When a house is foreclosed on, is the owner of the house still responsile for the balance of the mortage?
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When a house is foreclosed on, is the owner of the house still responsile for the balance of the mortage?
Asked on May 27, 2009 under Real Estate Law, New Jersey
Answers:
B. B., Member, New Jersey Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
Ordinarily, yes. If the foreclosure sale by the sheriff doesn't cover the loan and the costs of the foreclosure, the lender can apply for what is called a "deficiency judgment" for the balance. The former owner of the house should get notice of this before it happens, but there usually is not any way to stop it.
Sometimes, a lender is willing to accept what is called a deed in lieu of foreclosure, where the lender accepts the title to the house as full payment of the loan, in consideration for not having to follow the entire step-by-step process of getting the foreclosure judgment, having the sale, etc. It usually means the homeowner has to move out much sooner.
If you are in a situation like this, please have an attorney in your area review all the facts of your case. He or she may be able to negotiate something like a deed in lieu, if that is in your best interests, and advise you of all your options. One place to look for counsel is our website, http://attorneypages.com
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