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Can anyone tell me if I am personally responsible for a lien on my house if the house is forclosed? And generally how long does it take to be evicted by the bank on a foreclosure?
The lien will be paid off when the bank sells the property. Only if the bank requires a judgement from you when you do a short sale you can still owe this money...I'm not an expert so it could be that there are other possibilities that I'm not aware off.
The time line is completely different since some banks want to keep properties longer on their books and wait for the next semester to write it off and mean while a person can stay. In my area there are people still in their home for over 1 year of being in a foreclosure procedure and next to me the owner gave back the keys in Nov. '07 and moved to a different State and still the property hasn't changed title.
I also heard about areas in which foreclosure procedures go faster, but in the Tampa area the courts are too busy handling it and so are the banks...I guess.
The lien is not from the bank. I have a mortgage and a lien from a private loan that I used my house as collateral. Im just wondering if the bank sells the house and the mortgage is satisfied, would I be responsible for the payoff of the lien.
I would think if the loan is not paid off, you are responsible for it, especially since what you used for collateral is gone. What are the terms of the loan and what does it say? If you used the house as collateral, surely it must state something about your obligations if you foreclose.
The lien is not from the bank. I have a mortgage and a lien from a private loan that I used my house as collateral. Im just wondering if the bank sells the house and the mortgage is satisfied, would I be responsible for the payoff of the lien.
No the lien has nothing to do with the bank but the bank has to pay it off when it is sold. So the buyer get a clean title and that is why some banks don't agree on a low short sale offer, since they know the liens are there.
Many people over here have HOA and/or tax liens, private loan leans or judgments...so maybe similar to yours.
In foreclosure, the house goes to public sale. The lender in the first position will bid their debt. If ANY money comes in over the amount owed, it will go to the lender in the second position.
Chances are, two things will happen (at least this is the scenario in the past). First, the house will sell at Sheriffs sale to the first lien holder. The second lien holder will get nothing. The second lien holder, and usually the first lien holder and any other subservient lien holders will realize that if you had the ability to pay, you would. Instead of spending several thousands of dollars trying to collect from someone who has already shown they can't pay, and recognizing you have bankruptcy options, will simply let it go, sending you a 1099 as a method of allowing them to deduct the loss as though it is a payment to you. The IRS is not as forgiving. They will do all they can to collect the tax owed.
In foreclosure, the house goes to public sale. The lender in the first position will bid their debt. If ANY money comes in over the amount owed, it will go to the lender in the second position.
Chances are, two things will happen (at least this is the scenario in the past). First, the house will sell at Sheriffs sale to the first lien holder. The second lien holder will get nothing. The second lien holder, and usually the first lien holder and any other subservient lien holders will realize that if you had the ability to pay, you would. Instead of spending several thousands of dollars trying to collect from someone who has already shown they can't pay, and recognizing you have bankruptcy options, will simply let it go, sending you a 1099 as a method of allowing them to deduct the loss as though it is a payment to you. The IRS is not as forgiving. They will do all they can to collect the tax owed.
Goodpasture knows.
The second in line may bid on the property against the bank, if they think there will be enough equity to pay off the first and cover the debt they are owed in the second.
But they will collect nothing if the bank buys it at the amount of the first mortgage or less.
Of course, you should seek local legal counsel, since this is what I am told is the disposition in North Carolina.
State law rules.
The second in line may bid on the property against the bank, if they think there will be enough equity to pay off the first and cover the debt they are owed in the second.
But they will collect nothing if the bank buys it at the amount of the first mortgage or less.
Of course, you should seek local legal counsel, since this is what I am told is the disposition in North Carolina.
State law rules.
"If the house sells for enough to pay off the mortgage and there is any left over it goes to the lien holder".
But that is never the case. Probably 100% of all foreclosures are because the loan far far exceeds the value. If the lien is very tiny then are you saying they lose?
Can or do they try to track you down when they come up empty if you foreclose? What about if you move out of state? Can a small local company place the same lien on your new home if you buy another one out of state?
Some of you guys are pretty sharp. There is a couple more related questions for you.
A foreclosure is all about the liens and secondarily about the repayment of obligations. A mortgage is a legal document that grants a lender a "mortgage lien" against your property. The obligation to pay back the lender arises from a promissory note under which you promise to pay the lender. There are also tax liens, hospital liens, materialmen's liens, judgment liens, and a host of others which could attach to the property. If the mortgage lien is the first - senior - priority - all meaning the same thing - lien and it takes priority over all the others. The others are "foreclosed" - as they are junior to the first lien [the mortgage lien]. The junior lienholders do not have the right - in the case of the 1st lien being foreclosed - to get their liens paid from the sale proceeds UNLESS there are excess proceeds available. That is, the foreclosure sale brings more than the balance due plus all costs under the promissory note secured by the 1st mortgage. The purpose of a foreclosure is to strip the various liens from the property so it can be sold clear of encumbrances to a willing buyer and the proceeds of the sale go to the lien holders in order of their seniority.
So, the senior lien - the 1st mortgage - gets foreclosed, the property is sold, and there's not enough money to pay the junior lienors. What do they get - a "right to redeem" [which you get too by the way] which means they can pay off everything due to the first lienholder, and, if they're not the 2nd lienholder, they have to pay off the folks with greater seniority as well. You, as the property owner, as still out of luck because your interest in the property was "foreclosed" in the first instance - subject to that right to redeem mentioned above.
Do you have to pay the unpaid lienholders? That's up to you. You ARE liable. Will they chase you? Maybe - if you've got sufficient other assets and property to make it worthwhile to reduce their claim to judgment and levy on your other property. Can they follow you out of state. Yes. The judgment would get entered in the state where the cause of action arose [where the property was located] and it can then be transcribed to your current state of residence and enforced.
Does this clear anything up?
Last edited by windtimber; 08-09-2008 at 07:42 PM..
Reason: Typos
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