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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4 Comments on Can they go after your bank account in foreclosure?

Paulette Patterson @ 8:03 pm:

I just wanted to say I am losing my home to foreclosure on July15th and i have tried every thing possible to keep my house.,from hope line to short Sale I was denied.I was in my home for 15years made payment on time.But I think my mistake was filing bankruptcy whne i retired not on my first mortgage but mys second in order to pay the 1st mortgage. I found out I have a ballon loan which I don't remember knowing that when I refinanced.Suntrust wnated me to refinance but they couldn't help me.I even kept paying whn they said i was in default.I have moved on to a rental home since then.But I am distruaght because no one would help me, not even Suntrust. thats the reward I got for keeping my mortgage paid up.One slip up with not knowing about about a balloon loan and I was screwed.Thanks for listening.

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Dragonfly Daddy @ 11:54 am:

My friend has decided not to make mortgage payments and allow the house to go into foreclosure in order to save inheritance funds and simply walk away from the house in foreclosure.

My question relates to bank accounts held by my friend. Can the bank go after bank accounts once in foreclosure?

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