If you thought going through a foreclosure proceeding would automatically eliminate your obligation to repay a 2nd or 3rd mortgage, think again. In some cases foreclosed owners are being aggressively pursued by banks and lending institutions to pay back so-called “junior mortgages” – home equity loans.
State laws vary, but in some cases it does not matter that the equity is gone. You still owe the money and many banks will go to all legal means to get it from you.
This has become another obstacle in the struggle to clear away bad mortgages. First-lien mortgage holders resist reducing payments or writing down principal amounts unless junior lien holders will do the same.
In many cases they won’t. Some lenders are taking foreclosed owners to court or even garnishing their wages to get their money.
Resource: Wall Street Journal
Tags: 2nd mortgage, bad debt, foreclosure, home equity loan, mortgage, short sale
April 20th, 2010 at 3:16 am
A good article Thank you! RFID Reader
April 22nd, 2010 at 3:38 pm
Very interesting. It’s sad what is happening to our homeowners.
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