Did the Bank foreclose and sell your home? Many This is always the unthinkable – something we at the Law Offices of Melvin Monachan, PLLC always want to prevent. Banks often want to prevent it, too, because foreclosures usually result in selling the property for less than what's still owed on it. Sometimes, however, the bank is pleasantly surprised, and the home sells for more.
What happens in New York when there is a post-foreclosure surplus? Does the bank get to pocket the surplus monies or is it owed to you? Here, we discuss post-foreclosure surplus monies in New York.
What are post-foreclosure surplus monies?
Properties throughout New York tend to increase in value over time. Even when other real estate markets are not doing well in the nation, New York's market may continue to thrive. As such, there could be a time when the value of a property is greater than the amount of money you actually owe the bank. When your property becomes the subject of foreclosure, the bank may benefit from a profit surplus after a foreclosure is completed.
For example, imagine your home was worth $300,000 when you purchased it, and you took out a mortgage loan for $225,000. You made timely payments for years until your spouse became ill. Medical bills piled up while payments for the mortgage were not sent. Maybe you only owe $100,000 on the mortgage. Meanwhile, the value of the house has appreciated; it is now worth $375,000.
Now, imagine if the property is sold at its current worth of $375,000, but you only owed $100,000 to the bank. That's a surplus of $275,000.
This kind of situation underscores why a foreclosure defense attorney is important to have. We would have looked at these numbers and may have advised you – if securing enough money to pay the lender what is currently owed is not an option – to sell the house yourself at current fair market value. In the above scenario, if you sold the house yourself, then you could have used the $275,000 surplus to pay the bank the remaining $100,000.
Sometimes it is too late to sell the house yourself, though, because a judgment of foreclosure may have already been ordered and a public auction of the property may have already been scheduled. The judgment lists the amount owed to the lender, plus costs and attorneys' fees. The property should sell for that amount, but when it is valued for much higher, chances are good it will sell for more than what's owed to the lender. This is post-foreclosure surplus funds. But who is legally entitled to it? You or the bank?
Do you have a right to post-foreclosure surplus monies in New York?
After the lender is paid in full after a foreclosure sale and all other debts, like liens on the property, are addressed with the surplus, any remaining monies rightfully belong to the property owner. The big challenge here is knowing when there is a surplus. In such situations, it is always in your best interests to consult with an experienced New York foreclosure defense attorney.
A foreclosure defense attorney can help you defend your right to your property if it isn't too late. Alternatively, if it is too late to prevent foreclosure, an attorney will make sure your rights are upheld and you are given what's owed to you, too.