Foreclosure Question

[SandEagle]

If you take out a home equity on your mortgage and are at the maximum loan-to-value, what happens to the home equity loan when you file foreclosure? Are you still responsible for it? Just curious

 

[Blieb]

They have to compete with other lienholders for every $ they get.

 

[mugs]

Originally posted by: rrahman1
If you take out a home equity on your mortgage and are at the maximum loan-to-value, what happens to the home equity loan when you file foreclosure? Are you still responsible for it? Just curious

Hah...

 

[SandEagle]

Originally posted by: mugs

Originally posted by: rrahman1
If you take out a home equity on your mortgage and are at the maximum loan-to-value, what happens to the home equity loan when you file foreclosure? Are you still responsible for it? Just curious

Hah...

well, i've heard of people doing this: taking out a home equity, using it as a down payment on a 2nd home, and letting the first go into foreclosure.

 

[Slew Foot]

Depends if youre state treats HEL as recourse or nonrecourse. If it's recourse, they can come after you for the money on the HEL if you foreclose (I may have it backward).

 

[Whoozyerdaddy]

You'd be better off trying to negotiate a short sale with the bank if you're really in that much trouble. Foreclosure really should be a last option.


Unless, of course, you're trying to perpetrate a fraud like the OP lined out.

 

[Pacfanweb]

The first mortgage gets first dibs on whatever the home sells for. Then whichever subsequent mortage that has a lien on the property is next in line, and so on......

 

[Noirish]

Originally posted by: rrahman1

Originally posted by: mugs

Originally posted by: rrahman1
If you take out a home equity on your mortgage and are at the maximum loan-to-value, what happens to the home equity loan when you file foreclosure? Are you still responsible for it? Just curious

Hah...

well, i've heard of people doing this: taking out a home equity, using it as a down payment on a 2nd home, and letting the first go into foreclosure.

if they can't afford the 1st, how the 2nd?
not to mention it's a MAJOR hit to credit if they intentionally did it, sounds stupid.

 

[Beattie]

You are still responsible for that amount. If you try to take a second to put a down payment on another house, you still owe the amount if that first house is foreclosed on. I guess you could try to convince them into a short sale to pay less, but I dont think they would accept it if you have other property that could stand for the loan.