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In California, have a 1st (mortgage original purchase) of 450K and 2nd (HELOC funded at time of purchase, 2 weeks later paid it down to zero, 2 years later took 93K on it to fund investment) total balance due on 2nd is 93K. NOD filed by 1st lein holder. Both of these are with same lender.

If my short sale processes pay off 1st in total and short the second lender (HELOC) by 50K, can they chase us for deficiency amount?

2nd question, same situation, what occurs if the 1st is current, the 2nd falls behind and the NOD where filed by the 2nd lender instead of the 1st?

Thanks fred k.

robertsmith2005 · Joined: 22 May 2009 Posts: 338 -0.48 Dollars($)

in principal you are answerable for making payment.

Is NOD already filed?

Since your both the loans are with same lender and if NOD is not intitated, approach your lender for deed in lieu. If they accept you wil not be answerable for any payment.

jenkin7 · Posted: Sat Jun 20, 2009 12:27 am Post subject:

Hi Fred,

If you short sale the house and the sales proceeds pay off the first mortgage in full and the second mortgage in part, there are chances that the second mortgage holder will come after you for the deficiency. But as both of the mortgages are held by the same lender, they may forgive you the difference. When you discuss with your lender about the short sale, you should also discuss it clearly whether they will come after you for the deficiency.

It is the first mortgage holder who generally files the NOD. Since they have a first lien on the property, their debt will be paid first. Thus, it does not quite help the second lender, even if they file the NOD prior to it being filed by the first lender.

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2nd loan is HELOC in California