Title: What Happens to Equity During Foreclosure? - loan.com
Headings: What Happens to Equity During Foreclosure?
What Happens to Equity During Foreclosure?
Content: In any of the above cases, if the house is sold and there is money left over after the loan and all fees and penalties are paid, that is equity and that is yours. Fees Cut Into It
Your equity is being reduced before foreclosure starts. For most home mortgages, there are late-payment penalties. So, if you are late on your loan and it goes into default, for example, after four months of missed payments, the late-payment penalties for those months are added to the total loan amount and will be subtracted from the proceeds of any sale. That reduces your equity. Additionally, the lender can charge fees related to processing the late payments, the declaration of default, the foreclosure proceedings and expenses of the sale against your equity. This can amount to tens of thousands of dollars, which will be subtracted from anything owed you after a foreclosure sale. Low Home Appraisals Reduce It
If your home goes into foreclosure, the lender will have the home appraised for an auction sale. Typically, a lender will accept an offer of 90 percent of the home’s appraised value. Lenders do not want to own your home, particularly if it is a time of declining home values.