I'm going into foreclousure. Do I still owe the bank money if they take my house and sell it in the auction?

Answer 1

I am a certified Mortgage Planner:

I am sorry for your situation - it doesn't really help to know you are not alone, but there are some solutions for you (which I will detail below). The quick answer to your question is simple.

You are responsible for any funds not recovered through any sale, theirs or yours.

But there are some things you need to know:
1. If they sell it for less, they will attempt to collect the difference through whatever means are available to them. Filing bankruptcy can stop that cold. (But what a bad way to stop something like, a foreclosure and a bankruptcy on your credit report assures you no new mortgage for a couple of years at least.)

2. If you choose to sell it - which you can. And you sell it for less in what is called a short sale. You can stop them from collecting the deficit by using verbage on the Purchase Agreement that you use. BUT they can and will 1099 you for the deficit at the end of the year. Which means you could potentially owe the IRS for that money which is now income. If the amount is large, that could be a problem, but there it is. You would need to get with a tax advisor to discuss that issue.

Now, if you want to keep your house - fight for the darned thing! There are ways you can do that. The bank doesn't want it. There are so many properties that they are ending up holding them. You can try several things:

1. Modification with the current lender - call them, talk to them. If they won't help, try this

2. ACORN.org they are a non profit group that is set up with many of these lenders. They can help you save your home. If you can't get anything out of your lender I would try this.

3. Try to refi if you have equity, doesn't sound like that may be an option, but it is one of the things you can try. The rate might be crap right now, but it buys you some time. Find a mortgage planner - not just a loan officer to help you with this. It should be more affordable for you.

4. Find a private investor to buy it and lease it back to you on a Land Contract or Lease Option. Maybe even a family member could help.

I absolutely wish you the best in this and want you to know that someone is praying for your situation.

If you would like to talk or get some more questions answered, please feel free to contact me anytime.
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Answer 2

Depends.

You might have a "no recourse" mortgage. Most of us, though, do not. If the auction brings less money than you owe on the mortgage, you owe the difference.

Depending on the property, you can sometimes find someone who will pay off the mortgage to buy your house. You'd prefer that, and so would the bank, but if you're "upside down" as you suggest, it's hard to find someone to do this.

If you owe a deficiency and you haven't any money, the bank may end up writing it off. Talk to your banker and see what you can work out. Foreclosure is a real pain for them, and they'd like to do whatever is possible to avoid that. If nothing else, ask them if you can do anything voluntarily that will save them legal expenses.

Answer 3

The only correct answer here is: It Depends.

If your mortgage is written "without recourse" then you will have no obligation to the bank after the foreclosure. The house is the ONLY security in a non-recourse mortgage.

If your mortgage is written "with recourse" then the bank can go after you for any shortfall.

Read your mortgage agreement carefully. It will state somewhere whether it is "with recourse" or "without recourse." In at least on state, California, all purchase money mortgages are without recourse. If you refinanced and took any cash out of your home's equity only that portion of the mortgage is with recourse, the entire balance of the mortgage is without recourse.

With a non-recourse mortgage, you are guaranteed of getting a Form 1099-C from the lender if the final sale didn't cover the outstanding balance. (That's also true with a recourse mortgage if the lender decides to write off the debt without collecting it.) That "Cancellation of Debt" may be treated as taxable income to you by the IRS depending upon the facts and numbers. You can also avoid the tax on the COD if you are insolvent at the time of the COD. You are insolvent if your liabilities exceed the FMV or your assets at the time of the COD. Consult with a qualified tax advisor for full details on the tax implications of a foreclosure.

Answer 4

Likely the bank will sell it to a purchaser who will get a very favorable price. The bank does not want to hold onto the house, so they sell it at a below market price. Depending on your mortgage balance, the fees and costs of the foreclosure and the balance in yyour escrow account, you could end up owing the bank.


why not sell the house yourself? You still have time.

Answer 5

acually, possibly. If at sherriff sale, a bid is not made to cover the amount you owe, they will take highest bidder. And you will be held responsible for the balance. Typically that doesnt happen but.. 1/5 it does. And remember this is going to be on your credit forever. Have you thought of talking to the loss mitt dept at the bank? Thier entire job is built on helping you get out of foreclosure.
ask about a 1. modification (takes the back pymts you owe and places them at the end of the loan.. you just have to prove financial hardship)
2. short sale (place your home on market..if you get lower offer than what you owe..bank will eat the rest)
3. deed in leui (house on market for 3 months then simply turn over to bank. it's a voluntary reposession..looks better on cbr)
**depending on your state, you could be in foreclosure for up to 3 years. (except MI...3 months) So look into it.

**Good luck and be nice to the bank and they will be nice to you... they get a bonus if you can KEEP your house**

Answer 6

Yes! Banks are not in the business of owning or selling homes and they do not like to foreclose on property because it's expensive and they usually lose money. They must prepare the home for sale, hire a real estate agent to sell it, and until it's sold, it remains a non-producing asset on their books. The lending institution would rather take a loss on the home than have it remain on their books as a non-producing asset. More than likely they sell it below market price and Charge you for the balance of the loan.

Answer 7

it depends on how much you owe, and how much the home sells for. If the bank can see it for enough to cover your debt, then no, you won't owe anything.
But, if the sale of the home does not cover the debt, then yes, the bank will more than likely try to stick you with the balance left over. Check with the bank to see what their policy is

Answer 8

Why aren't you fighting to keep it? You have wasted every dime you put into it, and your credit will have a black mark on it. Call 888-995-hope to see if they can help you.

To answer your question, no, only if they can not auction it for the amount of the mortgage. Anything over that you would technically still owe.

Please fight for this. It's your right to own your own home. Don't give up.

Answer 9

they are in a position to repossess the vehicle out of your locked storage in the event that they have notified the community police and you have refused them get admission to to the motor vehicle. they are in a position to no longer sell you domicile or garnish your Social secure practices or 401-k plan. they are in a position to attach financial organization debts, garnish your wages (in the adventure that your State enables it) and report liens on the different belongings you would be able to very own like vehicles, boats, land and properties. they might desire to first take you to courtroom and get a judgment, yet they are in a position to do it. this variety in case you sell some thing that they have got placed a lien on they are going to be paid from the proceeds after any first lien if there is one is paid. upload this to the actuality that while they sell the vehicle at public sale for much less then it quite is properly worth they'll come when you for the soundness plus all expenditures for the repossession, storage, towing, interest, reconditioning and attorneys. this would volume to a number of thousand funds. All of this could teach on your credit for the subsequent 7-years making it purely approximately impossible to get the different sort of non-public loan without making huge down funds, paying huge expenditures and State maximum expenses of interest.

Answer 10

Nope. They are hoping to get what was left on your balance by selling your house.