“Can Lenders of Second Mortgages, HELOCs
, and Other Junior Liens Collect From You?
Generally, when a senior lienholder forecloses, any junior liens (these would include second mortgages and HELOCs, among others) are also foreclosed and those junior lienholders lose their security interest in the real estate
. If a junior lienholder has been sold-out in this manner, that junior lienholder can sue you personally on the promissory note. This means that if the equity in your home doesn’t cover second and third mortgages, you may face lawsuits from those lenders to collect the balance of the loans.”
“They then informed that the first lendor did not inform them of that. I had advice I should just quit paying it, because it should of been wiped out once the first mortgage was foreclosed on and technically that was true, but I continued paying on it unknowingly.” The 2nd mortgage lost their security interest in the property. If you stopped paying they would have had the ability to file a lawsuit against you for re-payment on the 2nd loan. 2nd loans can usually be settled for pennies on the dollar.
Since you continued to pay you would still owe the balance due on that loan. HOWEVER, you should be able to settle for a fraction of what is owed.
“The bank said they would be happy to give me a 0% loan and it would not have any affect on my credit. So, i figured I would try to do the right thing and pay the loan and I did. Until now, I find out they entered it as a write off and not a a zero percent loan. So now I feel they mis-represented things to make sure they don't lose their money. Would there be anything I can to not pay this any longer. I will attach the loan docs if needed.”
This is fraud. While they were entitled to be paid or work out a settlement they have no legal right to make misrepresentations of fact to you.
N.C. Gen. Stat § 75-1.1: Unfair & Deceptive Trade Practices Under North Carolina Law
There are government agencies that investigate these types of scams.
You would file a complaint with the North Carolina Department of Justice/Attorney General’s Office at http://www.ncdoj.gov/Consumer.aspx
You would also file a complaint with the Federal Trade Commission (FTC) at https://www.ftccomplaintassistant.gov/#crnt&panel1-1
Additionally you would file a complaint with the Office of The Comptroller of the Currency/ United States Department of the Treasury at http://www.occ.gov/topics/dispute-resolution/consumer-complaints/index-consumer-complaints.html
After the first mortgage foreclosed the 2nd mortgage no longer had a security interest in your property.
If the money the first lender received in the foreclosure did not cover the 2nd mortgage the 2nd mortgage lender had the ability sue you personally on the money you owed. That had no right to deceive you.
You have the right to file your own lawsuit against the lender as well.
If you would like a link for attorneys in your area that provide free consultations please let me know where you are located.
You do not need an attorney to file complaints with the government agencies I listed above.
Please feel free to ask me any additional questions that you may have with regard to this matter. It would be my pleasure to continue to assist you.