Can a second mortgage holder proceed againsta borrower after a foreclosure?

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Can a second mortgage holder proceed againsta borrower after a foreclosure?

Our house was foreclosed over 1 1/2 years ago. We had originally bought it as an 80/20 loan, with 20% being in a home equity loan. We never heard from the first mortgage holder again again, but the second mortgage holder (the home equity loan) is attempting to make us pay the 20% ($21K), which we don’t have. Are they allowed to do that? What should we do, etc. We’re currently renting and working on rebuilding our credit and we really want to purchase another home in the next year or so.

Asked on July 16, 2011 under Real Estate Law, Ohio

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

In most States in this country if the loans used to acquire the property were used for its original purchase and there was a foreclosure, then most likely you cannot be held liable for the $21,000 claimed by the second mortgage holder. The above answer would change if the second mortgage was not placed at the home's purchase but was part of a refinance.

Likewise, in most States in this counrty if the foreclosure is through a non-judicial foreclosure as opposed to a judicial foreclosure (lawsuit filed in the the court system), you as the former property owner would not be responsible for the $21,000 claimed.

You might consider a complaint being lodged with your State's Department of Corporations or Real Estate against the second mortgage holder.

Good luck.


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