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Denver, CO. After trying to modify my loan ( a third party company), my house was foreclosed on by the 1st mortgage company. My property had lost value about 35,000 or so with the real estate downturn. I am presuming the 1st was paid in full with the sale. I continued to receive my usual bill from the bank that held the 2nd (a home equity line of credit) after the forclosure, and continued to make payments. Then they stopped sending my monthly bill notice, for about 3 months there was no bill. About a week and a half ago I received a notice, from the bank that held the 2nd, stating that my loan was in default and they are asking for payment in full immediately. Am I responsable for the repayment of the 2nd after the forclosure, because I don't have the amount they are asking for, thanks for any input.
Last edited by kwnparker; 06-08-2011 at 10:16 PM..
Reason: entered location
Denver, CO. After trying to modify my loan ( a third party company), my house was foreclosed on by the 1st mortgage company. My property had lost value about 35,000 or so with the real estate downturn. I am presuming the 1st was paid in full with the sale. I continued to receive my usual bill from the bank that held the 2nd (a home equity line of credit) after the forclosure, and continued to make payments. Then they stopped sending my monthly bill notice, for about 3 months there was no bill. About a week and a half ago I received a notice, from the bank that held the 2nd, stating that my loan was in default and they are asking for payment in full immediately. Am I responsable for the repayment of the 2nd after the forclosure, because I don't have the amount they are asking for, thanks for any input.
You borrowed money from the bank, and agreed to pay it back. Yes, of course you are obligated to pay it back. Unfortunately for the bank, there is no longer any physical colateral to back the loan, so it's now an unsecured loan. That doesn't diminish your legal obligation to repay it, or their legal right to pursue it through the legal system.
Second trusts are strange creatures and state laws vary. Here in Virginia, we are seeing lenders reclassifying the 2nds as a consumer line of credit. Have you checked your credit report? Chances are the lender released their claim to the title, but not their claim on payment from you.
These nasty surprises are more common than you think.
I agree you should see an attorney. You didn't mention whether this was a primary residence or an investment/vacation property but it is possible that you may still owe the first lender, too.
Denver, CO. After trying to modify my loan ( a third party company), my house was foreclosed on by the 1st mortgage company. My property had lost value about 35,000 or so with the real estate downturn. I am presuming the 1st was paid in full with the sale. I continued to receive my usual bill from the bank that held the 2nd (a home equity line of credit) after the forclosure, and continued to make payments. Then they stopped sending my monthly bill notice, for about 3 months there was no bill. About a week and a half ago I received a notice, from the bank that held the 2nd, stating that my loan was in default and they are asking for payment in full immediately. Am I responsible for the repayment of the 2nd after the foreclosure, because I don't have the amount they are asking for, thanks for any input.
I don't know your details.. Modifying your loan through a third party? I am catechizing who's fault it was why they were not able to help you save your home. There should of been an affordability test before they took on your case. One thing your modification company should do - arrange for a settlement for less than the amount you owe on the 2nd. That could of freed up money to pay the 1st mortgage. I have seen 2nd's totally eradicated.
Your could be subject to a collection/judgement lawsuit involving a second mortgage. When the holder of the first mortgage forecloses and effectively wipes out the security interest of the second mortgage, the second mortgage holder may sue on the note as an unsecured creditor. A Chapter 7 bankruptcy will discharge this debt as long as you qualify under the “means” test.
What happens many times behind the lines - a 1st will pay the 2nd lender a small amount, to have a free and clear title.
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