What are the legal implications of a foreclosure?
Question:
Depends on your state's laws, but generally it means that the lender sells your home at auction and uses the proceeds to pay the loan balance. If there's extra money, the homeowner gets it. If the proceed is not enough to pay the balance, then the lender may be able to get a judgment for the remaining amount owed. The buyer takes the property free and clear of all junior liens, but if the foreclosed lien is a junior lien, then the buyer takes the property subject to the first lien.
Again, some of this isn't true in all states, so you need to check with a licensed attorney in your state. Otherwise, it's truly guessing.
If you lose a property in foreclosure, it will do nasty things to your credit rating. Aside from that, and the fact that you lose the property, generally nothing. In California, there are two kinds of foreclosure: trustee's sale, in which the property is sold at auction, and the underlying debt extinguished regardless of the sale proceeds; and judicial foreclosure, where a court order is obtained, and any deficiency remains a debt of the obligor. Judicial foreclosure is seldom used. One other angle: if the property has multiple liens, foreclosure on any one wipes out any junior liens, but all senior liens remain in place, and the acquirer of a foreclosed property needs to pay them off.
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