foreclosure question?

Question

if i let my house go into foreclosure will the banks garnish my wages? Please help. I have no one else to ask for advice.

Answer 1

Let me try to correct some things for you...

When you bought the property, you signed two pieces of paper; an IOU and a lien. The IOU was your promise to repay. The lien gave the bank the right to go after your home to recover the amount you borrowed should you not repay the loan as agreed upon.

You did not repay as agreed upon, so the bank exercised it's lien and foreclosed upon the property. The bank sold the property to offset the debt.

If the property sold for the amount of the debt plus the costs of foreclosure, then the IOU will be paid in full and the parties go their separate ways. In most states, if the bank has money left over after all associated debts are covered, that money goes back to the homeowner.

If the home is not sold for enough to cover the debt, the next step is for the lender to collect from any Mortgage Insurance Company that may have insured the loan. This is why you pay PMI if the LTV is over 80%. If the insurance coverage is enough to pay all the debt, then the matter is settled. However, if there is still an outstanding amount owed, the lender can still go after the borrower for payment. Banks rarely do this, but it is within their rights to hound you until the debt is paid.

For some reason people believe that foreclosure means the debt is retired. It doesn't. "Wiping out the lien" does not mean the debt is retired, it just means the lender has lost the collateral for the debt. The debt is now an unsecured debt, like a credit card, instead of a secured debt, like a car note or mortgage.

Answer 2

The collateral the bank attached is your house you purchased. Unlike car dealers that after selling a car and fail to get the loan amount now can file against the owner for full payment, I have not found this to be a troubling thing in the real estate field.

The banks try to make good decisions before lending money,s that this will not happen.

If the property that is in foreclosure reaches the bid or sale the minimum bid is the mortgatge note that is owed on the property.

If the property fail to sell at the sale or bid then the bank retains the property and place it back on the market at full market value with a real estate broker.

I doubt very seriously if the lender will come after you personally for any type payment. If they do get a real estate attorney and take them to court because the only thing they asked for collateral was the house and nothing else.

Call and speak to the Loss Mitigation department of your mortgage company. Check out some of the options listed below.

Why don't you contact the lender and work something out with them like a deed-in-lieu or foreclosure. You simply turn the property over to them with this procedure.

You might try a short sale, you sell the house based on a little criteria the lender will have, they will send you a package of things they require.

If you want to keep the house tell them you want to get a forebearance agreement. This procedure will allow you to keep the house with the pack payments and any fees going into a 2nd mortgage. Now you will have 2 mortgages. One the original mortgage with the same payments. The other is your back payments and an agreement you make with the lender as to how much you can pay back on these back payments.

I hope this has been of some use to you,good luck.

"FIGHT ON"

Answer 3

Garnish your wages? No, I sincerely doubt it. The foreclosure proceeding removes the property from the lien and wipes out all subordinate liens in the process (with a few exceptions). If the property does not sell for the amount owed, then they might be able to come after you personally, but it will not be in their best interest.

You do have someone to ask. Call the foreclosing attorney and find out what else you need to know. They shouldn't be jerks about it, as it is just a business for them. They represent the bank, but none of the information is "top secret."

Best of luck

Answer 4

Great answer CJ! CJkat is totally correct. The bank can exercises it's legal right in obtaining the full funds owed. period! Well done!

Additionally, a forbearance agreement is not a 2nd TD, but rather An agreement by the lender not to exercise it's legal right to foreclose. instead an agreement is drawn up whereas the borrower and lender agree to a payment plan that will cure the borrowers delinquency. Typical agreements may be additional monies on top of the PI monthly payment for a set period of time or sometimes larger payments for a shorter period, and in some rarer cases, the loan is re-amortized at 30yrs and the arrears moved to the back of the loan...this method is extremely rare.

Answer 5

Answer: Not usually.

They have the ability to go after you in most cases due to the agreement you signed (recovery); however, since they sell foreclosures through auctions, they usually are able to recover most of the money they've invested in the house and won't come after you.

As for garnishing wages, they would have to get a separate case (another lawsuit) to do that and I doubt they'll spend more money on doing so. For more in-depth information on how foreclosures work and how people buy it to make money (from you in this case), see the book below.