy and try to get it discharged. If the second loan is not discharged, you can then negotiate with your lender and get a payment plan to pay off the mortgage.

Thanks

I would feel bad from them if they lost their jobs or really cannot afford it. But I was told that it is being a trend and being recommended in the Indian community in SF Bay Area to take advantage of the goverment assisted program. It is sad that these people are selfish and irresponsible. My next door Indian neighbor was able to get the 2nd loan (equity line) for $350K soon after they purchased the house. She is a mortgage broker. They put down 15% on the $1.5M home in early 2006. Now they are on the second notice of forclosure and already cash out the $350K to buy new BMW SUV, Mercedes, and family vacations. Per my research, they have not been paying the property tax and stop making the mortgage for almost a year now. My question is this can the lender (2nd mortgage) still can go after them? I know the prim. lender will let them go for free since the Obama signed the new law for the foreclosure. Several other Indians neighbors are talking to me and that they are planning to do the same. They told me I should do it too since my house is also $200K under water. I cannot see myself doing it. I am obligate to my responsibility that I have commited. But it would really help to get to loan modification for the 30 fix term. But I cannot since my home is under water and both me and my wife still have job. However, I felt that goverment is not helping out good person like me, but only the bad one. :-(

Hi ikey,

Though your home is underwater and both of you have your jobs, you can still apply for a loan modification. You will have to contact your lender and inform them about your hardship in paying off the loan. If the lender is convinced, he would accept your request. Thus, the lender would reduce your interest rate and increase the term of the loan.

Thanks

I guess that also depends on the company. Our company told us they would work with us, told us an amount to put aside, then would not take our calls as the sales date neared. I had to call them crying and begging someone to talk to me before they told me they'd decided not to do the modification because my husband's w.c. was not guaranteed income. They would not even take my attorney's calls. They pulled the rug from under us and left my family almost homeless. :(