actions taken on a secured loan

[ivehadit]

In this case it's a heloc, I'm being sued instead of forclosed on. when interviewing lawyers he brought this to my attention and said it should be forclosure. I never really thought about this but is getting a garnishment or bank levy an option for a 2nd mortgage holder? I'm now wondering is their only course of action legally to take property securing the loan.

[angles]

Possibly on the deficiency if the sale of the property does not cover it.

This is the first I have heard of something like this happening. Do you have some assets that the bank knows about, or suspect that you have? That is the only reason I can think of that they are willing to make the effort and expense of suing you.

[catleg]

They must not be too confident of being able to pay off the 1st lien holder+your exemption/homestead amount (if any) should they foreclose.
But sure, you're in breach of contract, they can sue you.

[ivehadit]

I'll be filing within 30 days, I'm trying for a 13 for lein strip. they don't know about this yet. very few assets less than $2,000. I don't have an appraisal yet but I'm sure they will not recoup a cent but will actually lose money on the sale if they go that route. If they would settle for 10% I would be thrilled to do a 7. Only sensible reason I can come up with is they are hoping to get a garnishment or something is wrong with the contract that forclosure won't work.

[catleg]

There's another thread where our recent member creditor-advocate Brazzy discusses how a deeply underwater second lien like this can just remain on the property forever, waiting for you to pay off the 1st mortgage. So you can file ch7 and eliminate personal responsibility for the loan, but the lender is not really motivated to settle it for pennies.
It's a well reasoned argument why a lender isn't motivated to settle unless the 2nd is threatened with extinction by a foreclosure by the 1st mortgage.