Can lender sieze personal assets to foreclose a property ?

[chibe_k]

To foreclose a property, does a lendar have the rights to seize personal properties, money in saving accounts, 401K accounts, ..etc to cover the debt before taking the property away ?

[stock_post]

To foreclose a property, does a lendar have the rights to seize personal properties, money in saving accounts, 401K accounts, ..etc to cover the debt before taking the property away ?
No - to my knowledge. (I am a loan officer in Texas)

As far as I know the only thing the lender can take is the property they financed.

If there was fraud involved in getting the loan they can sue for that.

Never heard of taking savings account/401K money.

If I am wrong I would like to know.

[chibe_k]

No - to my knowledge. (I am a loan officer in Texas)

As far as I know the only thing the lender can take is the property they financed.

If there was fraud involved in getting the loan they can sue for that.

Never heard of taking savings account/401K money.

If I am wrong I would like to know.

In other words, if an owner has 200K in savings. Because the property value drops below the loan amount he still owes the bank, he can just walk away from the property, move to another state and pay cash for a new home, right ?

[rama1]

In theory -- yes, you can. I know the guy who bought 40 pre-construction apartments. Then he foreclosed on all of them but continue to be successful investor. I admit, he probably has a couple tricks that he could pull without sharing with anyone but that is what I know.

In your situation if you are buying next property for cash, you may or may not have a problem. For example, if the seller decided to check your credit history and will see a very recent foreclosure, you may not conclude a deal. Again, this is all a speculation.

[chibe_k]

In theory -- yes, you can. I know the guy who bought 40 pre-construction apartments. Then he foreclosed on all of them but continue to be successful investor. I admit, he probably has a couple tricks that he could pull without sharing with anyone but that is what I know.

In your situation if you are buying next property for cash, you may or may not have a problem. For example, if the seller decided to check your credit history and will see a very recent foreclosure, you may not conclude a deal. Again, this is all a speculation.

Even if the seller decided to check credit history and see a very recent foreclosure, why would he care if the transaction is fully paid in cash ?

[rama1]

Everything is possible -- some clients are flipping out and don't want to sign a contract with anyone if they don't think it is going to work. In general, with a cash deal I don't see any complications at all.

[aprazma]

To foreclose a property, does a lendar have the rights to seize personal properties, money in saving accounts, 401K accounts, ..etc to cover the debt before taking the property away ?

Please specify what state you are in.

In general, the answer to the question is no. However, you want to be able to determine whether the loan is a soft money loan or a hard money loan (in a soft money loan the lender's only security for the loan, and only recoverable asset is the property), and this depends on the state and the type of loan.

[clemy]

In other words, if an owner has 200K in savings. Because the property value drops below the loan amount he still owes the bank, he can just walk away from the property, move to another state and pay cash for a new home, right ?

Well, minus the taxes the IRS will get because the difference between the amount owed and the amount the bank gets for the property is considered "income" to the owner.