What happens if a home forecloses and the auction only pays off the first mortgage and not the second?
Will the second mortgage holders come after you or be able to put something (other than a foreclosure) on your credit like a judgement? Would they be ale to garnish wages or do anything crazy like that in the future? The reason for two loans was a first and second (100% loan) was used to purchase the home. The value dropped and the foreclosure auction will only be enough to cover the first mortgage and part of the second. If you could site any websites that show these types of laws it would be appreciated. Thanks.
Oh and real examples would be great. I’ve heard many people say yes they can come after you, but of those that have actually been foreclosed on I’ve yet to hear one of them tell me an actual horror story. This could be because many second lien holders use fear to get some people to pay them money and salvage some of their loss.
coragryph, keep in mind the 2nd was used as purchase money, so it was not a 2nd mortgage that was “taken out”. Also, have you actually heard of this happen or only studied it? Thats what i’m finding out, that most lenders don’t go through with that, as they end up getting nothing after spending all the money to legally fight it and most individuals could file BK to avoid it.