After foreclosure, homes go to sheriff’s sale to satisfy the amount owed on the mortgage. Whether you still owe money after the sale depends on a few factors.
Q: My house sold at Sheriff’s auction to my mortgage lender. They have recently sold it, how do I get information that my loan was covered and they were paid in full?
A: We assume you lost your home due to your inability or failure to make your mortgage loan payments. Then the lender foreclosed on your home. With the successful foreclosure, the home went to sheriff’s sale to satisfy the amount you owed.
But before it went to sale, your lender could have made the decision to write off your loan and release you from your obligations under the loan or decide to pursue an action against you for any deficiency on the loan.
Let’s say you owed $100,000 on your loan. If the lender received $75,000 from the sheriff’s sale, the bank would still be owed $25,000 on the note you signed. But if the lender wrote off any amount you might have still owed the lender, you’d be off the hook to have to repay any of that money back. If this is the scenario, and you’re not on the hook for any deficiency, it would be a moot point to know whether the lender received the full amount of the loan on the sale of the home.
On the other hand, if you’re on the hook for any deficiency owed the lender if the home didn’t sell for enough to cover your loan, your interest might be well placed. You can usually find out the value of a sale by reviewing the court records of your case at your local courthouse. You may also find that information on the public records site for your local recorder of deeds office or the office that handles the filing of real estate documents where your home is located.
You can even call the lender and find out if there is a deficiency on your loan or to get a final loan balance from the lender. Again, if your lender wrote off the loan, it doesn’t much matter to you from a legal perspective, but if you’re on the hook for the deficiency, the lender should be able to tell you. In fact, if they tell you, they will probably send the amount owed to collection to get that money from you.
Finally, if you’re still living in the home, you might have to vacate the home shortly as the sale may trigger a process to have you move out and deliver the home to the person that purchased the home at the sheriff’s sale.
If the lender forgives the $25k in the example, isn’t there a tax consequence? I seem to recall reading that it showed up as income. Has that changed?
Joe:
It changed during the Great Recession, and then after. It has been extended a few times, but I think it ended last year.
Ilyce Glink, Publisher
ThinkGlink.com
I don’t think lender will forgive the big amount but nice info
What if the home sold for well above what was owed?
Victor,
Once the mortgage is paid off, then any fees or interest that has accumulated is also paid off. If, after that, there is any equity left, you’re supposed to get it. But, typically there isn’t anything leftover.
Ilyce Glink, Publisher
ThinkGlink.com
What do fees from a foreclosure typically cost? My home was sold in ohio for 113k and i owed 80k. What is the process for me to try to recover funds and is it possible?
Hi Angela,
Typically, Attorneys Fees will be the biggest fees listed in a foreclosure. But there may be other fees as well. The lender will try to recover all of the costs of a foreclosure that it has – not just the amount of money that you owe.
In 2011, we wrote this story about how mortgage delinquency and foreclosure generate fees for lenders during the Great Recession. Lenders may say that the costs of foreclosure drive up the recoverable fees as much as 30 to 50 percent, depending on the price of the home. But they’re in it to make money, not to help you save your home.
What I’m curious about is why you didn’t just sell your home quickly and get out. It looks as though you had equity. If you had simply sold, you might have walked away without having a foreclosure on your credit.
In any case, you’ll have to work with your lender (and maybe hire an attorney) to get an accounting of the costs of your property to see if there’s anything left at the end of the day. My guess is after they charge you for the foreclosure fees and the costs of selling your home (including a broker’s commission), your equity will disappear. I’m so sorry about that.
Anyone else want to weigh in?
Ilyce Glink, Publisher
ThinkGlink.com
If I lost my home to foreclosure in 2011 and it was sold at a sheriff sale, can a lender cancel debt with the IRS in 2017? This happened and now I owe taxes for the cancelled debt.
Kristine,
Cancellation of debt is considered income by the IRS. It’s “phantom” income, because you don’t have any cash to put in your pocket, but income none the less. I know that’s a tough nut to swallow – you’re in foreclosure and now you have a huge tax bill on top of it.
Please speak with a tax preparer to figure out if there is anything you can do to lessen that tax burden and to help you arrange a payment schedule with the IRS that you can live with. If there’s nothing else you can do, and you can’t afford to pay it off, please consult with a bankruptcy attorney to see if you qualify to shed that debt through a bankruptcy filing.
Good luck. Let me know how it goes.
Ilyce Glink, Publisher
ThinkGlink.com
Hi Ilyce, I have had an illegal foreclosure in that I was ahead in the mortgage 28,000 when they put me into foreclosure fast forward to now, Even though they still got a judgement and advertised it for sheriffs sale and then it got sold at the sale back to the same lender and the sheriffs deed went to them that was in 2019. I am still living in the house didn’t know what was going on UNTIL NOW. My house was refinanced and they have the wrong legal description in the mortgage , the foreclosure judgement and the advertisement for the sheriffs sale and now the so called new deed back to the same bank. It’s not my legal description. They have put me throughover ten years of hell and no attorney etc has caught that. I live in Pa. Can you help? 2. Does this mean my house hasn’t sold?.The deed has my parcel number on it but not my metes and bounds nor the square footage.Fed up in Pa.