Wednesday, December 21, 2011

Can the bank go after my assets if my home is foreclosed upon?

Question: I own a second property that is under water. If the house is foreclosed on can the bank pursue any other assets that I have?

Response: If the house is foreclosed upon, the bank can get a deficiency judgment (the difference between what the bank recovered at a sale and what was owed) against you from the court and then try to go after your assets to try to satisfy such a deficiency. If you know in advance that you will not be resisting the foreclosure action taken by the bank, you might want to consider doing a deed-in-lieu of foreclosure, whereby you voluntarily transfer the deed of the property to the bank and they release you from any financial obligation to them. The bank will usually agree to a deed-in-lieu after you have tried other types of loss mitigation options, like a short sale. In a short sale, you would sell the property to a 3rd party at a fair market value but for less than is owed to the lender. Please note that unless a short sale is properly negotiated with the lender, there may be tax consequences to you as a result of a short sale. The banks typically prefer a short sale over a deed-in-lieu because they do not want be the ones then responsible for selling your home. If you can show to the bank that you tried to do a short sale but failed, they will consider a deed-in-lieu.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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