2nd Mortgage after 1st Mortgage foreclosed

[dhbentz]

What is the name of your state? California

I had a 1st and 2nd mortgage on my house.
We moved and property values dropped, and I was unable to sell the house for enough to cover the first mortgage. My wife and I were both out of work for some time and unable to make payments. Of course the 1st lien holder foreclosed and the house was sold at auction.

My question is: what happens now with the second mortgage?
Can they still come after us for that debt? I would like to avoid bankruptcy but I have no ability to pay.

Thanks

[FlyingRon]

In mosts states when you have a foreclosure on a debt (other than non-recourse loans which very few residential mortgages are), if there is a deficiency (e.g., the foreclosure sale doesn't net enough to pay off the amount owed), they can pursue action against you.

The order the proceeds are applied are typcially: the tax man first and then all the secured loans in their order of seniority (first mortgage first, then second mortgage, ...).

Of course, if you have nothing, their ability to collect on a deficiency judgment will be more difficult. You'll have to see if they are going to pursue the matter.