2nd mortgage foreclosure (for sale, rent, second mortgage)

[wendlynn]

Help!!! I foreclosed on a house in Illinois that had a first and second mortgage. First mortgage bid at auction and aquired the house. I received court papers on second mortgage stating "motion to dismiss without predjudice" I called lawyer for second mortgage that filed papers and was told the loan was written off. Five months later my checking account was wiped clean by second mortgage. Is this legal? Also first mortgage now has house for sale for 60,000 more than was on first mortgage. Do they have to pay any amount to second mortgage?

[linicx]

Let's see if I understand your plight. You owned a house that had a first and a second mortgage on it. You got behind in your payments and lost the house?

The First lienholder guaranteed to back your loan based on the value of your house aka collateral.
The second lienholdre did essentially the same thing. The sum total of both loans equal the amount of money you owe on the loans. The second lender filed suit which was "dismissed without prejudice" probably means they have no claim against the first lien holder. This does not mean the second lien holder cannot attach your assets - which they did - in an attempt*to repay the second loan. I would not be surprised to find court costs, legal fees, etc added to the total amount the second lien holder is owed.

If this is correct, they can probably continue to attach any and all of your assets that is unencumbered by a first loan. If you live in Illinois a loan company cannot attach Social Security benefits nor pension payments. The only way to protect your assets is to agree to re-payment plan or file bankruptcy. This is a guess on my part. You should probably consult a lawyer.

[wendlynn]

Thank you for reply.You are correct, I lost the house and thought with court papers from second mortgage and phone call to them that I was not liable. I wish they had told me I was still obligated. Not that it matters but it was only 2000.00 in checking account but very embarrassing when you bounce you first rent check to your landlord and several other checks. I feel like I was blindsided. Oh...and how about all the overdraft fees I now owe. I feel like I cannot get out of this rut!!! Thank you again for advice...I also thought I needed to talk to a lawyer. I was not sure what kind of lawyer but I do believe it is a bankruptcy lawyer.

[PrairieStateofMind]

When the first mortgage was foreclosed, the second mortgage lender had the option of paying off the first and getting the house. Since they did not, the mortgage was cancelled. But this only means that the bank's claim on the house was cancelled. It did not cancel your obligation to the bank. The bank should have been fair and professional and told you this. They acted legally, but not very ethically.

As for the checking account, banks have the right to "set off" against your deposits for any amount you owe them. Since they owe you the money in the account, and you owe them the loan, they set off one debt against the other. It's a centuries old practice. Never have deposits in a bank where you are past due on a loan.

Call the bank and see if they will waive the fees in this case. Don't deposit any more money. If you think you may file bankruptcy, don't pay the OD fees. They'll be cancelled in the bankruptcy. So will the remainder of the second mortgage, since it's now an unsecured loan.

[ANDY ROBINSON]

Originally Posted by wendlynn

Help!!! I foreclosed on a house in Illinois that had a first and second mortgage. First mortgage bid at auction and aquired the house. I received court papers on second mortgage stating "motion to dismiss without predjudice" I called lawyer for second mortgage that filed papers and was told the loan was written off. Five months later my checking account was wiped clean by second mortgage. Is this legal? Also first mortgage now has house for sale for 60,000 more than was on first mortgage. Do they have to pay any amount to second mortgage?

did you get a new title when you paid the 1st morgage off did you buy the house.

[mdand3boys]

Originally Posted by wendlynn

Thank you for reply.You are correct, I lost the house and thought with court papers from second mortgage and phone call to them that I was not liable. I wish they had told me I was still obligated. Not that it matters but it was only 2000.00 in checking account but very embarrassing when you bounce you first rent check to your landlord and several other checks. I feel like I was blindsided. Oh...and how about all the overdraft fees I now owe. I feel like I cannot get out of this rut!!! Thank you again for advice...I also thought I needed to talk to a lawyer. I was not sure what kind of lawyer but I do believe it is a bankruptcy lawyer.

You are still liable for the second mortgage amount even though foreclosed upon. If the first mortgage holder sells the property for more than they need to pay off the first mortgage and all the fees they tack on, they will either send the difference to you or pay towards the second mortgage. That part will vary based upon individual circumstances.
When in debt and floundering, never give your banking info to any of the lenders, whether they be mortgage companies or credit card companies. If any of them file suit against you, they have the right to attach (take) any money in your accounts if they have the account info. If you have given out that info in the past, such as to make a payment via phone, get a new bank account with a different bank right away.