All homeowners believe that after foreclosure, they will not owe anything to the lender. This depends on the state in which the homeowner is residing. In some states if the lender forecloses the loan and sells the house in an auction, he should be happy with the amount that is collected and will not be able to pursue for any more money. But if the borrower lives in a state where there is non-recourse then the lender can go to court to get the balance. The homeowner should get in touch with loanmoddepot.com for advice before making any move.
What happens to the Money Owed by Homeowner to Lender after Foreclosure?
When the house of the homeowner is lost in foreclosure and there is a balance amount to be paid, this amount is known as deficiency amount. In such cases, the lender has to go to court for the recovery of the amount. Many homeowners find it very difficult when they are asked to pay more to make up for the loan after foreclosure. A large number of homeowners who are left with deficiency judgments turn to bankruptcy to protect their assets. There is always the loan modification consultants who can be consulted for help.
What is the worth of the Home after foreclosure?
If the home was sold at a higher price than the amount for which the loan was taken, the homeowner will not have to pay the excess amount to the lender. The lender can only get the mortgage amount. When the outstanding amount is more than the mortgage amount at the time of foreclosure and the house is sold for less than the mortgage amount in the auction, the deficiency amount may come in for which the lender can go to court.
All states do not allow the lenders to collect deficient amount from homeowners after foreclosure. States that do not allow deficiency judgement are known as non-recourse states.