Answer:  - It depends on what you agree to as part of the payoff. This is where you need to make sure you ADD to the payoff letter that the $2500 is for “full satisfaction” of the loan. See there are 2 types of payoffs. 1 is a “release of lien” which means you pay the mortgage company $2500 and they retain the right to still come after you for the deficient amount. The other payoff is a “satisfaction” which means “paid in full” – they give up their right to come after you for the deficient amount (which is called a deficiency judgment). All they can do is 1099 you for the amount lost of which you can file form 982 and in most cases claim insolvency and negate the 1099. If it was your personal residence, with Obama’s new laws in place, you may not have to pay anyway. So whatever you do, please please please get the satisfaction. Sometimes if they don’t agree to a satisfaction of loan, you’ll just have to pay a little extra more to get that piece of mind.

Answer: -If your home has a first and second with the same lender, Countrywide, it’s almost treated like it’s one loan.  If they send it through foreclosure, they’ll probably start at just what’s owed on the first and hopefully get someone to bid on it…If no one bids then they’ll end up with the property.  Then they’ll probably write off that 2nd in which they could file for a deficiency judgment but more than likely they will 1099 you for that amount they lost and you’ll have to pay taxes on it.  As for the property taxes, they’ll have to pay those in order to sell it to an end buyer.

Answer: -You haven’t made a payment in two years and you own the home outright beside a small line of credit…You are crazy for not making that payment unless the home is not worth what you owe on the home equity line of credit.  No they can’t evict you…yet!  Once they foreclose on the property they can evict you.  I would try to get something worked out quickly especially if you have a great deal of equity in your home.

Answer: –  Yes, the 2nd can and most likely will foreclosure on your home, even if it’s the same lender because you are not meeting your obligation to them.  It’s just a matter of time. You might try to do a Loan Modification especially if your 1st and 2nd mortgages are with the same lender

Answer: –  California may be one of the few states where they don’t come after you for a deficiency judgment.  If your home is foreclosed on, typically they will 1099 the borrower for the amount they lost. However, VA loans have special exceptions. With VA loans, I believe they may have the right to come after you for the deficiency judgment. You may want to check with an attorney in California on this, but it seems like that’s what I remember.

Answer: -Your home equity line of credit (HELOC) gets wiped out if no one bids.  Then, typically your 2nd lien holder will 1099 you or file for a deficiency judgment. It’s more common to receive a 1099.

Answer: Yes, if the line of credit is secured by the property in foreclosure. Most homeowners have a home equity line of credit that takes a 2nd lien position on their home.  If the home is foreclosed on by the 1st lien holder and no one bids at the auction, the 2nd is wiped out, and the bank has the option of issuing a 1099 to the homeowner or filing a deficiency judgment against them.  In most deed states, including California, it’s very uncommon for the lender to file a deficiency judgment.  If you know what you are doing, there are things you can do to prevent a deficiency judgment altogether so it’s never an issue.