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

After a foreclosure in Washington, the balance of your loan will depend on the type of loan you have and the foreclosure procedure used. Generally speaking, if you have a non-recourse loan, then the lender cannot pursue you for any remaining balance after the foreclosure. This is because non-recourse loans rely on the property as the only security for repayment, and the lender is not allowed to collect a deficiency balance. On the other hand, if you have a recourse loan, then the lender can pursue you for any deficiency balance after the foreclosure. A recourse loan is secured by a lien on the property but also allows the lender to pursue you for any remaining balance. In the event of a foreclosure, the lender must first attempt to sell the property and if the sale does not cover the full balance of the loan then the lender can pursue you for the difference. In Washington, lenders must provide you with a notice of deficiency that outlines how much you still owe after the foreclosure. This deficiency amount must be paid within 3 years from the date of the foreclosure sale. If the deficiency amount is not paid in full within this period, then the lender can pursue collection actions against you.

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

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