Is it true that in foreclosures the bank can only sell the property for the amount of the loan?
Question:
Answer:
Laws vary state to state. The bank is not always legally bound to return the money. In many states you need to actively petition the bank to return the money.
This is the source of a big scam. Here's how it will work. You owe $50,000 on a house worth $200,000. Someone approaches you and says I'll give you $10,000 to help you move and get set-up in a new house and I'll take care of the foreclosure. Believe it or not some people are so ignorant of real estate that they see it as getting out from a $50,000 debt with $10,000 in the bank.
The buyer simply asks that you transfer title to them.
When the house goes into foreclosure and is sold for let's say $180,000 (10% less than fair market value). The bank gets paid their $50,000 plus expenses and the thief who convinced you to transfer title petitions to have the balance returned to them.
So the thief nets 180,000 less 50,000 that paid off the mortgage less the 10,000 they paid the seller ;ess any expenses to sell the house, or somewhere north of $100,000.
Beware!
It is depends on the area where you live, the laws vary from state to state. If you owe $50,000 and your property is worth $250,000. The bank will put your property up for sale by auction. If the auction price fetches only $190,000 then the bank will take the $50,000 that you owe them along with court cost, the cost of seizure of the property, any commisions for the sale of the property and the legal papers involved, if there is some money left at the end of this then the bank is leagaly bound to turn it over to you. Most of the time there will be very little left.
Hell no. They'll sell it for the best price they can get so as to recoup their investment.
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