Legal Question in Real Estate Law in California
Foreclosure on home with two mortgages
I purchased a home in California with an 80% mortgage, a 10% mortgage and 10% down. Since both loans were to purchase the home, would either have unsecured creditor status if the home is foreclosed on? Or will the home be sold and I am done?
1 Answer from Attorneys
Re: Foreclosure on home with two mortgages
Both are secured mortgages/debts. If the senior loan [one for 80%] forecloses, it wipes out all junior loans [the 10% one]. At a forelosure sale, the senior wil "paper bid" its mortgage and get the propety for that amount, unless someone else appears and bids more [but has to meet all the requirement set by senior to bid, which normally is all cash, so usually no other bids]. Your 10% down is lost, there is no excess from the sale so you get nothing, the junior loans are eliminated, and your credit record reflects a foreclosure so your credit rating goes down a lot. The senior, if it is a non-judicial foreclosure which most of them are, can not go against you for the balance of that loan.
But please look at this site's past replies as to foreclosures as to possible techniques to avoid going into this process in which you loss money and your credit rating.
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