my house was foreclosed, back to the bank, and sold.
Submitted by valpiry on Fri, 07/25/2008 - 2:01am.
The second mortgage asked me to pay off the loan balance by making payments or pay the whole amount. I was told if the house already back to the bank and it was sold then I should be no pay/wiped out. Am I correct? What should I do on this matter?
Comments:
I am in the same situation. Looking for an answer to the same question. My house was in Nevada. Hoping Sean will have the answer. Where is your house located?
The key to understanding this issue is to know that you are liable for the loan AND the lender has a secured interest in the property. When a 1st forecloses it wipes out the 2nd's secured interest in the property, but it does NOT remove your liability for repaying it.
In some states, like CA, you may not be liable for the 2nd if it was a purchase money loan (a loan used to buy the house rather than refinance). The theory being that the lender made the purchase possible and should not have done so if they weren't willing to accept the house as their only collateral.
So the answer is NO they were not wiped out with respect to their ability to come after you for the balance. This is why we advise homeowners to do a short sale, and if that does not work, to stop paying on the 2nd first to force it to use its one action in foreclosure giving up their right to a deficiency judgement (at least in CA).
my home foreclosed earlier this year. i had 2 loans to make up the original loan. what happens tax wise about this. do i get to claim the loss? it sold back to the bank for 50-60K less than what i baught it for. i'm just trying to get things in order for tax season. i see that the house is on the market for awhole 150K less than what i paid for it 3 years ago. i'm just a little consfused you might say.
PLEASE HELP!!!
Hi Kisha,
It is unlikely you will have any tax consequences. It sold for less than you bought it for so there should be no capital gains. And with recent changes to the law you shouldn't have to worry about forgiven debt income.
My bigger concern is that the bank may be able to come after you for thier losses depending on the state you live in and whether or not the loans were used to purchase the house or refi. If you're in CA and they were purchase money you have no worries.
Hi Sean,
Question? Our first was paid off in March "08" and I had paid our 2nd for Dec and Jan, Feb...spoke to an agent in Feb, told him 1st paid off, husband laid off but we were working on getting the 2nd paid off in full.... He said no worries, keep in contact which I did, I believe sometime towards the end of april and sometime in may 08. I was handed notice of defaut in july 08,they say house was up for Auction July 7.08. I cannot recall the exact date but it was mid july. The next day or so I gentleman knocked on my door and said he was a realtor working with the lender and he said he would speak with them and maybe we could work something out. He called me within the next day or 2 and told me to call neal at residential mortgage because he said he was willing to try and work something out. Guess what,I called neal that same day and he said that he could not help us,that there was nothing could do...
We have an attorney who deals with realistate and we have filed the propper paper,etc, etc,.
I need some input.
Thanks,
Debbie
First, please tell me what state you are in. Foreclosure laws vary a great deal by state. Typically a notice of default has to be filed months before an auction is held, and you should have received multiple notices prior to the sale. Hard for me to imagine that you could have been so careless to let this get so far along with a recently paid off first mortgage. Hopefully for you that means the lender made a mistake.
If in fact it legitimately went to sale all of your equity could have been wiped out with, as Neal said, nothing you can do. Even if that was the case I would immediately hire an aggressive, competent, attorney who is willing to play hard ball with the lender. Have them look for any flaw in the loan docs, and file a lis pendens on the property making some claim regardless. Perhaps such aggressive action will get the lender to reconsider and cut you some slack (assuming the lender is now the owner, and not a 3rd party bidder at the sale - in which case odds are very much against you).
Sean - We had a forclosure on a home in Oklahoma. It went to auction and the bank purchased it for 104,000. We owed 78,000 at the time of forclosure. Why would the bank do this? Why would they pay more than the appraised value and finally what should we expect next?
Hello, I bought a home in AZ @ 2 years ago, payed too much for it and now it's worth obviously less. Since then, I met a girl and am in the process for a new home...one we can live in for many years together(7-10). I am contemplating walking away from home # 1 due to late payments looming. My question is in reference to AZ law and the banks options. House #1 is under 2.5 acres and is a single family home. There is 1st and 2nd(used to buy not refi). Any help would be much appreciated.
Hi, I'm had my home forecolsed and i do know it was sold. So what now, what happens to me? I live in Kansas City, Kansas . It was my first home.
Post new comment