Do you owe money after a foreclosure?
Question:
Answer:
If the property does not sell for what is owed plus all the fees, expenses, etc added on top, yes you are responsible for the difference. What is called a deficiency judgement would be entered
Deficiency Judgment
A deficiency judgment is an order by the court, after the law day or sale date, that says that you still owe money to the lender.
In a strict foreclosure, if, after the law day, the property is worth less than your total debt to the lender, the court will enter a deficiency judgment against you. The amount you owe will be the difference between the total debt and the value of the property. A deficiency judgment following a strict foreclosure requires a separate hearing, and you have a right to be present and argue against the deficiency. The plaintiff is required to present testimony by an appraiser or an affidavit signed by an appraiser regarding the value of the property. You can hire your own appraiser to counter the plaintiff's appraiser, or you can simply ask questions of the plaintiff's appraiser to show that his or her conclusion of value is in error, or you can testify as to the value of the property.
In a foreclosure by sale, if the auction brings in less money than your total debt to the lender, then the court will also enter a deficiency judgment. The amount you owe will be the difference between the total debt to the lender, and net proceeds of the auction sale, subject to a discount that the law provides where the sale price is less than the appraised value.
no.
It all depends on your lender, most of the time if the property sells at auction or as an REO, and its less than what you owed, they will put a judgment on you for the difference.
I have been in the real estate field since 1978.
Normally once a foreclosure is complete and the property is sold or not sold that is final.
There is a possibility that a lender can issue a deficiency judgment against you, I have yet to hear of a lender taking such action.
Most lenders will only lend a certain percentage of what the property is worth, so when they do get property in a foreclosure there is equity.
Say a house is valued at $250,000, a lender will normally lend only 80% of that value making the loan $200,000, so there is a built in equity of $50,000.
So in answer to your question, it is a possibility, but I doubt very seriously that a lender will start any procedures against you for additional money.
I hope this has been of some use to you, good luck.
"FIGHT ON"
In most foreclosure situations that end up going to sheriff sale, the house does not sell for as much as the homeowners owe on their mortgage. Frequently, sheriff sale prices are far below the market value and far below the total payoff amount. One reason for this, of course, is the enormous fees, interest, and charges that lenders add to the payoff. However, under certain circumstances, if the house doesn't sell at sheriff sale for the amount that is owed, the lender is able to sue the former owners for a deficiency judgment. The deficiency judgment is usually the difference between the sales prices and the amount that was owed on the loan, plus the regular costs of suing someone.
In reality, though, banks almost never sue their former clients for a deficiency judgment. In all of the time that we have been working with homeowners in foreclosure, no bank has ever sued the homeowners if they lost the house. So, in most cases, foreclosure victims who do not come up with a solution to stop foreclosure do not have anything further to worry about after the foreclosure is over. Most homeowners in this situation are preoccupied with the task of finding a new place to live and repairing their financial lives. But the lenders do not act out of compassion for the homeowners when they decide not to pursue another lawsuit.
This is because it is simply not worth the extra time and effort for the bank to sue for a deficiency judgment when they are aware of the fact that the homeowners went into foreclosure because there was a significant financial hardship that either severely decreased income or raised expenses. Having an extra judgment against homeowners who have gone through the foreclosure process will not get the mortgage company any more money, and it will only cost them more to proceed with the legal process. Foreclosure is expensive and often results in a loss to the bank, and pursuing the deficiency will only contribute to the loss, in most situations.
So the possibility of a deficiency judgment it can be a danger for homeowners living in states where such practices are allowed, but banks rarely sue for the former homeowners. The very circumstances that led them into foreclosure will act to protect them from being sued for even more money. Obviously, this is small consolation to homeowners who have faced financial ruin and are just now beginning to pick up the pieces of their lives, but at least the mortgage company that proceeded with the foreclosure will not stick the foreclosure victims with another negative mark on their credit and another bill that will eventually need to be paid.
Rich homeowners that own many assets and have a lot of cash are in danger of being sued for a deficiency judgment. However, this describes very few actual foreclosure victims, who are often dealing with job loss, medical issues, or the sudden increase in the mortgage payment. These homeowners, who have faced a serious financial hardship, will not be targeted by their mortgage company for an additional lawsuit after the foreclosure process has ended. Of course, this is only because avoiding the deficiency judgment is in the lender's interest, but most homeowners have very little to worry about from their former mortgage company in terms of being sued for the difference between what they owed on the mortgage and what the house sells for at sheriff sale.
Hope that answers your question.
ForeclosureFish
http://www.foreclosurefish.com/...
More Related Questions & Answers...