After Foreclosure: Will Your Mortgage Home Lender—Sue You To Recover Loan Losses?

“Recourse Home Mortgages&quot; can hold borrowers personally liable for lender loses after their home is lost to foreclosure. <!--break--> Alarmingly many homeowners don’t know if the loan they used to buy their home is a “Recourse Mortgage.” Recourse loans allow mortgage lenders to sue homeowners after foreclosure—to recover “loan losses” when the lender sells the foreclosed house—for less than what is owed. Some states prohibit mortgage lenders from suing homeowners after foreclosure to recover loan losses on a “Purchase Money Mortgage” used to buy a home that was the owner’s residence. However lenders unless prohibited by law, can get “deficiency judgments” against foreclosed homeowners to recover losses incurred from refinance-mortgage loans and outstanding credit lines secured by the foreclosed residence. Bankruptcy for some foreclosed-homeowners might be the only option to prevent persistent mortgage lenders from attaching their future income and assets. As millions approach home foreclosure, some Americans might wonder if their own lender contributed to wiping out their home equity. That might appear true if their lender—continued to make Sub-prime mortgages to borrowers more likely to default in their neighborhood—after having actual knowledge there was a large number of home foreclosures. Many homeowners that live near foreclosed properties continue to see the value of their homes plummet. Sub-prime mortgage lenders appear protected from homeowner and borrower plaintiffs that might allege a lender’s loan practices damaged the value of their home. Congress passed the “1977 Community Reinvestment ACT” and other laws that encouraged lenders to make higher-risk loans to less qualified borrowers to expand home ownership in the U.S. However, there might be state and federal jurisdiction issues that “Recourse Mortgage Borrowers” can raise that concern whether a mortgage lender breached a fiduciary duty owed a client-borrower. Banks track mortgage defaults and foreclosures. Because foreclosures are so prevalent and bring down the value of nearby properties, shouldn’t lenders that market “Recourse Mortgages”, be required to disclose to home loan borrowers the number of house foreclosures within a certain distance of the home the lender is soliciting making a Recourse loan? “Recourse Mortgages” can hold borrowers personally liable should their home be lost to foreclosure. Nevada for example is inundated with recourse loan foreclosures. It appears doubtful that all lenders clearly explained Recourse Mortgages to their client borrowers.

<p>“Recourse Home Mortgages" can hold borrowers personally liable for lender loses after their home is lost to foreclosure.</p> <!--break--><p>Alarmingly many homeowners don’t know if the loan they used to buy their home is a “Recourse Mortgage.” Recourse loans allow mortgage lenders to sue homeowners after foreclosure—to recover “loan losses” when the lender sells the foreclosed house—for less than what is owed. </p> <p>Some states prohibit mortgage lenders from suing homeowners after foreclosure to recover loan losses on a “Purchase Money Mortgage” used to buy a home that was the owner’s residence. However lenders unless prohibited by law, can get “deficiency judgments” against foreclosed homeowners to recover losses incurred from refinance-mortgage loans and outstanding credit lines secured by the foreclosed residence. </p> <p>Bankruptcy for some foreclosed-homeowners might be the only option to prevent persistent mortgage lenders from attaching their future income and assets. </p> <p>As millions approach home foreclosure, some Americans might wonder if their own lender contributed to wiping out their home equity. That might appear true if their lender—continued to make Sub-prime mortgages to borrowers more likely to default in their neighborhood—after having actual knowledge there was a large number of home foreclosures. Many homeowners that live near foreclosed properties continue to see the value of their homes plummet. </p> <p>Sub-prime mortgage lenders appear protected from homeowner and borrower plaintiffs that might allege a lender’s loan practices damaged the value of their home. Congress passed the “1977 Community Reinvestment ACT” and other laws that encouraged lenders to make higher-risk loans to less qualified borrowers to expand home ownership in the U.S. However, there might be state and federal jurisdiction issues that “Recourse Mortgage Borrowers” can raise that concern whether a mortgage lender breached a fiduciary duty owed a client-borrower. </p> <p>Banks track mortgage defaults and foreclosures. Because foreclosures are so prevalent and bring down the value of nearby properties, shouldn’t lenders that market “Recourse Mortgages”, be required to disclose to home loan borrowers the number of house foreclosures within a certain distance of the home the lender is soliciting making a Recourse loan? “Recourse Mortgages” can hold borrowers personally liable should their home be lost to foreclosure. Nevada for example is inundated with recourse loan foreclosures. It appears doubtful that all lenders clearly explained Recourse Mortgages to their client borrowers.</p>