If a person owns a home worth $200,000 and mortgage debt of $250,000 (due to home depreciation) and the home?
Home Mortgage
He Gone! He Gone! asked:
is foreclosed on, can or will the mortgage lender sue the mortgagor for the difference between what they can sell it at auction and total debt?
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is foreclosed on, can or will the mortgage lender sue the mortgagor for the difference between what they can sell it at auction and total debt?
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February 19th, 2009 at 6:34 pm
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yes. best bet, get two jobs, and pay down the mortgage;
all RE that is located in non dead communities, will go up in value
in 3-5 yrs. What is the big deal?
February 20th, 2009 at 11:58 am
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February 22nd, 2009 at 4:21 am
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They will want all $250k back, so yes.
February 24th, 2009 at 12:21 pm
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Although the lender CAN come back to the borrower for the full amount still due on the loan, in certain instances, that may be changing.
All bets are off because of the bailout. Rather than letting your home go into foreclosure, I would recommend checking with your lender first to see if the loan can be re-structured.
If your lender won’t help, check with other lenders - especially those benefiting from the bailout. I think we will see some relief for homeowners in certain situations.
The ground rules are still being made, so pay attention in the coming months.
February 27th, 2009 at 1:59 pm
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The mortgage lender will sell it for much less than its 200K value and come after you for the rest.
Try to prevent this at all cost. You don’t want to owe a bunch of money and NOT have a house.
February 28th, 2009 at 3:58 am
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Perfect Purple, you and your first answer really go me confused? Isn’t the “mortgage lender” and the “mortgagor” the same thing? If you mean “mortgagee”, as in the dude that borrowed the money, I doubt one would try to sue for differences? You can “sue” for anything, it’s whether you’ve got a chance of winning anything?
I believe in most states, foreclosure, is a sort of state imposed “bankruptcy”? If the home was one’s primary residence, and they’ve got no real appreciable assets, suing is a waste of time? I don’t want someone put in my tax funded jails. You can’t get milk out of a turnip? You try putting a lean on someones small paycheck, then the wife and children become wards of the state. No judge is going to let some “lender” do that?
That’s why lenders are suppose to vet their clients, and their ability to pay back?? Technically, appreciation and depreciation have no legal bearing on debt. You’re suppose to pay back what you borrowed.
Now if you’ve got lots of money or other assets, and you foreclose on me, of course I’ll come after you in court. It won’t be for some auction difference either, but the whole note.
March 1st, 2009 at 7:13 am
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For the last person who answered, mortgagee IS the lender. The mortgagor is the borrower. The borrower is “mortgaging” the house, and as the initiator, is the mortgagor. The lender is the recipient of said mortgage, or the mortgagee.
March 4th, 2009 at 8:42 am
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I do not think so. Mortgages in the US are non-recourse, meaning that once the property has been foreclosed, the lender cannot come after the former owner. That is why some people are just walking away from their homes.
March 5th, 2009 at 10:56 pm
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They will either come after you for the difference, or forgive it and issue you a 1099 in which case you owe the IRS the taxes on the money gifted to you (around 36%) you will also owe local and state taxes on that amount.
March 7th, 2009 at 4:03 pm
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YES! Plus there will be late fees and lawyer fees. They bank will issue a 1099. And the IRS will then tax you on the banks loss.
YOU CAN”T JUST WALK AWAY.
March 10th, 2009 at 2:44 am
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