Is Foreclosure the End of my Mortgage responsibility?
Often I'm asked what happens after foreclosure, do you still owe money on the mortgage or does the sale cover your debt. What about legal fees and court costs? The real truth may shock you.
Your bank wants something on their money, so when they sell at auction they get what ever they can. Selling your house costs money, the bank wants that back too. Rarely does a property sell for more than the loan value.
Very often you'll find repair or service charges, legal fees, and other mortgage related expenses. Even after your house sells in foreclosure you are still responsible for any remaining balance plus legal fees. Very often you'll owe just as much after the house is sold as you did before it went into foreclosure.
You can be sure the bank gets as much of the principle as they can as quickly as possible, then goes after you for the rest. Even after the auction I was still responsible for the remaining mortgage value.
It is possible for them to write off the difference, in this case you only owe taxes on the amount. This mean now you're in a world of hurt because you owe the IRS taxes on money you never did receive.
Unfortunately, I'm telling you this from experience. This debt was sold into secondary collections and I was tracked down a year after the foreclosure. But more on that later, the simple answer is "even after foreclosure it's likely you'll still owe someone something."
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