Does the mortgagee still owe for the house when it is foreclosed on?


Quick Answer

After foreclosure, it is possible in some states that a mortgagee may owe the bank what is called a deficiency judgment. As NOLO explains, this is the difference between the amount the lender gets on a foreclosure sale and the balance owed on the original amount of the home loan.

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Full Answer

According to NOLO, some states only allow non-recourse loans, which means the lender is not legally able to seek additional judgment after foreclosure. If your state does allow recourse after foreclosure, the bank must file a separate lawsuit from the foreclosure process, before it can collect on the outstanding balance of the mortgage. The legal website NOLO explains that because of the costs and often moderate potential gains, many lenders do not take this route. Therefore, the odds of still owing after the foreclosure are minimal.

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