Nicole,

They are just saying that to scare you. However, in some areas this is possible, I would check with your state's attorney general's office and ask them that question. Failing that, I would seek the advice of a competent real estate attorney, most real estate agents aren't qualified to answer these questions for you since they deal with legal matters that we are not licensed to handle.

Cameron Piper

I understood that if you had a short sale, and you had a 2nd mortgage that if the first got some of there money maybe not all and the 2nd got nothing that the 2nd mortgage can still go after you for that money and hold you responsbile for it even if you no longer have the property? This was told to me by my bank. Correct? They said they could sue for it and it would follow me in my life. I am unsure if they are just sayong that to scare me or if it is true. The first and the 2nd are actually with the same mortgage company. Any ideas?

Thanks!

your 2nd mortgage can decide to show up and the foreclosure sale and bid. If they think there is sufficient equity which will allw them to get some of their money back then they will need to outbid the first mortgage holder. If the second mortgage company WINS the bid tehn they own the property and they have to PAY off the 1st mortgage. If they do not feel that there is enough equity they they will simply NOT bid and lose their money. Hope this helps--- I supervised a large foreclosure dept. for about 4 years.

call me anytime
Tino Martinez
630-835-9044

The second would get nothing. You may have to pay the IRS taxes on the amount lost on a short sale. Is this your primary residence or a second residence? Have you lived there more than 2 years? Good luck.

Don't let it go to foreclosure. You would be better off doing a Short Sale. Your credit will take less of a beating. A short sale is when you sell your home for less than what you owe on it and your lenders agree to let you do this. How many payments are you behind?

That would be for the seller. However, last year the government created The Mortgage Forgiveness Debt Relief Act of 2007. You can find information about that as well as possible tax consequences at the link below.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

Scott,

When you say there may be tax consequences associated with a short sale, do you mean tax consequences for the seller or for the buyer?

If the property is foreclosed on, then unless the 2nd lien holder (2nd mortgage) was to also purchase the 1st lien, the 2nd mortgage would be "cleared" and that lender would receive nothing.

I know this may be off the topic, but most people do not understand that there are also tax consequences associated with foreclosures and short sales. For this reason, you definitely want to consult both a real estate and tax attorney.

If you are the one being foreclosed and you would like to try and remain in your home, you might want to contact your lender and see if there is another solution. Most lenders will try and work with people that would like to remain in their homes.

Nikkiboo,

They are in 2nd lein position, so that is something the banks are going to have to work out in the sale of your property. The first mortgage holder has the majority of ownership in the property the second one has a little. Most likely the second mortgage holder will lose more money in the sale of your home. But I am not for certain. Thats a very good questions and I would like to see more answers on this.

Brent Bester
Mortgage Professional
614-622-8916

Are you the homeowner letting your home go to foreclosure? If so, then at foreclosure, the highest bidder will very likely be your bank for the first loan, and the second lien will be cleared. If I've misunderstood, and you own a mortgage or trust on a home where someone else is not paying, then the principal applies. However, if you are the noteholder, you hopefully have an attorney representing you through this process. Done wrong you could end up really in trouble. If you are the homeowner who owes the banks, you might want to consider a short sale. The blog post below pay help you.