How does a foreclosure work?

[ilovebabies]

Hopefully we don't have to go there if we can keep our head above water, but if we can't, it's a very real possibility for us.

What happens with a foreclosure? You don't just get to walk away from the house, right? Do you have to file bankruptcy?

Just wondering what exactly what our responsibility would be and how to make the process as smooth as possible, if that's possible at all.

[maciascl]

I think it is a little different in each state. What state are you in? I'd love to hear from anyone willing to share their story that has gone through it.

[PenelopeJune]

I'm hoping someone will chime in here with their story. I see foreclosure as almost inevitable for us in the next few years, although we're hanging in here as long as we can.

How do you find out if your loan is a non-recourse loan? Where in the paperwork will it say that?

[annethcz]

Originally Posted by PenelopeJune

How do you find out if your loan is a non-recourse loan? Where in the paperwork will it say that?

I was under the impression that you negotiate a non-recourse loan with the bank during the process of shortselling/forclosure. I don't think it would state this in the original mortgage paperwork.

[ilovebabies]

I've been doing a little research on this. For those of you who are wanting to know, just google your state and then "foreclosure laws" Like "Texas foreclosure laws". That's what I did and it was pretty thourough.

One thing I read about my state anyway is that when the home finally goes up for auction (chances are you'll still be living there because you don't have to leave until all is said and done and you can even wait until the sherrif evicts you. All of this could be a 6 month or more process). Anyway, once the house goes up for auction, if it doesn't sell for what you owe, then you are still responsible for the difference! Your lender can come after you for that difference just like if you owed it on a cc or something. So if your house sells for $20,000 below what you owe, you're responsible for that! You could always file bankruptcy of course but if you don't, then they will come after you for it in whatever way they legally can. So, this is NOT a good option, especially if you know you won't get what you owe. Yikes!