What will the bank do if the value of the borrower’s home will most likely not satisfy the mortgage?
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What will the bank do if the value of the borrower’s home will most likely not satisfy the mortgage?
Will the bank take the small value of the home and go away? Or will the bank do more? The bank is experiencing its own troubles and is being sued by the borrower for fraud?
Asked on September 6, 2011 under Real Estate Law, Maryland
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
If the loan secured by a trust deed or mortgage on a piece of property is current then the borrower will continue making the monthly payments until the loan is paid in full. However, if the borrower stops making the monthly payments, the lending bank could initiate foreclosure proceedings upon the security for the loan where the secured property could be sold at auction.
If the loan is "purchase money," meaning the loan was used to acquire the property, and if the state where the property is located has anti-deficiency statutes, then the lender will not be able to pursue the borrower for any deficiency judgment if the home is foreclosed upon.
If the lender is being sued by the borrower for fraud concerning the loan, the dispute will either settle or go to trial.
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