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Forty-one states and the District of Columbia permit lenders to sue borrowers for mortgage debt still left after a foreclosure sale.
Banks and other lenders increasingly go to court to obtain deficiency judgments against former homeowners when foreclosure sales of houses don't bring enough to cover the full amount of the mortgage.
Christine Paluch's profile photoAlister Macintyre's profile photo
I will list this in my 101 reasons why it is good not to own a house.
If we have a car loan, and it gets repossessed because we were not able to keep up with the payments, it is then sold, and the bank can sue us for the difference between balance on loan, and price at auction. Usually this is not a big deal unless it is a new car which got demolished in an accident, without adequate insurance. It could be a big deal in the future if the financial industry plays the same kind of securitization inflation game which they have been playing with real estate.
+Alister Macintyre I don't own a car either.
To be honest, I was one of the few people who was very skeptical of the whole buying a house and that housing was a good investment.
+Christine Paluch While this particular reason only applies to home owners with a mortgage they still paying off, it can also happen to someone who owns their home free and clear, because some banks invent mortgages which were never signed by the current home owner.
+Christine Paluch Ok, note the "Under Water Mortgage" graph on this page
It shows in which states, home owners are at greatest risk of this happening to them, due to the mortgage value being much higher than the resale value. The original article indicates that in some states, the banks are much more aggressive pursuing this.
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