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Foreclosure

  • 11-02-2013 11:40pm
    #1
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭


    I know this has been abolished here but when it's done in the States is it 'foreclosure' in same sense as was available here - e.g. all equity is extinguished?


Comments

  • #2
    Predalien
    Closed Accounts Posts: 946 ✭✭✭Predalien


    Yep, all right of action for the debt is extinguished and similarly the right of redemption of the mortgagor is extinguished also. In my opinion a fairer way of balancing the risks that exist for both parties.


  • #3
    Predalien
    Closed Accounts Posts: 946 ✭✭✭Predalien


    Actually following a quick google it appears that is only the case for non-recourse mortgages.


  • #4
    valleyoftheunos
    Closed Accounts Posts: 2,332 ✭✭✭valleyoftheunos


    Foreclosure is very unfair on the borrower as it extinguishes the equity of redemption but does not alleviate the borrower of liability so they have no property and still owe the outstanding amount of the mortgage.

    To be honest I'm not sure if this is how it works in the US or if it is simply the term they use for repossession.


  • #5
    ThreeLineWhip
    Closed Accounts Posts: 473 ✭✭ThreeLineWhip


    In the US when they foreclose they take the house in lieu of the loan. If the house does not make the value of the loan that is hard on the lender. The debtor is off the hook for any shortfall.


  • #6
    Ken.
    Closed Accounts Posts: 12,898 ✭✭✭✭Ken.


    Just on line with an American friend who was in a similar situation. When the bank forecloses you still owe the balance of the mortgage if the house is sold for less than what's owed.

    He said when people are foreclosed on the vast majority in America declare bankruptcy. Then the bank is screwed out of its money. If you don't go bankrupt you still owe the balance.

    He lives in Ohio.(some states have different rules).


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  • #7
    ThreeLineWhip
    Closed Accounts Posts: 473 ✭✭ThreeLineWhip


    I think it depends on the state and type of mortgage.

    There are non recourse mortgages that do not allow the bank to chase the homeowner for any shortfall.


  • #8
    Procrastastudy
    Closed Accounts Posts: 6,224 ✭✭✭Procrastastudy


    Thanks all - can anyone clear one more thing up for me. If they foreclose and sell the property for more than the mortgage - do they have to ass the profit on as they do (did!!!) in Ireland?

    If I'm honest this is a bit of a homework one as I'll lash it down as a bit of opinion when answering an essay question in the Land Law exam. Just thought I'd declare that for honesty sake.


  • #9
    valleyoftheunos
    Closed Accounts Posts: 2,332 ✭✭✭valleyoftheunos


    Procrastastudy wrote: »
    Thanks all - can anyone clear one more thing up for me. If they foreclose and sell the property for more than the mortgage - do they have to ass the profit on as they do (did!!!) in Ireland?

    If I'm honest this is a bit of a homework one as I'll lash it down as a bit of opinion when answering an essay question in the Land Law exam. Just thought I'd declare that for honesty sake.

    In a foreclosure the bank doesn't have to pass on any profit from the sale as the equity of redemption is extinguished.

    Again not sure if thats the situation in the US.


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