What happens if our house is foreclosed on when first mortgage is in my name and second mortgage is in husband’s name?

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What happens if our house is foreclosed on when first mortgage is in my name and second mortgage is in husband’s name?

Our first mortgage is in my name only and my husband has a second mortgage (home equity line of credit) in his name only. We’re not able to make payments on either loan, what happens if the house is foreclosed on? We have tried loan modification programs with both companies.

Asked on October 11, 2010 under Real Estate Law, Indiana

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

The mortgages will be paid in order of priority.  Priority is decided by many factors.  What I am most concerned about here is if there is a deficiency judgement on either of the mortgages and your liability on same.  A deficiency judgement occurs when the house sells for less than the mortgage(s) and there remains a balance due to the holder of the loan.  You indicate here that you have tried modifications and by the way you have phrased it I am assuming that it did not work out.  So you have to try and find another way to solve your problem.  You can try and short sale the home and ask permission from the mortgage holders and ask them to waive the deficiency.  You can turn over a "deed in lieu of foreclosure" to lien holders which saves them from the costly process of foreclosure and ask them to waive deficiency.  You need to contact you state attorney general's office about help here.  They have programs and people to help you.  Good luck. 


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