If I “give” my home back to the bank/mortgage company, can they come after my investments or car to collect on the loan?

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If I “give” my home back to the bank/mortgage company, can they come after my investments or car to collect on the loan?

I have paid well over $130,000 on a home that’s not even worth $100,000. I will never make money off of this place and I don’t intend to live there any more. I can’t sell it, and don’t know of any options other than giving it back to the bank.

Asked on April 26, 2012 under Real Estate Law, Wisconsin

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Before you decide to let the bank foreclose on your home, you need to consult with a real estate attorney to determine whether or not the loan that you have on the unit is purchase money or not. A purchase money loan is the original loan that a person gets when they get the home they have.

Under the laws of most states in this country, a lender cannot foreclose on a purchase money loan secured by a home and then sue the borrower for any deficiency owed on it.

Likewise, if you sell the home which may not be subject to a purchase money loan in a short sale, some states such as California by statute will prevent a lender from suing the borrower for any deficiency on the loan.


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