What happens after ur home forecloses in California? Does the lender garnish wages to recover the loss?

Does the mortgage lender garnish ur wages when payments has not been made for several months? R u taken to court? What exactly happens when a person’s property forecloses? I know the person’s credit gets hit significantly, but what else? Thanks in advance!

By | 2013-08-25T17:21:45+00:00 August 25th, 2013|Mortgages Home Loans Interest Rate|1 Comment

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  1. Peter August 25, 2013 at 5:27 PM - Reply

    That depends on the type of loan you had, and how the lender foreclosed. In many cases, the lender’s only remedy is to foreclose, and the lender may not thereafter go after the borrower’s other assets. In two situations the lender has no remedy other than foreclosure: (1) when the lender forecloses nonjudicially (i.e., by power of sale rather than taking you to court and having the court order a foreclosure), and (2) when the loan proceeds were used by the borrower to purchase a 1-4 unit residential property that is the borrower’s principal residence. In those two cases, the lender can foreclose, but has no personal claim against the borrower. In other cases, the lender can proceed against the borrower for the difference between the amount received at the judicial foreclosure sale and the amount of the debt. Usually, however, the lender doesn’t do this. Why? Because it is too much effort for too little money. Sometimes the lender will proceed personally against a borrower. In that case, the lender must make a motion to the court to obtain a deficiency judgment and must prove that the value of the property was less than the amount of the debt. The lender can then obtain a personal judgment against the borrower equal to the lesser of (a) the difference between the foreclosure sale price and the amount of the debt, or (b) the difference between the fair market value of the foreclosed property and the amount of the debt. If the lender obtains a deficiency judgment, it has the same remedies as any other judgment creditor, including the right to garnish the borrower’s wages. I emphasize, however, that this is very rare for residential foreclosures in California. Usually, the lender forecloses nonjudicially and walks away.

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