If you did a short sale and the first and second mortgage did a lien release, can the second mortgage holder stillsell your loan to another bank?

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If you did a short sale and the first and second mortgage did a lien release, can the second mortgage holder stillsell your loan to another bank?

Can it then collect after you closed on the home?

Asked on January 11, 2012 under Real Estate Law, Kansas

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If there was a lien release for the short sale to go through, did you receive a release as to your obligations under the loans? If not and the loans were not purchase money (original loans for the property's purchase), the second mortgage lender could sell your loan to another bank who can then seek payment on it from you.

If the property short saled in California, and the lenders received some money out of escrow, the second lender may have waived its rights to sell its loan where its new owner cannot come after you for money owed on it. I suggest that you carefully read the escrow instructions and all documents concerning the sale of the property to see if any of the lenders waived rights to money on the loan outside of escrow.

You should also consult with a real estate further on the subject you are writing about.


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