Yes. Most mortgage loan transactions include both the conveyance of a mortgage from the borrower to the lender(used to secure the loan) and a promissory note (the promise to pay).
If the mortgagee's security interest is extinguished resulting from the foreclosure of a senior lien, there still remains the personal promise to repay.... and can lead to wage garnishment, etc.
SSP is right, they will show up as a deficiency judgement on credit until paid or settled. They don't stick to the house, unless a property tax or IRS lein.
I believe this varies from state to state. My answer (from California experience) would have been the opposite - loans for residential property up to four units "stick to the house," not the person. They're "non-recourse" loans.
Find out what the situation is in your area. (BTW, just looking at the loan documents won't tell you. The law may very well specify that certain types of loans are non-recourse, no matter what the lender may desire.)
I think the term is coined "deficiency" or non-deficiency state. Also, sometimes it matters on whether or not the 2nd was a HELOC and in some cases if the HELOC was indeed used for home improvements, they will let the default go as a chargeoff. In fact, since the borrower gets tagged by the IRS as loan forgiveness which in turn leads to added income and added taxes
Yes. Most mortgage loan transactions include both the conveyance of a mortgage from the borrower to the lender(used to secure the loan) and a promissory note (the promise to pay).
If the mortgagee's security interest is extinguished resulting from the foreclosure of a senior lien, there still remains the personal promise to repay.... and can lead to wage garnishment, etc.
SSP is right, they will show up as a deficiency judgement on credit until paid or settled. They don't stick to the house, unless a property tax or IRS lein.
I believe this varies from state to state. My answer (from California experience) would have been the opposite - loans for residential property up to four units "stick to the house," not the person. They're "non-recourse" loans.
Find out what the situation is in your area. (BTW, just looking at the loan documents won't tell you. The law may very well specify that certain types of loans are non-recourse, no matter what the lender may desire.)
I think the term is coined "deficiency" or non-deficiency state. Also, sometimes it matters on whether or not the 2nd was a HELOC and in some cases if the HELOC was indeed used for home improvements, they will let the default go as a chargeoff. In fact, since the borrower gets tagged by the IRS as loan forgiveness which in turn leads to added income and added taxes