Can they go after your bank account in foreclosure?
I hear from a lot of people who are underwater in their house. They owe more than their loans. Some of them have a second mortgage and foreclosure is probably the only solution because they cannot afford their house payments and their equity is negative.
Someone asked if a mortgage company or bank, can they go after your bank account in foreclosure?
The answer to this is valuable to know if you feel you will lose your house in foreclosure.
There are two types of foreclosures. Judicial and non-judicial.
Judicial foreclosure typically is what is done with a mortgage, while non-judicial is done with a deed of trust. The difference between a mortgage and deed of trust is mainly technical. Some states use mostly or entirely mortgages while other states use mostly or entirely deeds of trust.
A mortgage foreclosure proceeding is generally a civil court matter, or judicial foreclosure. A deed of trust foreclosure is generally foreclosed using a trustee sale and does not involve the courts.
Regardless of judicial or non-judicial foreclosure, there are two issues in foreclosure. One issue is what happens to your house. The other issue is what happens to the bank's financial losses.
The foreclosure might mean you lose the house. But the bank still faces financial losses from your foreclosure. In many cases, the bank must take your house back and spend a good deal of money in just getting it back. Then they have to fix it up, market it and sell it. They can easily spend $20,000 or $40,000 on the process of taking your house back and marketing it and selling it. Then, the new buyers may pay considerably less for the house than the original mortgage.
We want to know how and when the bank can come after personal assets in order to recover some of their financial losses.
There is in law a "one remedy" rule that forces the bank to make a choice between judicial foreclosure and non-judicial foreclosure, or foreclosure and suing you in civil court for breach-of-contract. The one remedy that the lender pursues, together with the law in your state, will determine if the lender can pursue you for their financial losses and not just take your house back.
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