Comments on: What Happens to the second mortgage if the first forecloses? http://sellingnorthernnv.com/2009/06/what-happens-to-the-second-mortgage-if-the-first-forecloses/ Keeping you informed on all things real estate Fri, 12 Mar 2010 17:05:17 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: admin http://sellingnorthernnv.com/2009/06/what-happens-to-the-second-mortgage-if-the-first-forecloses/comment-page-1/#comment-1618 admin Wed, 10 Feb 2010 00:03:51 +0000 http://sellingnorthernnv.com/?p=362#comment-1618 To answer your question: First off, I am not an attorney and would recommend you speak with an attorney to verify this information. If you have not received a 1099 for the second loan, this may indicate that they are not forgiving the amount owed. My understanding of The Mortgage debt forgiveness act of 2007, is that it would not apply to your situation regarding the second loan. If you go through your original loan documents, chances are there was a clause that stated you agree to stay current on your primary mortgage (or similar verbiage). By allowing the property to foreclose, you may be in Breach of Contract with the second lien holder. Because it was not the second lien holder that foreclosed on the property, they may be able to pursue you for a deficiency judgment under the laws pertaining to breach of contract. In the state of Nevada, they may have up to 6 years to file for a deficiency judgment under the laws pertaining to breach of contract. My suggestions: You may want to contact the lender and inform them that you haven't received a 1099 for the loan in question. With any luck, they just failed to issue it. If not, they may inform you that they do not consider the amount forgiven. In this circumstance, you may want to speak with an attorney about your options. To answer your question:

First off, I am not an attorney and would recommend you speak with an attorney to verify this information.

If you have not received a 1099 for the second loan, this may indicate that they are not forgiving the amount owed. My understanding of The Mortgage debt forgiveness act of 2007, is that it would not apply to your situation regarding the second loan.

If you go through your original loan documents, chances are there was a clause that stated you agree to stay current on your primary mortgage (or similar verbiage). By allowing the property to foreclose, you may be in Breach of Contract with the second lien holder. Because it was not the second lien holder that foreclosed on the property, they may be able to pursue you for a deficiency judgment under the laws pertaining to breach of contract. In the state of Nevada, they may have up to 6 years to file for a deficiency judgment under the laws pertaining to breach of contract.

My suggestions:

You may want to contact the lender and inform them that you haven’t received a 1099 for the loan in question. With any luck, they just failed to issue it. If not, they may inform you that they do not consider the amount forgiven. In this circumstance, you may want to speak with an attorney about your options.

]]> By: chase http://sellingnorthernnv.com/2009/06/what-happens-to-the-second-mortgage-if-the-first-forecloses/comment-page-1/#comment-1433 chase Thu, 28 Jan 2010 16:51:26 +0000 http://sellingnorthernnv.com/?p=362#comment-1433 My primary residence was foreclosed on, I had a first and a second loan. The lending company is the same for both loans. They sent me a 2099 (1099a) for the first loan showing 185,000 owed vs 155,000 fmv. My understanding is that I can fill out a form 982 and have that debt excluded from my income under the Mortgage debt forgiveness act of 2007. If this is the case, what happens with the second loan? If they dont send me a 1099 for the second, is it just a waiting game to see if I get sued or am I protected under the Mortgage debt forgiveness act of 2007? Btw the second loan value is roughly 50,000. My primary residence was foreclosed on, I had a first and a second loan. The lending company is the same for both loans. They sent me a 2099 (1099a) for the first loan showing 185,000 owed vs 155,000 fmv. My understanding is that I can fill out a form 982 and have that debt excluded from my income under the Mortgage debt forgiveness act of 2007. If this is the case, what happens with the second loan? If they dont send me a 1099 for the second, is it just a waiting game to see if I get sued or am I protected under the Mortgage debt forgiveness act of 2007? Btw the second loan value is roughly 50,000.

]]>