Homebuyer walking away when house price down, net equity zero ..

joyfulguyAugust 10, 2007

... in most cases will be in for a surprise.

When the bank repossesses, then advertises the property for sale, if the value has gone down even farther, and they sell it for less than is owing ...

... they'll usually chase to buyer for the difference.

Suppose the mortgage was for $140,000. and they end up with $120,000. net on the sale, after the costs involved ...

... they'll be telling the former owner that s/he owes them $20,000.

ole joyful

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Chemocurl zn5b/6a Indiana

I know of someone who had a similar situation, but it was with a car.

It was repossessed out of their drive in the night. Months later they were hunted down to pay the difference between what was owed and what the finance company was able to get out of it. The person who had had it repossessed sure didn't think this was 'right' since they no longer even had the car...but then again a lot of what they 'thought' wasn't right. They asked a friend if they 'had' to pay it. Friends reply was that they should pay it, or end up being sued for it.

Sue

    Bookmark   August 10, 2007 at 4:59PM
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Chemocurl zn5b/6a Indiana

I just love this Maxine funny and thought it appropriate of what some folks 'think' they know when making so many bad financial decisions.

    Bookmark   August 10, 2007 at 5:11PM
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cmarlin20

Many purchase mortgages are non recourse.
Here in CA all purchase mortgages for owner occupied homes are non recourse. There is no liability.

    Bookmark   August 11, 2007 at 12:35AM
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saphire

In other states it would depend on what the homeowner could negotiate or what the loan documents say. Negtiation is important as is knowing your state law. Also any other debt would be unsecured (unless the loan says otherwise and it served as additional collateral). So the bank would have to go after it through the courts, it would not be automatic. Since the homeowner is already underwater, it would be beating a dead horse

    Bookmark   August 12, 2007 at 12:36AM
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saphire

This originated with Cramer on CNBC, please note he is a graduate of Harvard Law School. More importantly, CNBC has in house attorneys which while I would assume are not happy with this advice, did nothing to retract it

    Bookmark   August 12, 2007 at 12:38AM
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