Non judicial foreclosure, accruing interest on a deed of trust mortgage
Question Details: In 2006 I bought a condo. for about 142,000. I did not qualify for the whole amount and had to get a 80/20 loan. In 2008 I was foreclosed with a non-Judaical foreclosure. There was one deed of trust and one promissory note for both loans. The bank charged off the second loan with no notice to me, before the sale of trust. I have spoke to a HUD advocate and was informed that the second mortgage has now become unsecured debt. How is that legal and why was I not informed? I am I liable for the remaining balance of second mortgage, or does the entire debt get traded for the deed of trust?
Real Estate Law Answers
Whatever the situation is, in a "non-judicial foreclosure" whatever happens is with your written agreement rather than a court order, and the paperwork you signed at the time should either show that you did agree to this, or that it's contrary to the agreement and improper (if, for example, it was agreed in those documents that you would surrender the property in exchange for the full discharge of both loans, which is an extreme example that I think is unlikely). I would not be at all surprised if the unpaid balance, between the two loans, was converted to unsecured debt, because the exact same thing would happen in a judicial foreclosure, except that it would be converted to a deficiency judgment rather than being entirely unsecured.
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