Your biggest liens are likely your mortgages (assuming you have two or more). Generally, If they can't be paid off with the funds from the foreclosure sale - the lender has 90 days (in NY) to seek a "deficiency judgment."
Deficiency Judgment- Generally, a judgment for the amount a homeowner owes the lender after a house is foreclosed upon and sold by the creditor for less than the actual amount still owed.
You would basically be sued again for the shortfall after the foreclosure sale. This may or may not happen. Your current financial state will be a large factor in the lender's decision whether to pursue a deficiency judgment or not.
The good news is that a deficiency judgment, and many other judgments, are dischargeable in bankruptcy.
Now, I think you should consider contesting your foreclosure. I just got a foreclosure stayed today. I hope to get it dismissed, or force the lender to do a loan modification. Worst case we file a chapter 13 bankruptcy.
I suggest you consult with an attorney to determine what would work best in your case.
Watch this NYSBA video when you get a chance: http://184.108.40.206/peopleslaw/SaveYourHome.htm
Additionally, here are some options for those facing foreclosure :
1. Do something:
-Call the lender and try to arrange a loan modification, refinance, short sale, or Deed-in-Lieu of foreclosure.
-Loan Modification- A Loan Modification is a permanent/temporary change in one or more of the terms of your mortgage loan. Ideally, this will result in a payment you can afford. (You can do this yourself).
-Short sale- A sale of a house for less money than is owed to the lender. Ideally, the lender agrees to accept the proceeds of a short sale and forgives the rest of what is owed. (You will likely need the help of a R.E. Broker & a R.E. Attorney).
-Deed-in-lieu of Foreclosure- (May only be available after a failed Short Sale attempt). Ideally, the lender accepts ownership of the property in place of the money owed on the mortgage. (You will likely need the help of a R.E. Attorney).
-Consult with an attorney regarding:
-Foreclosure Defenses- Such as a Lack of standing, TILA violations, RESPA violations etc.
-Bankruptcy- Such as Chapter 13- which is a type of â€œreorganizationâ€ used by individuals to pay all or a portion of their debts over a period of years using their current income. The most important thing about a chapter 13 case is that it may allow you to keep your home if you can make the payments which the bankruptcy law requires to be made to your creditors.
2. Do nothing:
-Walk away OR
-Stay in your home until you get evicted.
-Pay or go calculator: http://www.payorgo.com/
All the best,
Robbie L. Vaughn, Esq. (Robbie Vaughn)- Long Island, Brooklyn and Queens Real Estate & Bankruptcy Attorney.
Broker/Owner of Bayview Estates Realty of Long Island.
No Attorney-Client, or Broker-Client relationship is formed until we have a signed agreement. This is not legal advice. Please verify any and all information provided to you.
MJ Peterson Real Estate
The First Mortgage or Superior Lien Holder is Paid Off.
If there are funds remaining, then the Second Lien Holder is Paid Off.
Then the Third, and so forth, until the money runs out.
Bear in mind, that in addition to Mortgages and Home Equity Loans, there may be Unpaid Property Taxes, IRS Tax Liens, Mechanics' Liens, Legal Fees, Homeowners or Condominium Association Liens, Zoning Code or Building Code Violation Fines, and other Financial Claims against the property.
The Court (maybe a Judge, or perhaps a Clerk of Court or other Official, depending upon the State) will usually determine who is "First in Line" to get paid.
If there is money left over after the Liens and Court Costs are paid off, any remaining balance usually goes to the former owner (the person who was foreclosed upon).
If there is a Shortage (not enough money for all Lien Holders, Plaintiffs, and Claimants to get Paid), then the owner who was foreclosed upon may face Civil Lawsuits, Judgments, Garnishment of Wages or Seizure of Other Assets by Government or Tax Authorities, and other continuing efforts to collect the Unpaid Debt.
*** It is imperative that anyone who is facing Foreclosure seek the Counsel and Advice of an Attorney ***
"Contact Legal Aid service for advice if you cannot afford an attorney".
We (Real Estate Brokers) are quick to advise people to see an Attorney,
but we need to remember that many people heading into Foreclosure are at the end of their financial rope. They may not have the $210 per hour or the $2500 retainer fee or other amount that Attorneys charge.
Robbie L. Vaughn, also great post, and way more meaningful coming from an Attorney.
Best wishes to you all.