What Happens to the Mortgage After the Foreclosure?
September 11th, 2009
Foreclosure is a complex problem to deal with and inevitably you will be left with questions. One of the most common involves the resolution of the mortgage after the foreclosure sale is complete. The purpose of the foreclosure process is to allow the bank to take possession of the home in order to sell it to satisfy the outstanding mortgage. If the home sale does not cover the full cost of the mortgage then the bank has the option to sue the borrower for the remaining balance.
In many cases the bank will not bother to pursue a lawsuit over the balance unless it is a large amount. This is because the lawsuit itself can cost the bank more in legal fees than it is likely to collect. If you find yourself in such a situation you may want to work with your bank to come up with a repayment plan in order to salvage a portion of your credit. A typical foreclosure costs a lender $100,000 and then they are not likely to want to add to that tab.
It is also important to note that the borrower may find a significant tax bill as a result of the lender writing off the balance of the loan. This is because the government will consider the write off as income for the borrower and will tax that income accordingly. This is rather like adding insult to injury for someone who has just endured a foreclosure. Anyone entering into a foreclosure should do plenty of research and know all the options.
- Bouncing Cheques Issued by Title Companies Lead to Foreclosures
- Increase in Foreclosures Prompting Class Action Legal Suits
- Avoiding Foreclosures by Walking Away From Loans are not Without Problems
- Foreclosure Assistance Being Taken on Tour by Housing Advocate
- Washington Mutual, the Symbol of the Foreclosure Crisis, Continues to be in Trouble
- The Consequences of not Paying Mortgages Can be Grim
Related Posts
Posted in
Foreclosure |
2 Comments »
Comments
2 Responses to “What Happens to the Mortgage After the Foreclosure?”
Leave a Reply
Search
October 22nd, 2009 at 2:48 pm
[...] American economy is in deep trouble. With unemployment reigning high, people are faltering on mortgage payments. Hence, foreclosures are at an all-time high. Now banks are at the center of action what [...]
October 29th, 2009 at 1:04 pm
[...] free-for-all partying, allowed shady characters with criminal background to join hands with mortgage agents and appraisers of property. Houses were bought and sold at the drop of a hat – this being [...]