I Gave a Friend a Loan and he Used Equity on his Home as Collateral, Now that the Property is Foreclosed What Should I do?

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“A friend of mine borrowed $10K. The collateral for this loan was the equity in his house, however, his house has been foreclosed on now. I have a legal Loan Document signed by him. Besides a copy of the Loan, what other documents do I need to file at the local court house in order to file a claim to try to get some money back from the sale of the property? Deed of Trust? “Intent to Lien” form? “Intent to Redeem” form?”

[NOTE: Articles and answers on DearEsq., while written and published by lawyers, do not constitute legal advice, and no attorney-client relationship is formed by your reading of this information. You should always consult with an attorney for any legal situations.]

As a general rule, when a senior loan is foreclosed (I assume the mortgage was in place before your loan), the junior lien holders are out of luck. However, foreclosure laws are detailed and complex, so it wouldn’t hurt to do a little investigation. Start by contacting whoever is doing the foreclosure.



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Author: House Attorney

A house attorney has answered this question.

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