Special Foreclosure Situation

A listener asks how a deficiency settlement in a foreclosure is determined if the owners are divorced.

QUESTION: A listener on Twitter asks how a deficiency settlement in a foreclosure is determined if the owners are divorced.

ANSWER: It’s called a joint and several liability. Check with an attorney in your state to be sure. But in most states, when you both are on the note, you are both liable for the whole note. So they could choose to go after either party or both parties for the whole thing.

They can’t collect a total that is more than the whole thing. But let’s say Mom has a good job and Dad doesn’t work and they are divorced, then they can choose to go after Mom for the whole note just because she’s actually got something to get.

That’s what “joint and several” means. Anytime you sign on something in a partnership situation, which would be included in a mortgage done by a married couple, that’s what you’re facing.

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