if our house was sold at a sherff sale what happens when you have a 2nd morgage?

Question

we bought the house on a 80-20 loan and still oue both loans

Answer 1

They get in line after the primary mortgage is paid off. They will likely not be anything left to pay off the 2nd, so they'll have to write it off. They'll try to go after you other assets, of course, but I would think that there aren't that many to go after.

Answer 2

You will either owe whatever is left over after the sheriff's or if they write it off they will send you a 1099 form and you will owe the taxes on the money as if it was a bonus (around 30%) to the IRS, local, and state Either way you are in allot of debt, can have you tax returns, taken away, garnish your wages, intercept any inheritance etc, until the debts are paid. If they 1099 it and you owe the IRS, and somehow manage not to pay (unlikely) they do not fall off your credit report in 7 years, only after they are paid.

Answer 3

the lender holding the 2nd lien is well, S.O.L.
the only recourse they have is to buy back/take over the 1st lien in order to come after you for the 2nd.

Answer 4

You are responsible for all money owed. You better declare bankruptcy at this point.