Receiving Excess Funds After A Mortgage Is Paid

In this article, you can discover:

• The process and timeline for receiving surplus funds after a foreclosure auction.
• How multiple liens and mortgages affect the distribution of surplus funds.
• Steps to ensure the accurate receipt of remaining funds after foreclosure.

How Long Is The Wait For A Former Homeowner To Receive Surplus Funds Post-Foreclosure Auction?

The timeline for a former homeowner to receive surplus funds after a foreclosure auction varies by case and state. Each situation is unique, making it crucial to familiarize oneself with state-specific regulations and timelines.

Will Any Taxes Or Fees Be Deducted From The Surplus Funds Post-Foreclosure?

Yes. Before the foreclosure process concludes, lenders often incur various costs like legal proceedings, property maintenance, and administrative fees. These costs are added to the outstanding mortgage balance. When the auction bid surpasses the total owed to the lender, including fees and interest, surplus funds can remain.

What Happens To Surplus Funds When Multiple Mortgages Or Liens Exist On The Property?

The distribution of surplus funds can be complex when multiple liens are present:

1. Primary Mortgage Holder: They’re the first to receive funds from the foreclosure sale, covering the outstanding mortgage balance and related costs.
2. Junior Lienholders: Subsequent liens on the property, such as a second mortgage or tax liens, are addressed next, paid based on their priority.
3. Former Homeowner: If funds remain post-paying all lienholders, the surplus typically belongs to the former homeowner, as they’re entitled to any remaining property equity.

If Surplus Funds Exceed The Mortgage Amount, Who Gets The Excess?

The “surplus funds” or “excess proceeds” beyond the mortgage amount are first used to pay off other lienholders. If funds still remain, the former property owner is typically the recipient.

Can A Previously Evicted Homeowner Claim Surplus Funds?

Absolutely. In many places, a former homeowner, even if evicted before the auction, retains the right to claim surplus funds. This is because the former homeowner has an equity interest in the property, and any leftover equity should revert to them after settling secured debts.

How Can Former Homeowners Guarantee They Receive The Accurate Surplus Amount?

Ensuring the right amount of surplus funds requires vigilance and proactive measures:

1. Stay Informed: Track the foreclosure process to know mortgage balances, other liens, and foreclosure costs.
2. Obtain the Final Sale Price: Post-auction, determine the property’s final sale price, usually available in public records or from the auction entity.
3. Request an Itemized Deduction List: This helps verify all amounts deducted from the sale proceeds.
4. Know Local Laws and Procedures: Understand local regulations concerning foreclosure sales and surplus funds.
5. Consult an Attorney: Seek guidance from a real estate attorney familiar with your jurisdiction’s foreclosure laws.
6. Promptly File a Claim: Claim surplus funds as per the stipulated process and timeframe.
7. Review and Challenge Discrepancies: If offered surplus amounts seem incorrect, present your evidence and calculations. If partnered with an attorney, they can streamline this.
8. Beware of Scams: Stay alert to potential scams, particularly those charging hefty fees for surplus fund recovery.

Being proactive, staying informed, and possibly seeking legal assistance can help ensure the rightful receipt of surplus funds after a foreclosure.

For more information on Receiving Excess Funds After A Mortgage Is Paid, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (913) 543-4500 today.