Posted on: 16th Nov, 2008 11:55 am
Hello, I have two mortgages on one home. One is for $108,000 and the other is for $22,000 which was a loan I took out against the house. My ex-wife (who is also on the loan) just moved out and stopped paying. I can't pay it because I have another house. The $22,000 is from a different lender. What happens to that 2nd loan of $22,000 if the house goes into forclosure?
hi guest!
welcome to forums!
in most cases, the first lender who forecloses the property may include a non-merger clause. it prevents the second mortgage lender from taking any legal action against the first if he cannot pay off the balance on the second mortgage.
as far as i know, the second lender may file a deficiency judgment against you in order to recover his debts. he may even garnish your wages. apart from this second mortgage charge off is another option for the 2nd lender.
feel free to ask if you have further queries.
sussane
welcome to forums!
in most cases, the first lender who forecloses the property may include a non-merger clause. it prevents the second mortgage lender from taking any legal action against the first if he cannot pay off the balance on the second mortgage.
as far as i know, the second lender may file a deficiency judgment against you in order to recover his debts. he may even garnish your wages. apart from this second mortgage charge off is another option for the 2nd lender.
feel free to ask if you have further queries.
sussane
Thanks Sussane, I have another question. Can I keep paying on the 2nd mortgage after forclosure to avoid a deficiency judgement?
Hi Mark!
You can definitely keep paying on the 2nd mortgage so that you can pay off the debts but you will have to check with the lender if he will allow it or not. Generally, as the collateral is not there, the lender will lose interest in recovering the debt and thus charge it off to a collection agency.
However, you should remember that the 1st lender who is foreclosing the property may also file a deficiency judgment against you if they cannot recover the loan amount from the sale proceeds. In that case, you will have to pay that deficient amount separately.
Thanks.
You can definitely keep paying on the 2nd mortgage so that you can pay off the debts but you will have to check with the lender if he will allow it or not. Generally, as the collateral is not there, the lender will lose interest in recovering the debt and thus charge it off to a collection agency.
However, you should remember that the 1st lender who is foreclosing the property may also file a deficiency judgment against you if they cannot recover the loan amount from the sale proceeds. In that case, you will have to pay that deficient amount separately.
Thanks.