Who know what happens to your 2nd Loan in a SHORT SALE.??
It all depends on what the short sale acceptance letter says. The road to a completed short sale is long and frustrating. There are contracts that come in on your home, then contracts that fall away, the bank ignores offers, so on, so on, so on……
But once you can get a buyer and the bank to agree then the road becomes much more clear. The bank’s short sale approval letter will spell out what type of release the 2nd loan is issuing. Is it a “release of lien” meaning they will release the lien on your home? They will often pursue the homeowner for the difference between what the 2nd Loan amount is and what they are being paid at closing from the 1st loan
ie. 2nd loan amount $50,000. The first loan agrees to pay the 2nd loan $5,000. There is a remaining balance of $45,000.
the 2nd loan can then pursue the homeowner for that difference through a judgment, wage garnishment, or collection agency. Good news about going the short sale route is that you can control the outcome by trying to have the bank release that remaining loan balance.
If you walk away they will always typically pursue for the loan balance. You then don’t have a choice.
Compass Realty Services
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