Can the second mortgagee on a foreclosed home loan require payment of the remaining balance due?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Can the second mortgagee on a foreclosed home loan require payment of the remaining balance due?
We were foreclosed on our home by the primary mortgage company, the house sold at auction as scheduled per the details of that foreclosure. The secondary mortgage company has now turned the balance owed on the account to a collection company. We were told by the real estate agent who purchased our home at the auction that the secondary mortgage would go into immediate default and essentially be “written off”. Was this correct information or are we liable for the balance regardless of the foreclosure?
Asked on August 23, 2010 under Real Estate Law, Texas
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Yes, she was right: it went in to default. But n my understanding of the law, the second mortgage would not be "written" off unless there was some prior agreement with the mortgage holder or you have filed a Chapter 7 bankruptcy prior to the foreclosure and the debt had been discharged. The second mortgage is not longer "secure" - it no longer has the house as collateral for the debt. So they are now the same as any "unsecured" creditor such as a credit card company and they can turn you over to collection. I would speak with a debt specialist to see what your options are here. Good luck.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.