In Foreclosure and need help

[Faithfullymovin]

Hi. I just received a letter for an attorney that my lender hired to foreclose on our home.

The sale date is for January 7, 2009 and I am glad that it is finally here. The house is in Michigan and my husband was losing his job. He found another job in Georgia and we were upside down on our home BAD. To make a long story short we could not sell it and it had to be let go.

My question is, the letter only references our first mortgage. We have a lst and 2nd mortgage with the same company. What usually happens to the second mortgage in this case?

Thanks for the help.

Faithfully

[SiftedLikeWheat]

With my house in California, where they usually do a non-judicial foreclosure, the first takes back the house and auctions it. Since they take the house, it is a "secured" loan and they cannot come after you for any difference. The second, however, then becomes and unsecured loan and is included as a claim in your BK along with your other unsecured creditors. Without filing BK, they can come after you for a deficiency judgement. The only way to handle outside of BK is to try to negotiate with the 2nd lender for a lower payoff.

[Faithfullymovin]

Thanks for the response. The 2nd mortgage is with the same company does that make a difference or will they still come after me for the 2nd mortgage?

[HHM]

Thanks for the response. The 2nd mortgage is with the same company does that make a difference or will they still come after me for the 2nd mortgage?

Generally no, it makes no difference. There are 3 possibilities.

1. Your state does not allow collection of the deficiency balance
2. The deficiency is assigned for collection as an unsecured debt
3. The deficiency is foregiven in which case you will receive a 1099-C, and must declare the deficiency as income for tax purposes (see IRS Form 982).

[hnhlvr]

Our house is coming up for auction soon after seven months in default. Right at three months our 2nd went to collections. You probably will get a letter stating that soon.