If a first mortgage was foreclosed, and there is also a equity line, what happens to the equity line???

Answer 1

Any second or third place liens have the option to buy out any liens that are in prior position to theirs. If they do, then they can sell the home. Many 2nd and after that liens choose not to because there isn't equity to make it profitable.

Answer 2

When the home is sold, the lender that was the primary mortgagee gets paid first for the principle balance and any foreclosure fees, and the lender for the HELOC gets paid second....any remaining money legally must go back to the homeowner.

If there is not enough money to pay off both, then the lender who fell "short" may seek a deficiency judgement against you.

Answer 3

it is obliterated

the amounts paid at a foreclosure sale for first to pay any government obligations [tax liens and similar, usually] and then to pay the first mortgage in full including interest and late charges. If any is left, it is paid to the other lienholders in the date order of their filing.

All liens are wiped out in a foreclosure, unless state law says differently [and that would only be a lien to the government if it wasn't paid off].

Of course, if you are the borrower the equity line agreement likely says that you still owe. Same for any other lien's agreement, or even one placed by a different creditor [like a hospital over unpaid bills].


clear?

Answer 4

the second note/equity lien is considered junior in title to the senior lean the first note, when the first note forecloses all liens junior are cleared of the title to the land, allowing the first note to sell the property free and clear

as toward your second/equity lien it is still valid against you personally, just lost its right of collateral against the house, in this cases the note becomes do and owing immediately and they can seek legal recourse to attach to any remaining assets you may have left

Answer 5

They will either purchase the home from the primary lender (not likely) or come after you for the money you owe them (more likely)...

Answer 6

In New York the liens do not disappear. they are still there and you can be held liable for them. Good Luck to you.

Answer 7

It will close since it is tied to the home. You will still owe any money you took out.