Legal Question in Credit and Debt Law in Kentucky

Foreclosure
I have two new construction properties that have an appraised value of fifteen to twenty percent more that the bank loan. The properties have not sold and I can no longer make the interest payment on them. If the bank forecloses on the loans, what are the ramifications to me, specifically, will the bank be able to attach my personal home or other real property? Also, is the bank allowed to sell these properties for well below fair market value, and hold me responsible for the difference?

Asked on 4/01/01, 4:45 pm

E. Brian Davis Davis Law Office

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Re: Foreclosure

Your liability depends on the underlying documentation.

Assuming that you have either guaranteed the loan, or signed

for it personally, you can be held liable for a "deficiency

balance" after the loans are foreclosed, the collateral sold, and

if there remains money due and owing. The bank could then seek

to collect that money by filing a lien against your house, attempting

to seize exempt assets, etc.

You may be able to negotiate a "deed in lieu" of a foreclosure. Under

such an agreement, you essentially give back the property, let the bank

avoid the delay and expense of a foreclosure sale, and walk away.

Answered on 6/05/01, 9:02 am

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