foreclosure

jschill9 · Joined: 10 Oct 2007 Posts: 1 1.40 Dollars($)

I am in default on my first and secind mortgages and expect to be served with a foreclosure notice on the first mortgage shortly. In addition to the above liens there are tax liens (IRS & State) that far exceed the value of the property.
What happens in Ca. to the 2nd mortgage and the tax liens when the first is foreclosed? Could a friend or relative buy the house ffrom the first morthahe holder and rent it to us?

jenkin7 · Joined: 04 Jun 2007 Posts: 939 140.77 Dollars($)

Hello,

If your first mortgage forecloses and the property is auctioned off, then your second mortgage becomes an unsecured debt. If the second lender does not receive any fund from the auction, you are liable to pay the full balance of the loan as well as interest if you are delinquent. If they receive some amount from the sale then you have to pay the rest of it, if they don't do a charge-off.

Regarding the IRS tax liens, the new buyer of your property from the auction will be responsible to pay them.

Your friend or relative might buy the house from you and then you can pay off the first mortgage. But the lender should be notified about the deal as there is a transfer of title.

Guest 0.10 Dollars($)

Hi,

As far as I know, in most places the tax lien needs to be paid off within 48 hours of purchasing the foreclosed property and that too by check or bank draft.

larry · Joined: 27 Jun 2007 Posts: 3328 473.40 Dollars($)

Hi,
When the first mortgage is foreclosed, the second mortgage lender can sue you to the court and asked for the deficiency judgment. And if you can show that you can't pay it off and you have become bankrupt, the lender might forgive your debt which is also known as charge off.

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