If an individual defaults on a mortgage, the foreclosure process allows the lender to sell the property to recoup the balance of the loan. Although some properties sell for only the amount of the outstanding loan or less, most foreclosed properties are now selling for more than what is owed. This creates what's known as a foreclosure surplus, which you may be entitled to. To ensure you receive any surplus funds, get foreclosure assistance during the process.

What Homeowners Need to Know About Foreclosure Surplus Funds 

How is a foreclosure surplus created?

When a foreclosed home is sold, typically via an auction, the proceeds of the sale are first used to pay off the remaining balance of the mortgage. Any remaining funds are then used to pay off liens against the home, such as those created by a second mortgage. If any funds are left over after paying those debts, you are entitled to the remaining balance. 

How do I know if there is a foreclosure surplus?

Getting foreclosure assistance is crucial because many homeowners never know that there is a surplus on the sale. The bank will send a Notice of Deposit of Surplus Funds to your last known address, which is sometimes listed as the foreclosed property. If you don’t receive the notice and claim your property, it is considered abandoned and turned over to the state. 

How do I collect a foreclosure surplus?

When you receive a Notice of Deposit of Surplus Funds, you and the creditors must file a motion with the court staking a claim to the sale proceeds. While the motion is straightforward, the process can be complicated if there is a unique ownership structure or multiple liens. An attorney specializing in foreclosure assistance can help you with this motion by doing a title review and making a case for why you should have a higher priority for the fund disbursement. 

What happens if the sale doesn't cover the debt?

If your foreclosed property sells but doesn't cover the entire amount you owe, the lender may seek a deficiency judgment for the remaining balance. Laws regarding these judgments are complex, and you may be able to eliminate or reduce the judgment via a property appraisal or bankruptcy. You will need foreclosure assistance from an experienced attorney in this case to argue on your behalf.

Get help claiming foreclosure surplus funds you're entitled to with Max Tax Refund +. The foreclosure assistance specialists at this Arizona-based company help clients nationwide claim money that belongs to them through recovery and auditing services and more. Learn more about their services online or speak with a representative about your case by calling (866) 629-8291.