Does your mortgage co. come after you if your home is foreclosed?

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I got in on a bad loan with an adjustable rate. My husband lost his job and then we got behind on our mortgage. We have tried to refinance, but can’t because we’ve only been in this house a year and we have a prepayment penalty. We would need too much cash to close. We are now trying to work with our current lender to modify the loan, etc.

Just wondering, if we foreclosed, would they come after us?

Please no smart alec answers! Please don’t take joy in kicking someone when they’re down. I’d like to know from someone who’s actually been through a foreclosure. How was the process?
Elsa….thanks for your kind words! My husband did get another job after a month of looking and I do have a job. His company where he was supervisor moved to Ohio and we chose to not move. The only job he can get so far pays far less than the job he had when we qualified for the loan. We are not refusing to pay the mortgage. It is our first bill we pay each month. It is just hard to pay since we are behind because of the job loss. Also, we were given a bad loan to begin with, which I know is our fault. So, thanks again for the help and kind words. It’s obvious no ill fate has crept into your life……YET. I hope someone is as kind to you, as you’ve been to me! Have a great day!!

7 Comments
  1. Reply
    Alphageek
    May 19, 2011 at 1:14 am

    Unfortunately, yes. If they foreclosed and the home sold
    for less than you owed, they would try to collect the balance. How far they go to do that depends on how much the deficiency is, and how much expense they wish to go to in order to try and recover it.

  2. Reply
    Dizzy_Lizzy
    May 19, 2011 at 1:54 am

    They can come after you, but I think in many cases they’re smart enough to realize that if you didn’t have the cash available when you needed it to save your credit, you probably won’t have it now that your credit has been destroyed – why would they waste money on legal fees if they know you can’t pay?

    What I think is more common is that they report your “gain” to the IRS so that you have to pay income tax on it. Basically, if you owe $ 150K, and your home sells for $ 100K, you’d have to report that forgiven $ 50K as income next year.

  3. Reply
    feilefoo5k
    May 19, 2011 at 2:53 am

    yes, the lender can sue you for what is called the deficiency, the amount remaining on the note after the home is sold at auction. But you may have protections, if your income is very low or non existent, they can’t get blood from a stone. If your lender is not willing to work with you, you can consider a deed in lieu of foreclosure, where you give the house back. make sure if you do this that there is no penalty to you for a deficiency. Additionally, you can consider selling, but that may also expose you to what ever is due above the sale price fo the house.
    Also, you don’t foreclose, the bank does. It’s a lawsuit the bank brings against you to get the house back because you haven’t made the payments.
    In a bankruptcy, you might have protections, and my guess is that the bank is going to be very willing to help you out right now, since the housing market has really crashed.

  4. Reply
    robert w
    May 19, 2011 at 3:12 am

    sorry – yes. along with fees.

    visit dave ramsey.com to learn some of the hard lessons coming ur way and how to aviod them, some what.

  5. Reply
    Elsa D
    May 19, 2011 at 4:02 am

    The short answer is Yes. They gave you money. You spent the money. You even picked your own loan. You still need to repay the money, and will have a hard time buying for several years as you are apparently refusing to make these payments. Your credit is shot.

    Not only should your husband have gotten himself another job, maybe you should think about working as well.

  6. Reply
    Zach
    May 19, 2011 at 4:03 am

    If you’re both back working the lender should be very willing to work with you. The key is to communicate with the lender. I know it sounds simple, but people in foreclosure seem to be scare to talk to the lender, so COMMUNICATE!
    Since you’re both back working, if the lender will not work with you, talk with a bankruptcy attorney about a Chapter 13 (not a Chapter 7).
    Now, if your were foreclosed upon, the lender could win judgement for a deficiency. They could send you a 1099 to report as income. Currently though the government has halted people who have been foreclosed on from reporting it as income. I wouldn’t be worried about if they would come after you – by that point, you could file a Ch7 and wipe the debt away if they got that ugly.
    Good Luck and God Bless with your situation.

  7. Reply
    !!!
    May 19, 2011 at 5:03 am

    Yes. The lender files a deficiency judgement and it goes on the title report and your credit report.

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