If home is in foreclosure but sold in a short sale for less than what is owed on the first mortgage, is anything owed on the second mortgage?

mr.yet

Both Mortgages most likely have been recorded and liens against the property are in place.

If the First mortgage is sold for less than owed, the property will not be released, the second mortgage will have to be paid to release the property also.

I dont see how the sale would go through, no release of lien would be able to happen.

Mortgage Advisor

yes... whoever purchased the home now takes on the obligation and liabilities of any and all liens on title.. If there is a 2nd mortgage, there is a lien on title, and the new owner of the property now owes that debt...

If the sale didnt pay all of the first mortgage either, then you also will owe the money that is left over...

Technically, you wont owe the mney on your credit report, but you will have the liens against the prop[erty..

Meaning, if you try to refinance, you have to pay any liens..

If you try to sell the property, the liens will ahve to be paid...

Question_master

Let me make this more interesting....The house was sold over 4 years ago. The people I sold it to ended up having the house actually foreclosed on a few months ago. The paperwork I have from the sale says "cancellation and release" from both mortgages, and the court documents filed for the recent foreclosure mention my and and the same statement. (No, I'm not involved in the foreclosure. I already confirmed that with the courts. My title company sucked, and didn't file half the paperwork.) HUD, who the 2nd mortgage was through, just now contacted me about repayment. (The 2nd mortgage was taken out over 5 years ago.) The house is now bank owned and for sale again.