What happens to the homeowner's equity in a foreclosure?

When a homeowner is in foreclosure in the state of Florida, their equity is put at risk. Equity is the amount the homeowner has paid on their mortgage, minus any amount owed on the loan. When a home is foreclosed, the homeowner loses all of their equity. The lender, who holds the mortgage, will take ownership of the house and the foreclosure process will begin. The lender then has the right to sell the property for a lesser value than the amount owed on the mortgage. Any excess funds are then returned to the homeowner in the form of their equity. This is known as a deficiency judgment. In some cases, a lender may attempt to collect the full amount of the loan from the homeowner, including their equity. This is referred to as a deficiency balance. The homeowner would then be responsible for paying back the full amount of the loan including the deficiency balance. No matter the situation, when a homeowner is in foreclosure in the state of Florida, their equity is put at risk. The lender holds the power to sell the home for a lesser value than what is owed, leaving the homeowner with the difference as their equity. However, the lender may also choose to attempt to collect the full amount of the loan, including the equity, from the homeowner.

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What happens to the homeowner's equity in a foreclosure?

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