You may still owe money after a foreclosure or short sale

If your home sells at foreclosure for as much as or more than what you owe, then you will not owe money after foreclosure. You will only owe money after foreclosure if you owe more on the mortgage loan than the fair market value of the property.

A short sale is the sale of a property for less than what the owner still owes on the mortgage. A short sale is an alternative to foreclosure when a homeowner needs to sell and can no longer afford to make their mortgage payments. The lender agrees to accept less than the amount owed to pay off a loan now rather than taking the property back by foreclosure and trying to sell it later.

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By short sale, if you mean, you have not sold it for as much as you owe on your mortgage, then yes, you still owe the bank the money to pay off your original loan. If we could all just short sell.

After the short sale is completed, your lender may call you or send letters stating that you still owe money. These letters may come from an attorney’s office or a collection agency and will demand that you pay off the deficiency.

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What If a Mortgage Company Accepts Payment After Starting a foreclosure? mortgage lenders are in the business of accepting your payments, not refusing them. However, after missing several payments, you may reach a point when your lender stops accepting payments, rejecting your efforts to bring the loan current.

In some cases lenders never go after the unpaid money, or deficiency. But homeowners going through the short sale process are in some cases being asked to sign promissory notes that they will pay back the money.

If you still owe money on your loan after either a short sale or a foreclosure, whether you still owe the lender that money will depend on where you live. Also, this is the type of deficiency that can be discharged in a bankruptcy if you choose not to keep your house.

If you lose your home to foreclosure, you still might owe money to your lender.. A short sale or deed in lieu of foreclosure might also result in a deficiency.. bank may file a lawsuit after the foreclosure seeking the difference between the sale.