Your House Forclosed And You Think You’re Off The Hook- Think Again
In America’s suffering economy, it is all too common that a house goes into foreclosure and the amount due on the mortgage is more than the price that the house was sold for. This balance that remains is called deficiency and it leaves mortgage lenders at a loss for words.
And even though the fact that you can agree with the mortgage lender or bank to sell the house for less, these institutions may still want to be paid what is owed. Certain factors might increase one’s risk for this unfortunate situation including credit history, other assets owned, and liens such as second mortgages.
This dilemma is especially important to the new group of homeowners who are choosing to walk out on their houses despite being able to afford payments. This is known as the “strategic foreclosure.” The belief of the people that do this is that it is better to pay rent at $1,000 than $3,000 on a mortgage every month.
Obviously, the mortgage lenders are not big fans of these strategic foreclosures. Not surprisingly, they are ramping up their efforts to get back the money that is owed on these houses. The main targets? Homeowners who are only slightly behind on home payments.
Banks and mortgage lenders don’t have to address this issue right after the house is foreclosed and then sold. It is actually in their best interest to go after the money years after the fact. It is much more lucrative for them this way, because once someone recovers from financial failure and their credit goes up, there is more money to be taken.
Collection companies will collect on amounts starting at $25,000 or more. To avoid deficiency judgments, always take a look at the paperwork. Never sign anything that says anything about remains being owed and have the mortgage lender release any more obligations on the mortgage.
Mallory Megan is employed by a debt collection agency. She also writes stories on business and finance, consumer spending and collection agencies.
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