If your house goes into foreclosure, can the...

[Lin E]

...mortgage company take money from you bank account? In attempt to collect on what is owed to them?

[Rick B]

If they get a judgement against you (which they will) they can normally garnish your paychecks and bank accounts.

[Christian Rollindo on the ground]

On a refinance, yes, they can go after your assets to cover a deficiency judgement.

On a purchase loan - no.

[kate]

After they sell the house and calculate the difference between what you owed and what they sold it for .

Then they go to court and get a judgment .
But it will probably be a "blood from a turnip" situation since you were delinquent .
(Unless you have other assets on record )>

[Darby]

No, but it can put your house up for auction so it can be sold to pay off what is owed. Rather than have that happen, you should immediately put the house up for sale so the mortgage can be paid and you can get out from under something you can no longer to pay for. Hopefully, you could sell it for enough money to have a little left for yourself to start over.

[877YouKeep]

The most common process for creditors to collect money when amount due becomes exceptionally delinquent is wage garnishment. In order to garnish, an unsecured debt one must first take legal action against the defaulter. Normally this does not transpire until the debt is somewhere around six months past due. The creditor brings a claim in small claims or civil court, in accordance with the magnitude of the debt. If the outcome is in favor of the creditor, a judgment is ordered. Once you win a judgment in court a notice of judgment is sent to the debtor and creditor. The debtor is ordered to pay the creditor with in 30 days of the judgment. If the judgment is unpaid then there is a potential for a wage garnishment. There are other recourses one being filing a lien against personal property. Bankruptcy can halt the process.
There are many more legal actions that can take place once a judgment is filed but to answer your question. Lenders do not garnish wages for a property that is in foreclosure or that has been foreclosed upon. Many lenders write off the loss and 1099 the homeowner for earned income and report the earnings to the IRS. Although, some lenders seek a deficiency judgment which attaches to anything you own.

[Leah W]

It depends on where you live. Certain states have different criteria for that. However, until they sell the house, they won't pursue you for a deficiency judgement until then. The summary judgement they put against you was to foreclose and gain ownership of the house. It all really depends on your situation which I am sure was fully laid out to them before they pursued a foreclosure. Lenders do anything they can for a borrower before they will foreclose.

[Cogito Ergo Sum]

If your house goes into foreclosure, it will usually be sold at auction (i.e., "under the hammer") and the mortgagee (lender) would be entitled (but not required) to bid on it by proffering the amount of the debt owed to him by the mortgagor (debtor) in payment for the house.

If the mortgagee did bid the amount of the debt and won the house, then of course by definition the debt would be fully paid and discharged and no further amount would be owed by the erstwhile mortgagor (debtor) and there would be neither the need nor any justification for the lender to try to reach into the erstwhile debtor's bank account nor to pursue any other of the erstwhile debtor's assets.

If, instead, the mortgagee (lender) did not bid at the auction of the house, and the house should be purchased by another bidder whose bid was in an amount less than the outstanding loan balance secured by the mortgage, then the proceeds of the sale would be paid to the lender and applied as far as they went to the partial payment of the outstanding loan, after which the lender could sue for a so-called deficiency judgment for any balance of the loan still remaining unpaid.

Upon obtaining a deficiency judgment, the lender could pursue any available assets of the debtor to satisfy that judgment, including any bank balances owned by the debtor.

[Mike]

Once the foreclosure is complete, and the house is sold by the bank, they will probably get a judgement against you for the negative equity... they can garnish bank accounts and wages.

[877YouKeep]

Mike, I have never heard of any lender that holds first position would let the house go for less than what is owed at the auction. The lender is typically represented by an attorney that bids the payoff plus in Florida $100.00 then opens to the floor for bids. Additional lien holders then can reporesent their position in either taking the house back or being out bid by another lien holder or buyer. The foreclosing party begins the bidding process then anyone is allowed to bid.
If there is a second mortgage or other lien holders and the sales price does not make them whole they have the option to pursue a judgment on the homeowner.
If the property sells for more than all liens and judgments the person holding title to the property is entitled to the money minus court fees, but do not expect to get it back fast and there is paperwork required to be filed. let me know of an instance where at a foreclosure auction the property sells for less than the foreclosing party is owed.