What Happens to the second mortgage if the first forecloses?
When the first lender carries out a foreclosure sale, the second mortgage lender may be able to take the following steps:
- File a deficiency judgment against you if the foreclosure sale doesn’t cover the entire second mortgage loan balance.
- File a civil judgment against you in court or garnish your income.
- Bid for the property at the time of foreclosure sale in order to recover the money the second lender has invested.
- Even after the first lender sells off the property, the second lender can pay off the required amount of money to the first and get back the property at the end of the redemption period.
In addition to these options, the second lender can also charge-off any unpaid that isn’t paid off from the sale proceeds. A charge-off means the lender considers the debt as uncollectible, but don’t lose your obligation to pay off the mortgage.
A charge-off will have a negative impact on your credit score. If you repay the charged-off debt, you can request that it be reported as “Paid Charge-off” or “Settled Charge-off”.
In the event you do not pay off the debt, it may be considered as income and might be taxable. However, if the debt is forgiven, you may be exempt from this tax under the Mortgage debt forgiveness act of 2007.
Should you have any questions or need further information,
please don’t hesitate to contact me, (775) 220-1630
Or visit my blog at www.SellingNorthernNV.com
Joshua Talayka
Chase International
Office: 775 850 5900
Toll Free: 877 922 5900
Cell: 775 220 1630
Fax: 775 850 5901
985 Damonte Ranch Pkwy, Ste. 110
Reno, Nevada (NV) 89521
Comments