What is the punishment for defaulting on mortgage?

Say a borrower's home loses a lot of value and he/she owes more than the home is worth. They move out and mail the keys to the bank (the bank is stuck with the property).





What, if any, are the punishments for such a borrower?What is the punishment for defaulting on mortgage?
Bank will reposess the house and will sell it at a very low price What is the punishment for defaulting on mortgage?
Depends on the state and which method the mortgage company takes to try and secure their funds. For example, in some states, there is a one option rule where the bank either forecloses on the property or forgives the lien against the property and goes after the borrower, but NOT both.





In some instances, they can do both, by foreclosing on the property and then suing the borrower in court for the balance owed.





Your best bet is to speak with a real estate attorney that is familiar with the laws in your state and actively works with customers in the real estate finance area of law.
Well it doesn't matter what happens to the keys...the borrower still borrowed THE MONEY and still has to pay back THE MONEY.





So, the borrower mails back the keys. The house is then sold by the bank as a foreclosure. That amount is applied to what you STILL OWE.





Lets say you borrowed $300,000 to buy the house. The house is only worth $200,000. and lets say you've made $10,000 in payments. You still owe $290,000....what the house is worth isn't the issue here...you didn't borrow a house you borrowed MONEY.





So you mail the keys back. The banks sells the place for $185,000. The bank applies that to the $290,000 you still owe. If you can do the math you see that you STILL OWE $105,000.





You are still going to have to work out a payment schedule with the bank, because you still owe them money. Your next move will probably be bankruptcy. Even if it isn't, this will have a significant impact on your ability to borrow any money ever again.



the bank will go thru normal foreclosing procedures,write you several letters rrr and then the home will be sold at auction. afterwards your credit will show you were in a forcloser and you may owe a balance to the bank or yo can just ignore it,as i did. after a few years it will vanish! i'm now at whits end on credit cards myself,they are just thiefs who rob us ,so to hell with them!
you lose the property,and whatever money you have paid thus far. the lender will sell the property and you will still owe whatever is the difference


between what the prop. is sold for and what you owe on it. and it will ruin


your credit for the next 7 years. and you lose the tax deduction on the


interest you were paying on the loan. you are going to pay more income


tax as a result.
The house will be sold - probably very cheaply and the money difference is owed by the borrower
Foreclosure.