Many people don’t realize this, but there are several laws in place that prohibit your lender from taking advantage of you in a foreclosure situation. Every day, I hear: “My mortgage company just wants my house because it’s worth more than I owe”. In a few cases, this may be true, but legally, your lender must sell the home for it’s fair market value and pay you any proceeds over and above the amount owed. Banks may try and take advantage of the fact that most consumers don’t know their rights when it comes to foreclosure, but we’ll help you understand your rights and hopefully get some money back if you’ve lost your home.
The main issue we’ve seen is when a lender sells the home as quickly as possible, just to pay off the mortgage. They never seem to care about the previous homeowner and the money they are owed. For example, lets assume your home is worth $300,000, but your total payoff is only $275,000. Your lender has a legal obligation to sell the home for it’s fair market value, which is $300,000. This would mean you would get $25,000 back. What usually ends up happening is the bank accepts the first offer they receive of, lets say, $250,000, then they sue the home owner for a $25,000 deficiency judgment.
In a case where the bank should be paying $25,000 to the homeowner, they end up stealing the home and an additional $25,000, due to their refusal to sell the home at its fair market value!
If you are in the process of having your home foreclosed on, or if you have already lost your home to foreclosure, then it’s imperative that you know the current market value of your home. You may be owed thousands of dollars, in the event your home is, or was, sold for less than it was worth. There are many cases where previous homeowners have gotten settlements in excess of $50,000! Understanding your rights and the laws when it comes to facing foreclosure is probably one of the best ways of avoiding foreclosure altogether. If you didn’t understand your rights and you were taken advantage of, there is a chance you can get your home back, or at least sue the lender for their misconduct.
The best way to determine your home value is to is to get a full appraisal from a local, qualified appraiser. However, this can be somewhat costly, since you are/were facing foreclosure and it’s hard to justify “throwing good money after bad”. My recommendation is to get a BPO or Property Valuation from a qualified source. Our website can provide you with a good local recommendation if you need one. I do not recommend using an online service that offers a free value, because they are rarely accurate and do not take the condition of the home, or improvements into consideration.
Ultimately, if your lender broke the rules when foreclosing on your home, or sold the home afterwards for too low of a price, then you need to take action. We can not just sit back and let the lenders get away with breaking the laws and taking advantage of helpless borrowers. Take action today and force your lender to answer for their wrongdoings!