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Foreclosure Initiated by Second Mortgage Company

If a second mortgage company forecloses and I have no other assets nor income what happens?

To make a long story short I bought two homes in FL. one for my son and one for my wife both in in my name. Due to health reasons no one moved in and they were rented. Due to my lack of income I find it impossible to support the properties and stay current any longer. there are two first's and two second's. if the second's are defaulted and the first's paid there will be sizeable deficiency balances no doubt totaling the entire sum of one second ($100,000) and appx. ($35,000/46,000) of the other. if in fact the second mortgagee forecloses and i have no other assets nor income what happens? Thank you.

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Bill's Answer
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In our current housing market, in which housing prices are rapidly decreasing while many consumers’ mortgage payments are increasing, homeowners across the country are facing the same financial trouble you are currently experiencing. The problem with owing more on one’s home than the property is worth is that, if the property is forced into foreclosure, the consumer may very well end up owing money on her mortgage notes even after she no longer owns the property. Some lenders, such as your first mortgage, will decide to forgive any deficiency balance, while others, such as your home equity lender, will decide to pursue the borrower for the collection of the deficiency balance.

In some states, such as California, lenders are prohibited from collecting on deficiency balances resulting from loans used to purchase a primary residence; however, many other states allow lenders to collect on deficiencies to the full extent of the law. Because of the differences in state laws regarding deficiency balances, I strongly encourage you to consult with an attorney in your area to determine if you are legally liable for the deficiency balance claimed by State Farm, and if you are liable, what steps you can take to stop these collection efforts. For more information about foreclosures, I invite you to visit the Foreclosure page.

Depending on your state laws regarding the collection of deficiency balances, your home equity lender may be able to file a lawsuit against you for the collection of this debt. Since I am not licensed law professional, I cannot tell you what action the creditor can legally take against you. You can check the various laws at You should keep in mind that even if the lender can sue you, it does not necessarily mean that it will decide to sue you. Frequently creditors choose alternative collection tactics, such as hiring collection agencies, over litigating delinquent accounts; these decisions are based on many factors including the cost and practicality of filing suit, and if the creditor believes that filing suit will increase its chances of collecting the debt. For example, if the creditor thinks that you are likely unable to pay the debt, it may decide not to sue you simply to save money. However, if the creditor does sue you, it may be able to obtain a judgment against you, which could lead to wage garnishment, bank levies, and/or property liens, depending on your state laws.

I wish you the best of luck, and hope that the information I have provided helps you Find. Learn. Save.



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