Many people believe that simply because they have lost their home in foreclosure that their financial worries are now behind them. Not so fast bucko.
If a lender has taken a loss on a property that was foreclosed on they can go after the consumer for the amount due after the foreclosure. This is why I often suggest that people that have had a foreclosure or short sale should contact a bankruptcy attorney and talk about terminating any future liability for the lost home with a bankruptcy.
The Washington Post reported yesterday that more lenders are deciding to go after consumers.
Over the past year, lenders have become much more aggressive in trying to recoup money lost in foreclosures and other distressed sales, creating more grief for people who thought their real estate headaches were far behind.
Before the housing bust, when the volume of foreclosures was relatively low, lenders seldom bothered to chase after deficiencies because borrowers had few remaining assets to claim and doing so involved hassles and costs.
Those who had a second mortgage, such as a home-equity line of credit, in addition to their primary mortgage may find themselves particularly vulnerable, especially if they tapped into the equity line for cash.
Second lenders are last in line to get paid when a distressed property is sold. There’s usually little or no money left over for them, making it more likely that they will pursue large deficiencies, several attorneys said. – Source: Washington Post