Can a lender come after me for the balance of a mortgage on a house that was foreclosed on and sold at auction?
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Can a lender come after me for the balance of a mortgage on a house that was foreclosed on and sold at auction?
I received a letter from the mortgagee about the remainder of my home loans that were not covered by the foreclosure sale.They say that they will take me off their books if I paid them $12,000 of the $37,000 that wasn’t recovered in the sale.
Asked on October 27, 2010 under Real Estate Law, Missouri
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
When house is sold for less than the amount remaining on an outstanding balance, that creates a deficit or "deficiency". In most states a lender has a right to sue a borrower and obtain a "deficiency judgment" to collect the shortfall. However, some states including MO, have what is know an "anti-deficiency" statute. This means that typically a deficiency judgment may not be obtained by a lender in a foreclosure situation - regardless of the auction sale price.
Note: These are laws protect purchasers of residential real property used for his/her primary residence pursuant to a purchase money mortgage.
Since I don't know all of the details of your situation you should consult with a real estate attorney in your area.
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