What are “Excess Proceeds”?
When a house is foreclosed, the process is usually done with a foreclosure sale, technically referred to as a “Trustee’s Sale”. If the property sells for more than the amount owed to the lender, the difference over the loan balance is referred to as “Excess Proceeds” or “Surplus Funds”. Different states have different Laws. But typically, these Excess Proceeds are generally deposited with the appropriate county treasurer. If someone believes they are entitled to receive these funds, they must seek and obtain a court order requiring the county treasurer to turn over the funds to them. This requires a legal action and involves very specific laws and procedural rules. It is very important that these laws and rules be followed correctly. Because it is a court action, it would be beneficial to utilize our services to make sure the legal statutes are met.
Who has a right to claim the Excess Proceeds?
Any person with a recorded or other legal interest in the property at the time of the Trustee’s Sale may be a claimant for these funds. Thus, the person who owned the home prior to the Trustee’s Sale can claim the funds. Also, if there were any junior mortgages, homeowner’s association liens, or tax liens filed against the property, these entities may have a right to the funds as well.
Can the former homeowner claim the Excess Proceeds, even if there was a second mortgage against the house?
Most State laws state that any person with a recorded or other legal interest in the property at the time of the Trustee’s Sale may be a claimant for the funds, this certainly allows the former homeowner to claim the funds. However, there are priority positions. Someone else, such as a junior lienholder (second mortgage) or homeowners association, may be ahead of the former owner in priority to receive some or all the funds. But, if these other entities do not claim the funds, the former homeowner may do so. In such a case, it is very important that the homeowner follow all the laws and rules of procedure including sending proper notice to all required parties.
Why would a junior lienholder/second mortgage fail to claim the funds?
There are several reasons. Sometimes, they might just overlook them. Also, in recent years there have been large national settlements which have required these mortgage lenders to forgive (or write off) billions of dollars in second mortgages. In these cases, the lenders cannot claim the funds. Additionally, mortgages are often transferred or sold to other entities, who may not have the proper documentation to claim the funds. In these cases, the junior lienholders will not claim the funds.
What should I do if I believe there are Excess Proceeds from the foreclosure of my house?
Contact us. Any one of our staff member will be happy to discuss the matter with you and do the research to determine whether there are any Excess Proceeds, and whether you are entitled to receive them. If you do choose to utilize our services to recover these funds, you will never be required to pay anything up front. We will reimburse ourselves if we successfully recover funds. If for any reason we are unsuccessful in recovering the funds (for example, if a second mortgage DOES claim the funds), then you will owe us nothing. Please feel free to contact us by submitting an e-mail request at: firstname.lastname@example.org