Foreclosure, what exactly happens when you owe more than your house is worth?

Question

What happens when you owe more money than your house is worth. Ex. You owe 200k on a house, the house is worth 100k in the market, if you foreclose on the house and the bank sells the house for 100k, do you still owe the other 100k or does the bank take the loss? Can the bank come after you for this? If your mortgage is current, how long does it take until you hit the foreclosure period and kicked out of your house?

Answer 1

there are clauses in mortgages that tell you that....what you may be looking for in the paper work is a "forclosure with appraisment" if that is in there you may be ok on paying the difference.

Answer 2

There are actually companies that will work with you for free to buy your mortgage away from your mortgage company and avoid your foreclosure. I would advise looking into this first. Try http://www.speedyrealestate.info. Good luck!

Answer 3

The lender CAN pursue litigation to recover the shortage, and will do so if they discover that you have other substantial financial assets.

Once you stop making mortgage payments, a time frame of 90 days is typical for a lender to initiate foreclosure proceedings.  Depending on your state, another 90-120 days may pass before you lose the house to the bank.

Answer 4

When the foreclosure occurs in court, the difference you are required to pay is called a deficiency judgment.  It is the "loss" in value that you will almost certainly be required to pay the lender after the foreclosure sale.

I would check your loan documents for TILA errors to determine whether you can rescind the loan (return the loan for a refund).  See http://www.foreclosure-fight.com  

Answer 5

The bank will sell the house for the amount left owing on the mortgage plus any fees it incurs as a result of the foreclosure.  These would include the attorney's commission, filing fees, publishing in the paper, etc.  If you owe 200k on the house and it forecloses, it will be sold for 200k plus the above mentioned fees.  

If your mortgage is current, how long it takes until the foreclosure begins depends on the lender.  Usually it's several months, then the foreclosure process itself takes several more.  Altogether, there is usually about 6 months between that first foreclosure letter and when you have to be out of the house.