Regarding Foreclosure

[opebo]

Perhaps this question aught to be in the legal section, but it is timely in discussion of economics during this depression:

When a foreclosure is accomplished by the 'lender', does his seizure of the property under lein constitute his full recourse?  Or can he attach the income and other property of the debtor?

For example, lets say you have a house upon which you owe $500,000, but also own another property/stock/bond/whatever, worth $500,000.  Let us also say for argument's sake y our income is considerable.. say $100,000/year.  The bank seizes your house and sells it for $50,000, leaving $450,000 'owed', but with no direct or specified lein against either your income.  Does the debtor still owe the $450,000? 

I'm just not clear what is promissed in a 'promisory note'.

[opebo]

I don't think so.  I believe the bank can only take the house that is being foreclosed.  And I have heard the bank can NOT sell it for a profit.

That keeps foreclosure being undesirable to the banks.

Actually I just read up on it a bit more.. it seems that if it is a non-recourse loan the bank cannot pursue the debtor's other assets or income.  Most but not all home mortgages are this type, but many other types of real estate loans are not.

[opebo]

Can't the bank get a deficency judgment for the difference of the amount owed and the amount received for the property sold at auction?

I'll make sure, but I'm almost certain that's only with recourse loans.

Yes, that's only with recourse loans.  Apparently the only common typeof loan that is a non-recourse loan is that on the primary residence (and I have no doubt that this is an archaism of liberal days and unlikely to survive much longer).

As for me I'm in Thailand and can never borrow any money due to the most frightfully bad credit imaginable - I'm just asking for people I know.  But it is interesting to think that all this effort to 'make people pay back' loans is so terribly counterproductive, particularly in an economic downturn.  Especially when the easy solution is so ready at hand.

[opebo]

I used to deal with this a lot when I worked at the IRS.  Most Americans have NO idea they owe taxes on debt forgiveness.  Some people were excessive and yeah should be punished this way, but I've also come across people who didn't have sh**t for income and still got hit with the tax bill.  I've even had a few cases where they didn't even make enough earned income to file, but got socked with debt forgiveness.  It's like getting blood from a stone.

What is usually done with these people?  Are they allowed to pay it back bit by bit the rest of their miserable lives, or are they sent to the Big House to be buggered?

[opebo]

In any event, you should read anything that you sign,

Oh, well I never sign anything, as any potential creditor is away my promises are worthless.  But I'm sure you're right about serfs in general.

Your description of the process was very interesting, and one reason I think that the courts should not take seriously 'contractual obligations' incurred by ordinary people.  They should always be assumed to have been duped by the 'professionals'.  It really is a safe assumption.