What happens to the balance of my loan after a foreclosure?

The balance of your loan after a foreclosure in Massachusetts depends on the type of loan you have. If you have an FHA or VA loan, the balance of your loan may be forgiven, and the remaining balance on the loan may be paid off by the government. If your loan is not backed by the government, then the lender may still attempt to recover the remaining balance after the foreclosure. After the foreclosure, the lender will first attempt to recover the balance from the proceeds of the sale of the foreclosed property. If the sale of the property does not cover the remaining balance of the loan, the lender can pursue a deficiency judgment. A deficiency judgment is a legal document that enables the lender to sue for the difference between the amount owed on the loan and the amount the property was sold for during the foreclosure sale. If the lender obtains a deficiency judgment, they may choose to pursue the remaining balance in the form of a civil lawsuit. This can involve garnishing wages, levying bank accounts, or placing a lien on any future real estate the borrower owns. In this case, the lender may not be able to recoup the full amount of the deficiency. Depending on the terms of the loan, the amount of the deficiency may be taxable income. It is important to consult with a lawyer to understand the full legal implications of a foreclosure in Massachusetts.

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