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will the lender go after your bank accounts in foreclosure?

It seems my last resort is go into foreclosure. I have liquid assets in the bank, another property. Will the lender go after my assets?

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi photon!

If your property is foreclosed, the lender will try to recover the debts by selling it. But, if there is a deficient amount, the lender may ask you to pay it off by filing a deficiency judgment against you. If you cannot pay, he may place lien on your other property or can even garnish your wages. As far as I know, bank accounts are not even exempt from the liens. Normally retirement accounts are exempt from this.

It will be best if you can speak to an attorney and check which assets are susceptible to a deficiency judgment laws.

You have mentioned that your last resort is foreclosure. Did you try the different methods to avoid foreclosure?

Thanks

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

garnishment of wages and attachments to savings accounts are probably the last things on any lender's corporate mind when it comes to foreclosures.

i am quite certain that your assets and your paychecks are safe.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I live in the weird State of SC ....am not sure my wages and assets are out of their reach....? :(

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi RonY,

As far as I know, garnishment of wages and assets are not allowed in South Carolina. However, garnishment of savings account will depend upon your state laws. You can consult an attorney and take his opinion regarding this issue.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I live in California and may be facing foreclosure due to a lay off. Can the lender go after my savings, checking and CDs from another institution? If so, how can I prevent this?

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

not to worry.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Our rental house got foreclosed early part of this year , currently due to job loss , we already missed a month mortgage on our second house, we are planning to surrender the property to the lender, will the lender go after our savings and other assets? How bad will this affect our credit score, having one house being foreclosed and another one is on the process of shortselling ?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I own a condo in SC. It's a second home. Big Banks have reclassified the property as Sub Prime, so now only cash buyers can buy there. This has crushed the value of the condo. I put about $80k down and now it's about $60k underwater. If I stop making payments, how likely is it they will go after me? I live in MI.

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi jj,

If you stop making the payments on your loan, your current lender will foreclose your property to satisfy the mortgage lien. Since the property is underwater, there will be a deficiency from the foreclosure sale of the house. The lender will have the right to come after you for the deficiency. If you fail to pay off the deficiency, they may seek a deficiency judgment against you. If they forgive the deficiency, you will not have to pay it off. However, in that case you will be liable to pay tax on the cancelled debt. But you can claim exemption from taxes under the Mortgage Forgiveness Debt Relief Act 2007, which applies to debts discharged in the years 2007 through 2012.

Hi Guest,

[quote:38026b390f]we are planning to surrender the property to the lender, will the lender go after our savings and other assets?[/quote:38026b390f]
Are you going to surrender the property to the lender through a deed in lieu? In that case, the difference between your mortgage balance and the property sale price will be forgiven. The lender will not come after you for this deficiency. However, this will affect your credit scores negatively and you will not be able to qualify for a new loan for at least the next 2 years after the deed in lieu. If another of your house is going to be short sold, you will be liable for the deficiency and your credit scores will also get affected adversely.

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marklavender1's picture
marklavender1 | Joined: September 13, 2009 01:45 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Better you approach your mortgage lender for DIL / Short Sale. at the same time you need to think about your another home as well. is it mortgage free ? or you can make monthly payments as usual.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My husband brought a vacation home last year, I owned my house before we got marry. Can't afford two houses, can I short sale my house or foreclose. My name is on his title to his house. What would happen to his place .......would the bank put a lien on it.....thanks

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi cin,

If your lender pursues a judicial foreclosure on your property, he can obtain a deficiency judgment against you. The judgment will allow the lender to garnish your wages or to put liens on your other properties. Since your name is on the title to your husband's house, the lender may put lien on it. However, the lenders generally use this option as their last resort. I think you should try out the option of deed in lieu of foreclosure. Chances are that the deficiency, if any, will be forgiven by the lender.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To prevent a foreclosure you must consider a shortsale
* You are in control of the sale, not the bank.
* You may sleep better at night knowing who is buying your home.
* You will spare yourself the social stigma of the "F" word, foreclosure.
* Contrary to popular belief, you can be current on your payments and still effect a short sale.
* Your home sale will be handled like any other home sale.

You are out of the debt and then you can rent for a while while you repair your credit and buy another home. During your shortsale you will have time to save money and look for a new place to live in peace. Instead of being rushed to move and instead of hindering your credit. There is always a way out.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

this is for george a. I live in california so, you are saying if I short sale a house, they will not go after my bank accounts? Is it ok stop paying the mortgage if I plan to short sale, how to I answer the bank once they start callling me for late payment or i mean non payment

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Gigi, I don't pretend to know the laws in California. [b:b01a5d1169]Usually[/b:b01a5d1169] with a short sale, it's up to the lender to decide if they choose to go after a deficiency. There are situations in which they will ask (require) you to sign a promissory note for any deficient amount. That's not to say they will or won't in your case. You are well-advised to speak with an attorney to assist you in this endeavor, and you'll want to get as much information from your lender as they can provide to you about how they conduct short sales.

If they have you sign a promissory note, for example; and you default on the terms of that note, they could then seek judgment against you, and that would open up the opportunity to garnish your accounts.

At this stage of the game, however, your bank accounts are not in jeopardy. Their main intent is to recover as much as they can through the sale of your home, and no creditor has a right to your bank accounts unless they have a judgment and you've defaulted on that judgment.

As to whether to stop paying, that's really a decision for you to make, and I can't provide you with any verbiage that will affirm that the lender will allow or disallow it. That, again, is up to how they conduct their short sale business.

I'm sorry to be of so little assistance here. I've not worked in that aspect of the business - been a collector, but that was for consumer debt like personal loans, auto loans, etc.

Continue to ask of others, though; and get some legal advice. You're in for some unnecessary surprises, I would think, without legal advice upfront.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I owe a condo in Seattle. It is under water. I am thinking about not making any more payments and let it go. It is rented but the rent covers about 40% of the monthly payment and HOA's are high. The loan has a PMI, shouldn't that cover the deficiency if I do a quick claim? or just send the keys to the bank?

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Pat,

I've given my suggestions in regards to your query at:
http://www.mortgagefit.com/know-how/about38158.html#163052

Take a look at it. I hope it'll help you.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i reside in nj and i am planing on a short sale my house. will the lender ;00come after my investment property. the house was sold for 630,000.
i put 80.000. as a down payment. today its app. at 300.00.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I believe California is one of the states that lenders cannot file a deficiency judgement against you ...

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Does anyone know if deficiency judgement is possible or happens often in Illinois against one's other rental property, saving account, or investment (stocks) account? Appreciate any help!

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

In case of a foreclosure, the lender can come after you in order to recover the deficiency judgment in Illinois. If you do not pay the deficiency judgment, the lender will file a lawsuit in order to garnish your wages or your savings account.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I own 2 houses in Illinois and financially I cannot afford to keep the 2nd home and I want to let it go. what is the best way to give the house up and not have my bank accounts, CD's effected.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi VW!

Welcome to forums!

You can apply for a [url=http://www.mortgagefit.com/deed-lieu.html]deed in lieu of foreclosure[/url] in order to get rid of the property. If the lender accepts your request, then you will be able to sell off the property and won't be liable for paying the deficient balance resulting from the sale of the property. Thus, the lender won't be able to attach your bank accounts, CD's, etc.

Feel free to ask if you've further queries.

Sussane

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