It’s a disturbing, but very serious question. Depending on the state and other factors, after foreclosure the lender may be able to sue you for the difference between what you owed on the mortgage and what they sold your home for. An awful prospect if you couldn’t make the payments to begin with and now you have lost your home. Some states have “anti-deficiency” laws that offer protection from these lawsuits under certain circumstances.
If the lender forecloses on your house and sells it for less than what you owe, the difference is called a deficiency. Unless prohibited by your state’s laws, the lender can sue you for the deficiency and go after your personal assets. This is called a deficiency judgment. If your home sells for what you owe or more, you have no deficiency and the lender cannot sue. You are in the clear.
Will I Really Be Sued?
If your state allows it, there is a chance that the lender will sue you for the deficiency, but it’s not guaranteed. Many lenders choose to write off the loss rather than spending money on a lawsuit to try and get money out of someone who probably doesn’t have any way to pay them since they couldn’t make their mortgage payments in the first place.
What Should I Do?
Talk to an experienced attorney in your state to find out what the possibilities are based on your state laws and your circumstances. Anti-deficiency states typically have conditions on the protection they offer. For instance, protection may only apply if it’s the home you live in, not one you own but rent out. Most do not protect you on second or third mortgages.
If you are facing foreclosure, please contact an experienced foreclosure attorney in your state right away.