"Later [the putative current owner] offered to sell her the house back, [the putative former owner] said, for what he paid for it: around $25,000."
If the buyer paid $25K for a free-and-clear title (i.e., the bank took the auction proceeds in lieu of the loan balance), then the former owner should take that deal, because it means her mortgage is now gone!
(The article is unclear which kind of foreclosure this was -- did the buyer take title and assume outstanding debt? Or did the bank just wash its hands of the whole thing when it unloaded the property at auction? The low sales price suggests it's the former, rather than the latter. But stranger things have happened.)
Unfortunately, that is not the case. If you lose your home in foreclosure, you are still liable for the mortgage. They could buy the home back for $25,000, but they are still going to have to pay on that mortgage that they took out.
That actually depends on the jurisdiction and the specific loan terms! For example, in California, mortgages are generally non-recourse, which means that the lender can take back the collateral (the house) upon default, but can't go after the borrower's remaining assets or property to make up any remaining deficit after liquidating the house.
That said, in this case you're correct: the article's subjects live in Colorado, which does not allow non-recourse mortgages.
Comments
"Later [the putative current owner] offered to sell her the house back, [the putative former owner] said, for what he paid for it: around $25,000."
If the buyer paid $25K for a free-and-clear title (i.e., the bank took the auction proceeds in lieu of the loan balance), then the former owner should take that deal, because it means her mortgage is now gone!
(The article is unclear which kind of foreclosure this was -- did the buyer take title and assume outstanding debt? Or did the bank just wash its hands of the whole thing when it unloaded the property at auction? The low sales price suggests it's the former, rather than the latter. But stranger things have happened.)
Unfortunately, that is not the case. If you lose your home in foreclosure, you are still liable for the mortgage. They could buy the home back for $25,000, but they are still going to have to pay on that mortgage that they took out.
That actually depends on the jurisdiction and the specific loan terms! For example, in California, mortgages are generally non-recourse, which means that the lender can take back the collateral (the house) upon default, but can't go after the borrower's remaining assets or property to make up any remaining deficit after liquidating the house.
That said, in this case you're correct: the article's subjects live in Colorado, which does not allow non-recourse mortgages.