Full question:
Our home went into foreclosure. On Mar. 23, 2007, our home was sold at a public auction to the highest bidder. We had 2 loans. The sale covered the first loan, with about $14,000 left over. What happens to the second loan of about $43,000? I was told it just goes away and we do not owe anything on it. Also we got papers in the mail that says it is a Notice of Deposit of surplus funds in the amount of $14,331.85. It says, "The Trustee has no interest in the funds and is uncertain as to the relative priority claims against the surplus funds and is concerned that trustee will incur liability if the surplus funds are incorrectly disbursed". Does this mean we can collect the surplus funds? And what really happens to the second loan?
- Category: Real Property
- Subcategory: Foreclosure
- Date:
- State: Washington
Answer:
Unfortunately, you likely still owe the second loan of $43,000. Even though the second lender may have lost the right to foreclose, unless your mortgage includes an exculpatory clause, you remain responsible for the debt. An exculpatory clause means the lender agrees to cancel the remaining debt after foreclosure if they only receive the sale proceeds. This clause is more common in commercial loans than in residential ones. Regarding the surplus funds, the notice indicates that there is uncertainty about claims against the $14,331.85. This means that while the trustee has no claim to these funds, you may need to clarify your rights to collect them based on the claims against the surplus.This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.