After foreclosure, you might still owe your bank some money (the deficiency), but the security (your house) is gone. So, the deficiency is now an unsecured debt. One of these documents was a promissory note, in which you promised to repay the mortgage debt to your lender.

Can a mortgage company sue you?

A few types of creditors can garnish your wages without first obtaining a judgment, but mortgage companies and private lenders do not fall into this category. That means your mortgage lender will have to sue you and get a money judgment before it can garnish your wages.

Who pays deficiency after foreclosure?

1. How much is your home worth? Regardless of your state’s deficiency laws, if your home will sell at a foreclosure sale for more than what you owe, you will not be obligated to pay anything to your lender after foreclosure. Your lender is obligated to apply the sale price of your home to the mortgage debt.

What happens to the remaining debt after a foreclosure?

When a borrower loses their home to foreclosure and still owes their lender money after the sale, the remaining debt is usually referred to as a deficiency. Lenders can sue to recover this amount. For example, if you owe $500,000 on your mortgage and can no longer afford to make payments on the note,…

Do you have to pay a deficiency judgment after a foreclosure?

Regardless of your state’s deficiency laws, if your home will sell at a foreclosure sale for more than what you owe, you will not be obligated to pay anything to your lender after foreclosure. Your lender is obligated to apply the sale price of your home to the mortgage debt.

Can a lender accept a loss on a foreclosure sale?

If the foreclosure sale does not generate enough money to satisfy the loan, the lender must accept the loss. Some states that have anti-deficiency legislation qualify it by only making it applicable to seller-financed or “purchase-money” mortgages. North Carolina is a good example.

What happens if you don’t make your mortgage payments?

If you’re in foreclosure, it usually means that you aren’t making your loan payments. If the bank is able to get everything it’s owed for your house through the foreclosure process, your responsibility for the loan will end. If you owe more than your house is able to be sold for, then you run the risk of being subject to a deficiency judgement.