How bad is foreclosure?

Question

If someone paid 500K of a 600K loan and then forecloses, what do they get back? What if they paid 100K towards a 600K loan?
Do they get fined for foreclosing? Can they continue the same loan with how much they put towards it if they re0buy the same house they foreclosed on?
Does the .gov help pay for like an apartment or something if foreclosing makes a family homeless?
Thanks.

Jon Holdman · Answer

Not entirely sure what you're asking.

"Does the .gov help pay for like an apartment or something if foreclosing makes a family homeless?"

No. You might, however, be eligible for some sort of assistance or welfare.  But, no, losing your home to foreclosure doesn't automatically make you eligible for government housing.

"If someone paid 500K of a 600K loan and then forecloses, what do they get back?"

Do you mean if you borrowed $600K, repaid $500K leaving a loan balance of $100K, what happens if the property is forecloses.  I assume you mean you would owe $100K and the property would be worth more than that.  That's called "having equity in your property".  Frankly, it would be foolish to let a property with equity go into foreclosure.  You would be much better to sell the property, pay off the loan, and pocket whatever you can get.  Even with the costs of selling a house, and if you have to take a lower price than if you weren't distressed, you'll net more than at a foreclosure sale.  Prices at a foreclosure sale are very low and the foreclosing lender will add a bunch of costs onto the amount they're owed.  Its not unusual for it to take a year or more of non-payments to actually go to a sale. So, you would have a year of missed payments, late fees, and legal payments tacked on.

If the property does sell at the foreclosure sale for more than is owed, including all the extra costs, the previous owner would get the excess.

After the sale, the winner of the auction, whether its the foreclosing bank or someone else, will take possession of the house and evict you.  If you damage anything or take things you shouldn't, they will file criminal charges.

"What if they paid 100K towards a 600K loan?"  I think you mean here is if only a small amount had been paid back.  Again, the value of the property is key.  If there is equity (after considering it will costs you about 10-11% of the selling price in costs if you sell), then, again, you're better off selling.  If you mean what if the property is worth less than is owed, you're "underwater" or "upside down".  In this case the foreclosing lender might start the bidding at the foreclosure sale at the amount they're owed. In that case, nobody else will bid.  Or, they might start the bidding lower.  Someone else might bid and win.  In that case, and depending on the state, they might seek a "deficiency judgement" for the difference between what they were owed and what they got from the sale.

"Do they get fined for foreclosing? Can they continue the same loan with how much they put towards it if they re0buy the same house they foreclosed on? "

I'm really not sure what you're asking here.