What are the ramifications of walking away froma mortgage?
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What are the ramifications of walking away froma mortgage?
I have a 40+ year old home with structural problems as well as wet basement and mold. Mortgage was refinanced 10 years ago; bankruptcy in 2003.
Asked on June 27, 2011 under Real Estate Law, Indiana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
1) Defaulting on a mortgage and being foreclosed upon will have a major negative impact on your credit rating and history, and therefore on your ability to obtain credit (and terms, interest rate, etc. if you do get credit).
2) Indiana allows deficiency judgments. This means that if your home is foreclosed upon and then sold (e.g. at a foreclosure office) and brings in less money (after auction expenses) than is required to pay off the amount you still owe under the mortgage, the lender may sue you for any remaining balance. Thus, you could potentially lose the home and still owe the lender money; given what you write about the home and when you refinanced it, there is a good chance that at auction, it would fetch less than you still owe.
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