Minnesota Anti Deficiency Law states: judgments are restricted to the fair market value of a foreclosed property less the unpaid balance of the foreclosed loan.
How does this work if you have a 1st (Primary) and 2nd (Home Equity) lender and the estimated value of the home is greater than the unpaid balance on the 1st loan
1st Loan $115K
2nd Loan $34K
Estimated Home Value $139K
You'll need to be sure about which mortgage is being foreclosed (the first or the second) and which type of foreclosure is actually being performed. In Minnesota a mortgage company can use "Foreclosure by Advertisement" or "Judicial Foreclosure" ... if "Foreclosure by Advertisement" is used then the mortgage company has foregone the right to any deficiency, but a deficiency judgment is available when "Judicial Foreclosure" is elected. If the 1st mortgage is foreclosed then the 2nd mortgage lien is wiped out, but the obligation to pay on the note still exists. The homeowner will likely eventually get sued on that 2nd note, which can lead to wage garnishments, bank account levies, etc.. You should at least look into a chapter 7 bankruptcy to sever all of your legal obligations on the mortgages.
I offer a free consultation if you would like to discuss your options.
Very best regards,
Errin P. Stowell
Stowell Law Firm, LLC
350 St. Peter Street, Suite 224
St. Paul, MN 55102
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.