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
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.