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01-23-2008, 07:15 AM
| | Junior Member | | Join Date: Jan 2008
Posts: 1
| |  Do we legally have to pay?
What is the name of your state? Michigan
Our home was recently forclosed, on Jan. 3, 2008, at sherrif's auction. No one met the minimum bid, so the mortgage company assumed the loan. We also have a 2nd mortgage, a home improvement loan that is through a different company. My question is, are we legally required to continue paying on the 2nd mortgage? We are now two months behind in payments, and the company is threatening to send the account to their lawyers. My husband is afraid that his wages can be garnished. I don't see the sense in continuing to pay for something that is part of a home that we technically no longer own and will be moving out of in five months. Is my husband right, can they garnish his wages if we don't make the payments? Or is it the 1st mortgage company's problem now?
Sherie |
01-23-2008, 08:21 AM
| | Senior Member | | Join Date: Aug 2005 Location: St. Odo of Cluny Parish
Posts: 27,497
| | | Sounds like predatory borrowing to me.
You borrowed money and put your house up for collateral.
Just because you don't own the house anymore doesn't mean you don't owe the money.
Pay up.
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01-23-2008, 08:37 AM
| | Senior Member | | Join Date: Oct 2005 Location: Ohio (southwest)
Posts: 2,251
| | | The 2nd mortgage company would have been notified that your house was being foreclosed on and had every opportunity to go to the sheriff's sale and bid, to protect their interest. (But I have seen it where the 2nd mortgage holder doesn't even bother with it, knowing they would be stuck with the house if they kept the bidding going.)
My advise; No, don't continue to pay on the 2nd mortage. But be prepared for the 1st or 2nd mortgage company to come after you for a "deficiency judgement". As SJ says, you owe the money, so pay up. Foreclosure is not the answer people think it is.
(Yeah, I know, that was contradictory . . .) |
01-23-2008, 10:57 AM
| | Senior Member | | Join Date: Oct 2007
Posts: 2,109
| | | so you dont think you should have to pay money back that you borrowed and promised to pay because you no longer own the collateral? but why should the entity you borrowed from be left holding a debt with collateral that no longer exists? if you lent someone money for something and then they no longer had the "thing" for whatever reason, would you just say "oh you dont have to pay me back now" |
01-23-2008, 11:28 AM
| | Senior Member | | Join Date: Mar 2006
Posts: 4,994
| | | If it was a purchase loan, it is a non-recourse debt. While your credit may be affected, a non-recourse debt goes against the collateral and the OP may not owe any more money on the 1st or 2nd. True, we don't have that fact, but it is a key fact as to how to answer the question. Also, with the passage of the mortgage protection law recently, if the amount of the loans are below the purchase amount reduced by principal payments (or if it was still a non-recourse, or if insolvent), the OP will not be taxed on the difference between realized and owed.
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