What happens if I stop paying on my house and let it get forclosed on even ifI have money in the bank?
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What happens if I stop paying on my house and let it get forclosed on even ifI have money in the bank?
I owe more on my house than it is worth and I have been thinking about moving. Is it OK to stop paying the mortgage payment and saving the money instead or will they come after the money in the bank?
Asked on November 15, 2011 under Real Estate Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
In the majority of states, the lender is entitled to seek what's called a "deficiency judgment." That is, once the house is foreclosed on, it will be sold (e.g. at auction; or in a private sale, with the bank the owner). If the proceeds of the sale, less certain costs of the foreclosure and sale, is not enough to pay off the remaining principal balance of the loan, the bank may sue you for any amounts remaining unpaid.
There are a few states which do not allow deficiency judgments, so you should either consult with a local lawyer or repost your question with your specific state identified.
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