Sale Price

• Even if you lose your home through a foreclosure, your mortgage lender may not be able to recoup all the losses that arise from your unpaid loan balance --- for instance, your home's value may have dropped. When this happens, your first mortgage lender gets paid first, and your second mortgage lender only receives the money left over. The second mortgage holder may not get anything at all, giving them the incentive to collect the debt.
  
  

Judgment

• To collect the debt, the second mortgage holder has to start a lawsuit and obtain a court judgment against you. The amount of the judgment is usually equal to your outstanding loan amount, plus any interest, legal fees and other charges. It can amount to hundreds of thousands of dollars, according to MSN Money. You may receive the bill years after you lost your home in a foreclosure, when you may not even remember the debt anymore.
  
  

Collection

• With a money judgment, your second mortgage holder can obtain a court-issued order to demand that your employer send a portion of your pay to your second mortgage lender. The lender can then simply provide the local sheriff or marshal with a copy of the court order and wait until your employer gets it. At this point, you will receive a notification of the garnishment from your employer, who must withhold up to 25 percent of your pay and give it to your second mortgage holder.
  
  

Likelihood

• Only about half of the states allow mortgage lenders to conduct wage garnishment. Other states place restrictions on mortgage lenders seeking judgments; and two states, North Dakota and Oregon, prohibit judgments altogether. A second mortgage holder is more likely to pursue a judgment and garnish your pay, according to MSN Money. A second mortgage lender is less likely to get full repayment from foreclosure sale proceeds, and state laws often provide less protection from second mortgage lender judgments. However, your second mortgage lender may decide not to garnish your pay because of the costs involved and the bad public relations.