Do I have to make mortgage payments while my house is in Foreclosure?

Many times clients ask if they should or have to make mortgage payments while they are in foreclosure. The answer is the bank (that is suing for foreclosure) will not accept payment while the case is pending. However, if you have a 2nd lien or a home equity line of credit, it is probably wise to go ahead and continue making those payments. For example, if the foreclosure action is dismissed because you were able to work out some type of modification with the bank, and you are in default to your 2nd lien holder, that entity could foreclose on the property. When you took out the 2nd mortgage or the home equity line of credit, you used your home to secure or collateralize that debt. When you miss payments, they could legally look to foreclose on that collateral. It may not be in heir best interest to foreclose (because they incur filing fees and other costs) because the 1st lien holder is the party that gets paid off first. In this economy, its rare to have equity after your first loan is paid off.

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