Can a bank come after my wife for the negative equity in the sale of a foreclosed house?
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Can a bank come after my wife for the negative equity in the sale of a foreclosed house?
My wife and I live in GAand are negotiating the purchase of a new home. The house will be financed in my name alone. We have not decided on if we should put her name on the deed. My wife and her ex-husband had a house which he was awarded in their divorce. He was ordered to sell the house and pay her “x” amount upon sale. The house never sold. Instead, it was foreclosed on in the past year. Once the house is sold by the bank, can they come after my wife for the negative equity? Could they put a lien on our new house, even if she is not on the paperwork? What measure can we take to avoid these actions?
Asked on August 6, 2011 Georgia
Answers:
M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
From what I am understanding about your wife's prior situation the house that she and her ex-husband owned was foreclosed upon and there was a deficiency that resulted (the house sold for less than the mortgage), correct? Then if she was still on the mortgage when it was foreclosed the lender can indeed come after her for the deficiency and obtain a deficiency judgement against her. She may be able to , in turn, sue her ex husband for the money under their divorce agreement (it is a contract) but I would seek legal help with regard to that. The bank, once it has the judgement, can attach assets as permitted under the law in your state. I am fairly sure that filing a lien against the new property would be an avenue that they could pursue. Get help. Good luck.
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