Our house is going towards foreclosure but I was told that if we loose our home the second mortgage which is a home equity line of credit can sue us for the debt owed?? :confused: Is this True?

It is true, yes. But it is unlikely. Its typically not worth the effort of a second note holder since you just had your house foreclosed... bankruptcy is a minor step from there. They would pay legal fees for the process to collect nothing. Technically the mortgage holder can sue you for the difference between the amount owed and the amount gained from the sale of the foreclosed property.

What WILL happen is when the house sells, you will be given a 1099 for the difference between the amount owed and the sale price. You will owe taxes on this.