Can mortgage companies or mortgage insurers go after IRA, checking, or savings accounts, if you go through foreclosure, short sale, or deed in lieu?

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Can mortgage companies or mortgage insurers go after IRA, checking, or savings accounts, if you go through foreclosure, short sale, or deed in lieu?

I have PMI insurance and live in FL. I am not behind yet but cannot continue to afford to make my mortgage payments. Considering my options.

Asked on May 28, 2011 under Real Estate Law, Florida

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

In most states, FL among them, mortgage lenders can go after borrowers for what is a called a "deficiency judgement" if a house is sold for less than the remaining balance on the mortgage (plus certain costs/fees).  However in a short sale or transfer by deed in lieu, a lender can waive their right to a deficiency which means that it cannot later try to collect on any amounts owed.

In a case where a lender has not so waived its rights or a foreclosure has taken place, a borrower may be pursued for a deficiency, and if a judgement is obtained against them certain assets may be seized.  Among these most bank accounts.  However certain assets may not be taken because they are "exempt". As a general rule an IRA is such an asset.

This is just a basic summary. The fact is that this can all get somewhat contusing and complicated, so you should consult directly with a real estate attorney as to your options.


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