holding second lien, first lien foreclosed

[dlentz1]

What is the name of your state? Michigan

Last June, my wife and finally sold our old house and moved. In a poor market, we had to make some sacrifices to do so, including providing the buyer with a small second mortgage to handle costs and improve the chance of attaining a good mortgage.

The first mortgage is for approx. $60,000, and our second mortgage was for $10,500. The house has since not been maitained and is probably worth no more than $60,000 at this time.

We have not recieved a payment from the buyer for the second mortgage in a long time and assumed that we might not see any more money. Last week, we recieved a letter from the first lien holder that they were repossessing the property and gave a date for sheriffs sale, (which had already passed anyway).

Obviously, it would not be in our interest to purchase this property and pay the first lien as the home has been ransacked and is not worth the debt owed to the first lien holder. We do not expect to see any money from the loan and frankly, we would have given it to them to buy the house anyways, so we are not heart broken.

However, I wonder if legal action to recover the debt would be an option. We will no longer hold a lien on the property after the redemption period is over anyway. Is this money lost forever, or is there the chance of redemption through a law suit?

Thank you for your help and I apologize for the longwinded description.

[FlyingRon]

Sounds like you understand. The house will be sold and the tax man and the senior lien come first. If there is anything left it goes to you. You could pursue a deficiency judgement on the guy for what you are owned, but there's probably a good chance he doesn't have any to collect on.

[dlentz1]

If pursuing the money is possible, I will do it. The man makes a lot of money, just doesn't pay his bills on time according to his credit report. He also has virtually no debt now that he has let the house go. He has a trailer that he is living in now that is debt free.

It is safe to assume that a wage garnishment after a successful judgement is very possible.

Thank you for your input.

[FlyingRon]

In Michigan it looks like you could.