Did You Know?
- In order for there to be surplus funds from a foreclosure sale, the house must have been sold for more than what you owed to the lender
- If your house is foreclosed on, any home equity that you have will be used to pay fees and penalties associated with the foreclosure
- Any equity left over after paying off the fees and penalties will go to the homeowner
- There are two ways to claim surplus funds from a foreclosure
- Pursue it yourself
- Go through the process with the help of an attorney
What are Surplus Funds?
- In a foreclosure sale, surplus funds are the difference between the equity of the home and the amount it was sold for.
- For example, if the house was sold for $200,000 and you still owed $180,000, you would be entitled to the remaining $20,000.
- There may be other things that will be subtracted from the surplus amount.
- for instance if there is a second mortgage on the home that will be paid with surplus funds before you are able to collect them.
- The right parties may not always notify you of the news and keep the surplus funds.
What Happens After Foreclosure?
- The amount that you can get from mortgage surplus funds depends on how much was owed to the lender and the selling price of the house.
- Surplus funds are calculated by subtracting the outstanding mortgage balances from the sale price paid by the bidder, including any & all fees and penalties incurred by the property.
- In other words, surplus funds are the difference between the selling price and the outstanding balance.
- In California, the law states that any excess funds go to the most recent owner of the foreclosed property.
- If there is another party that lays claim to the property such as in the case of a second mortgage, then the surplus funds will be used to pay off the debt, and the amount left can be claimed once secured liens are paid off.
- If you need help in getting back the surplus funds from your foreclosed property, you should consult with a professional law firm experienced in recovering excess funds from foreclosed properties.
