Q: Second mortgage foreclosed and they sold the house at auction. Who is responsible for the first mortgage?
I live in Los Angeles, CA. I have a first mortgage loan with Chase ($245,000) and a second mortgage loan ($299,000). The second foreclosed and sold the home at auction. It was my belief that I would be on the hook with Chase for the $245,000 but I recently spoke to an attorney who told me that Chase would be going after the new owners, not me. He stated that the mortgage (the first, Chase) is attached to the property and the new owner will eventually have to deal with it. This would be great since I was preparing to file bankruptcy on the 245,000 and wouldn't have to do so, but I don't really think the attorney is correct. Any information is appreciated. Thanks
A: if the house is your primary residence, california has anti deficiency statutes where you are not personally liable/ responsible for the debt on the first mortgage. the 1st mortgage can foreclose on the property and that could hit your credit again because you are technically still on the loan but they cannot come after you for the money owed to them, if this is your primary residence.
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A: IF THE SECOND MORTGAGE FORECLOSED ON YOU, THEY ARE ENTITLED ONLY TO MONEYS AFTER THEY SATISFY THE FIRST LOAN. THEY CANNOT POCKET THE MONEY FROM THE FIRST LOAN. SO THEY PROBABLY GOT ANY MONEYS AFTER THE FIRS LOAN WAS PAID. YOU LOST YOUR DOWNPAYMENT ON THE FIRST AND INCURRED A LOSS ON YOUR PROPERTY. TALK TO A CPA TO SEE IF YOU ARE ENTITLED TO ANY DEDUCTIONS. BEST OF LUCK.
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