When a property is foreclosed on, what are the consequences for the borrowers?

When I married my wife 4 years ago, she owned her own home. Together we purchased our current home. She still has her first house and rents it out. We’ve had nothing but problems with renters and just want to sell it. It causes us constant grief, to say the least. The houses in that area sell for an average of $70,000. We owe $86,000. If we let it go to foreclosure, can they put a lein on our current home?

Asked on October 10, 2015 under Real Estate Law, Illinois


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Most mortgage lenders require borrowers to personally guarantee the amount of their mortgage note. This leaves a lender with 2 choices regarding a foreclosure. They can take back the real estate and, in some cases, sue the borrower personally if the house doesn&rsquot sell for the full value of what is owed.
When a borrower loses their home in a foreclosure and still owes their lender money after the sale, the remaining debt is called a "deficiency". And the lender can sue to recover this amount. If they win a judgment, the lender then can seize or attach the borrower's other property. In your case, for example, a lien can be placed on yours and your wife's jointly owned home, even though you don't owe your wife's lender any money.
At this point, you should consult directly with a real estate attorney in your area as to your rights and/or remdies.

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