With few exceptions, homeowners who lose their properties through foreclosure behave responsibly. As we’ve noted, though, foreclosure can be emotional, especially for individuals already experiencing personal or financial stress. Some individuals are tempted to trash their homes and/or neglect basic maintenance and protection. Behaving vindictively can result in fines or even criminal charges. The lender or trustee might even decide to sell a damaged, run- down property for a lot less than what the borrower owes. You want the home to be in optimal condition, so that it will sell in foreclosure for the greatest amount and reduce your debt as much as possible.
DEFICIENCY JUDGMENTS
Following the foreclosure sale, whether the property is sold as an REO or to a new individual owner, the courts may grant a deficiency order against you if the sale price fails to cover your mortgage balance. For example, if your mortgage balance was $370,000 and the house sold for only $350,0000, the lender could ask the court’s authorization to collect the $20,000 difference from you.
POINTS TO REMEMB O REMEMBER:
• If you are in default of your mortgage, your lender — or the lender’s trustee — will schedule your house to be sold to the highest bidder at a public auction. • If a third-party bidder does not purchase the property, its ownership reverts to the bank or other lending institution, who will most likely attempt to sell it in a liquidation auction or by other means. • You will ultimately be required to vacate the house. If you persist in staying there, you and your possessions will be 30
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