Millions of homeowners have found themselves unable to pay their mortgage and facing foreclosure. Millions more can still pay the bills, but owe so much more on their home than it’s worth, they’ve considered simply walking away.
But walking away from a mortgage may not be that simple. First, there’s the obvious impact on your credit history. Those late payments, delinquencies, and defaults will stay on your credit history for years, making it harder and more expensive to borrow.
And, depending on your lender, your exact situation and the state where you live, you may even more to worry about if your house is auctioned off.
“The lender can come back and hold you responsible for a deficiency, which is basically the loss that the lender has on the loan. The amount they’re not getting paid. If they foreclose on the property.”
-Dan Humbert, Real Estate Lawyer
Again, depending on your exact circumstances and location, it’s possible that the lender can sue you if they lose money when they sell your house.
“Even if you don’t have that much in the way of money, if you have a weekly paycheck, your weekly paycheck could still be potentially at risk if you have a judgment against you.”
-Dan Humbert, Real Estate Lawyer
Most banks today aren’t pursuing judgments, even if they’re legally entitled. But that can change. And it’s not their only option.
Even if they decide not to pursue a judgment, they could sell your loan to someone who will, like a vulture fund or collection agency. Then they could come after you.
Bottom line? The decision to walk away from a good debt gone bad isn’t as easy as it may seem. So before you make it, talk to a pro… think it through.
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