Why is lender including only 1st mortgage in foreclosure?

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First of all the foreclosure by Bank of America on my house is 100% illegal but that’s a whole different issue. I had 2 loans on my house, the second is not a heloc, it is a fixed second I took out the same time as the first towards the purchase of the house. I am getting phone calls from the lenders collections department asking me to pay the second. They literally call 3 times a day, I finally told the lady the 2nd is not a heloc as she was referring to it as, and that the house is in foreclosure with an auction date in a few weeks. She had no idea it was in foreclosure which is weird, but why are they not including the 2nd in the foreclosure? They’re not haggling me about the first. This is in CA.
I had put 10% down so it was a 80% 1st, 10% 2nd and 10% cash down on the purchase. The house is worth a little bit more than the 1st mortgage but I’m not selling because like I said it’s illegal they put me in foreclosure and when I collect enough money will hire a lawyer. In California only cashout 2nds they can come after, not 2nds that are fixed like the 1st that were taken out at the same time as the first during the purchase. I don’t understand why a big bank like B of A doesn’t know this and are hounding me on the 2nd.

  1. Reply
    the tax lady
    May 18, 2011 at 1:33 am

    When loans are set up as 2 loans, that generally means that you had an 80/20 and the loan terms are different for the second loan. The auction probably won’t cover the first loan, leaving you high and dry on the second. I’m thinking it’s a recourse loan, meaning they can try to collect from you.

    The lender is NOT required to cancel the debt.

  2. Reply
    May 18, 2011 at 1:54 am

    You aren’t current on your mortgage (1st or 2nd). We know this because you say “when I get money”. With the manual review in Calif, it’s unlikely that the foreclosure is illegal. If it is illegal, it’s on a technicality, not because you are current on your mortgage. Pay your mortgages and you won’t have these problems.

    You are correct that the 2nd loan is non-recourse in your situation in California.

    My guess is the reason that BofA continues to call is because their is no connection between the two loans. Is BofA the actual lien holder or are they just the servicer? Is it the same lien holder on both loans?

    After the foreclosure, BofA will probably get this straightened out. If not, at some point there will be a court date, you can show up, and it will get dismissed.

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