What happens to a home equity loan in foreclosure?
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What happens to a home equity loan in foreclosure?
My house was foreclosed and sold at auction. The credit union who bought it and holds the home equity loan on it now says I owe them for what they paid for it. Is this right?
Asked on November 22, 2011 under Real Estate Law, Virginia
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If the home equity loan that was secured by a second or third mortgage on your home was wiped out by a foreclosure by a senior mortgage and if the home equity loan was not part of the initial purchase money for your home, then you are obligated on the amount of the loan personally under your loan contract.
I suggest that you consult with a real estate attorney about what happened to confirm that the home equity loan was not a purchase money loan to acquire your home. If not, you will owe the credit union for the moneys unpaid on this loan.
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