Q: I had a 80/20 loan combo with the same company; the 80 loan went into default and the house was auctioned off. The 80 loan was originally 64,000 and the 20 loan was 22,000. With the high interest rate we were not paying much on principal so when the house was auctioned off it was sold for $86,000 (the original price when we bought it). But with all the fees and court costs the 20% loan was not paid by the proceeds of the auction and so now we are being harassed by a collection company to pay this loan. My question is, do we have to pay this loan back? I don’t understand why, because what would we be paying for? Please help, we are so confused. Thanks
A: The laws differ from one state to the next. In many states you’d find yourself responsible for any losses suffered by the holder of the 2nd mortgage, and this could very well be the case in your state. You may want to consult a real estate attorney in your area (many offer free consultations).
