If my home was foreclosed on last year and was then sold at auction for less than the amount owed on the mortgage, am I liable for paying the balance?

UPDATED: Sep 30, 2022

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If my home was foreclosed on last year and was then sold at auction for less than the amount owed on the mortgage, am I liable for paying the balance?

Now a company l is trying to collect the balance and I want to know if I am obligated to pay this or any amount and if I don’t pay it will it stay on my credit report?

Asked on January 27, 2016 under Real Estate Law, Texas


B.H.F., Member, Texas State Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

You have a couple of different issues/concerns:
First, if a house sales for less than is owed at a foreclosure sale, then you are still liable for the balance. 
Second, the foreclosure is already on your credit report and will remain on there as long as the reporting period remains active, which is usually 7 years.  You can only get things removed from your credit report that are inaccurate or false. 
It's a bit disturbing that the mortgage company or collection agency is purporting that any payments will 'relieve' a stain on your credit... because that stain is already there and will remain there for at least 7 years.  You will owe the money until you pay it... but paying it doesn't improve your credit history.  They can't promise you something that they can't deliver. 
So... you do need to send in some payment(s) for the residual that is due.  However, before you make any payments, make sure that you invoke your right to ask for verification of the amount that is actually due. 
Second, you need to arrange for any attorney to review the documents that you are being requested to sign.  You probably have a judgment against you with a certain interest rate.  You do not want to accidentally agree to a higher interest rate by signing documents that you don't understand.  Do not give them your account information until you have (a) proper verification and (2) a clear understanding of what you are agreeing to.

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