Can the mortgage company list my 2nd as open and behind on my credit bureau even though they foreclosed on the house?

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Can the mortgage company list my 2nd as open and behind on my credit bureau even though they foreclosed on the house?

We had an 80/20 loan the 2nd is still reporting on our credit as open and behind. Is that legal? If not what can I do?

Asked on September 25, 2011 under Real Estate Law, Oklahoma

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Yes, they can do this--because it's true . . . assuming, that is, that repossessing the house on the first mortgage did not result in enough proceeds--e.g. if the house sold at a foreclosure sale--to pay off the second mortgage as well.

Each mortgage is its own independent obligation. If you don't pay either one, it will still be open and behind on payments. If you didn't pay the first mortgage, presumably you were not paying the second, either. If that's the case, the bank forecloses on you on the first mortgage...but unless that foreclosure produces enough return for the bank to pay off both mortgages (i.e. there was enough equity to pay off both loans), the second loan remained open and you were behind or in default on it.


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