Foreclosure : When a home is sold by the bank for more then you owe what happens to balance?
Question:
Answer:
It goes back to the owner of the home. Since it's a sale, any proceeds will be used to pay off the mortgages and other liens first, then any amount above that goes back to the former homeowner, just like in a regular sale.
The homeowners own the asset, so they get the full value of what that asset sells for, and the bank gets the portion of the proceeds that cover the loan they gave on the asset. But they aren't entitled to extra profits if the asset sells for more than their calculated loan payoff.
The big difference is that, with a sheriff sale, there is no real closing to go to, as the property is just auctioned off. So, if the house sells for more than what was owed on it, the homeowners have to contact the county courthouse to claim that money and (ideally) go and pick up their check.
But the bank only has recourse to the amount of the loan that they were owed. They can't profit from a sheriff sale, which is why they jack up the fees, interest, and miscellaneous charges until the original balance has increased by several tens of thousands of dollars.
And the courts don't inform the homeowners of the extra money, since that's not really their responsibility -- they just handle the sale and legal proceedings. It's up to the homeowners to ask where their sale proceeds are and then claim them.
Hope that helped.
ForeclosureFish
http://www.foreclosurefish.com/...
bank keeps it.
Once your home is in foreclosure, it means you've defaulted on the loan so the bank has taken possession of it. They keep all monies from the sale, regardless of the loan balance.
http://www.buyinghome.org/foreclosure-pr...
If the house sells for more than the loan, the excess must be returned to the borrower.
And that's the law!
Theoretically the borrower would then be due a refund. The thing is, foreclosed houses rarely, if ever, sell for more than the balance owed. There are several reasons: If there were much equity in the home, the owner would never have let it be foreclosed in the first place. The bank/lender commonly sells the home at a below-market price to an affiliated company or insider.
Foreclosing on homes is a dirty business, do not get anywhere near it unless you are a seasoned real estate investor and/or attorney.
The bank keeps it.
The surplus funds go to the homeowner, unless there are other liens on the property, such as a 2nd mortgage or judgements. Those are paid off first and the former homeowner gets anything left over. Banks are not allowed to take more than what they were owed.
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