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Posted by Stacy on February 23, 2005 at 16:14:51:
In Reply to: foreclosure question/what happens to the money owed? posted by chris from memphis on February 23, 2005 at 13:20:42:
In doing some research I found this law. It depends on your state and how you signed. Some loans can come back on you, some can't.
Some states have anti-deficiency laws which protect purchasers of residential real property used as his/her primary residence pursuant to a purchase money mortgage. In the event that the purchaser fails to make the mortgage payment and the property is foreclosed (title taken by the lender through a legal procedure) and sold to pay the mortgage, a deficiency between the sale price and the outstanding balance of the mortgage could occur. Under anti-deficiency laws, if the mortgage is a purchase money mortgage for the purchase of a dwelling occupied by the purchaser, the purchaser will not be held responsible for any deficiency - the lender can only recover the property and the proceeds of a subsequent sale - the purchaser does not pay any deficit between the sale proceeds and the outstanding loan balance.
Anti-deficiency laws typically provide no protection for non-purchase money mortgages (such as a second mortgage obtained after the original acquisition) and there is no protection when the property is not used as the primary residence of the purchaser.
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