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If I foreclose on my home, can the 1st mortgage company or the 2nd (home equity) try to recoup the money from my accounts through a bank levy? Or is that only used with past due taxes to IRS, overdue credit cards etc???
If you default on your loan and allow them to foreclose, there there is certainly a possibility that they will go after other assets to recoup thei losses. This will be more true of a second mortgage then a first.
If you default on your loan and allow them to foreclose, there there is certainly a possibility that they will go after other assets to recoup thei losses. This will be more true of a second mortgage then a first.
I was under the impression that the 1st mortgage can ONLY "recoup" the home. But, other than our vehicles, we have no other assets. No 401K, no investments etc.
Could the home equity do a one time bank account sweep? or put in a judgement for our vehicles?
Depends on your contract. If the home is listed as the sole security for the loan, then that's all that can be used. But many seconds are written to go against other assets.
Let's get our lingo straightened out: "foreclose (Verb) [-closing, -closed] Law to take possession of property bought with borrowed money because repayment has not been made."
You don't foreclose; the lender forecloses, which means, take possession of your home. Depending on your state, the property will be judicially sold, or sold non-judicially. In either case, the property is advertised and sold at auction to the highest bidder. Many times, lenders, if they have the cash, will bid in what is owed to pay their note; if there is interest from other buyers, the price can be bid higher. After recouping any costs of sale, the first mortgage is paid first, then the second. Any additional funds (rare) are paid to the mortgagor (you). If the second lienholder has not recovered the balance owed, it can sue you under the promissory note for the balance and attorney fees and costs, then take an execution and attach other personal property (in some states), or garnish your wages and bank accounts.
Thank you George, yes you do not foreclose, they foreclose after you defaut by not paying for many months payments while they keep adding late fees and other legal charges. And yes often the 1st mortage company will bid the amount of thier loan to get the home and thus no additional will be owed on the first mortage but a second mortgage in these cases go unpaid.
So depending on the terms of the loan, they may come after you
Okay, but nobody really answered my question. Can the 2nd mortgage put a levy (apologize if I'm not using the word correctly) on our bank accounts? Our legal documents say that the only collateral is the home. So, I additionally am assuming our vehicles are safe-- that they WOULD NOT be able to take these as a form of repayment.
If the answer is YES, the 2nd mortgage can put a levy on our accounts, then are we able to cash our paychecks without loosing $$$ to pay the debt as long as the paychecks are NOT direct deposit???
If you signed a promissory note that is not paid in full, the lender can sue, get a judgment, and levy on bank accounts and garnish wages. In some states the judgment creditor can take your personal property (cars and furnishings) that are paid for, and sell them for cash until the note is paid.
Actually we DID answer the question, but you are looking for a black and white answer that we cannot give. The answer depends on how the second mortgage note is written. It could be written in such a way that it precludes bringing suit against you or it could allow it.
If you cash your paycheck without depositing it, they could not attach it. However, your bank may decline to cash a check agaoinst a frozen account.
But you will have ample warning if they file suit against you.
Are you thinking about allowing your house to go into foreclosure? If so, do you have other options?
Not only may you have to pay the difference between the sale of the home and the outstanding mortgages, but you may not be able to purchase again for several years with a foreclosure on your credit report.
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