In a foreclosure, the lenderâ€™s lien on the house is wiped out but the debt is still outstanding. You signed a promise to pay back a loan â€“ a promissory note â€“ and that note still exists and you may still owe the money. It is tragic to lose a house and then be expected to pay the money that was lent to you against the collateral that was the house. You need legal advice in regard to what you should do. Under some circumstance you may owe the money and under some circumstances you may not. An experienced real estate attorney can explain and suggest an action plan for you.
Consult with an attorney on this. Mike is not correct when it comes to the 2nd. John's answer is the one you should be considering.
There are certain 'case specific' facts in the State of California that might protect you from having to pay the 2nd. For example, if the loan was purchase money (in other words, it is the original loan on that house that allowed you to buy the house), then most likely you don't owe the money. However, you said it was a home equity loan, which usually means you borrowed the funds AFTER you bought the house. In this case, you would still owe the debt.
As John said, the lien (which is simply the pledge of collateral/security) is wiped out but not the note (the promise to repay). What the holder of the 2nd now has is an unsecured note, but they can still pursue you for payment. Take your specific facts to an attorney and get a free 15 or 30 minute consultation. If you owe the money, they will be able to advise you of your other options in this situation.
Sorry to hear you are going through this. Hang in there, but get some good advise this time.
Shel-lee Davis, QSCÂ®
Certified Distressed Property Expert â€“ CDPEÂ®
Short Sale & Foreclosure Resource â€“ SFRÂ®
Certified HAFA Specialist â€“ CHSÂ®
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
In a short sale, the 2nd lien holder would have had to agree to release you of the lien as paid in full & could not go after you in the future for payments or a judgment.
Sounds like you need a new Realtor, when your credit is better & you can buy again.
Why did you have a Realtor "taking care of your foreclosure"? They should have been 'taking care of a short sale" & successfully closing it.
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