2nd Mortgage Options and Liability

Posted by Gary on April 27, 2008 at 13:28:07:

First lender foreclosed with a balance of 120K on the loan. The 2nd
mortgage holder initially stated they would foreclose but now has
opted to take legal action to collect the full amount of the second
mortgage; 35K. The appraised value of the property was 175K when
the 2nd was taken out. The holder of the 2nd has a new appraisal for
125K. The first mortgage holder issued a 1099a for 2007 tax season
stating the value of the foreclosed property was 175K. This
determination was independent of the first appraisal. What are my
options and is the 2nd mortgage holder able to get a judgement for
the full amount even though the loan was based on the appraised
value at the time of the loan and was secured by the property?

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