04
Mar

Purchaser of foreclosure property responsible for 2nd mortgage forgiven in bankruptcy?

Archived in the category: 2nd mortgages

2nd mortgage relieved in bankruptcy & home is now in foreclosure with 1st mortgage bank. If someone buys the property, will they have to pay the 2nd mortgage or is it gone because it was part of the bankruptcy? BTW, the property is in Michigan.

who ever buys the property isn’t buying the debt. they just buy the property. the debt has to be dealt with prior to the sale. bankruptcy can sometimes wipe out a line of credit or second mortgage look at the bankruptcy discharge paperwork to be sure. good luck

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Posted by: admin - 3 Comments

3 comments for “Purchaser of foreclosure property responsible for 2nd mortgage forgiven in bankruptcy?”

.1
FarmGirl13

who ever buys the property isn’t buying the debt. they just buy the property. the debt has to be dealt with prior to the sale. bankruptcy can sometimes wipe out a line of credit or second mortgage look at the bankruptcy discharge paperwork to be sure. good luck
References :

March 5th, 2010 at 1:08 am
.2
foreclosurefish_com

When the title is transferred on a property, all liens or debt against the property will need to be settled, otherwise the transfer will not go through. This is the main reason for title searches/insurance, which will help eliminate these types of problems at closing.

A title search should reveal all possible liens against the property. The insurance will cover they buyer if there is something the title search missed. If there is still a second mortgage, then the bankruptcy discharge papers will be needed to clear the lien.

In most cases like this, a chapter 7 bankruptcy is used to eliminate all the debt except the mortgage, so the buyers probably don’t have to worry about it. But there will probably be some extra paperwork involved to make sure the bankruptcy is discharged and the debt is eliminated.
References :

March 5th, 2010 at 1:55 am
.3
Dark Green Money

If the home actually goes through foreclosure, all junior liens are removed.
But if you’re buying on the courthouse steps, tread lightly, senior liens will remain. It might be the HELOC foreclosing, you’d be stuck with a home with a 1st and a tax lien still stuck to it.

The bankruptcy only had to do with an individual and their personal liability for these debts. To the buyer of a foreclosure, that is irrelevant.

Bought REO, you could get title insurance and be assured clean title.
References :
http://www.bkworker.blogspot.com/

March 5th, 2010 at 2:11 am

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