Some Foreclosed Homeowners Leave THOUSANDS of Dollars on the table when they walk away from their foreclosed homes.
In California, when a property is sold in a foreclosure auction for more than the outstanding mortgage debt, the excess money is known as “surplus funds” or “excess proceeds.” This can occur when the property’s market value is higher than the homeowner’s/trustor mortgage debt at the time of foreclosure.
The process of claiming these surplus funds can be complex and may require legal assistance. Given the complexity of the process and the potential for other creditors to stake a claim on the surplus funds, it’s often beneficial for the trustor to seek legal assistance. A lawyer can help navigate the process, ensure all paperwork is correctly filed, and represent the trustor’s interests if other creditors attempt to claim the surplus funds.
If the claim is approved, the trustee will distribute the surplus funds to the trustor. However, if there are other lien holders or creditors with claims on the property, they may also have a right to these funds. In such cases, the funds may be distributed in the order of the priority of the liens
It’s important to note that there are also scams related to foreclosure surplus funds. Homeowners should be wary of unsolicited communications promising to recover surplus funds for a fee. Always verify the legitimacy of such claims and consider seeking legal advice before proceeding.
Remember, each case is unique and the process can vary based on individual circumstances. Therefore, it’s always a good idea to consult with a professional or legal expert to understand the best course of action.