Benny L. Kass Mailbag

Foreclosure may leave other assets at risk Q:I am retired. About 18 months ago (before the economic crash), I bought a fixer-upper and renovated it, but I've been unable to sell it. If I let the property go into foreclosure, can/will the bank that gave me the mortgage try to get at my other assets (equity in my home, stocks, etc.)? -- Irvine

Answer: You are asking about a legal concept known as a "deficiency judgment." Let's take this example: You owe the bank $200,000 when you go into default. The bank -- after trying to work something out with you -- forecloses on the property. At the sale, the property is sold for $150,000. The difference -- $50,000 -- is the deficiency.

Your state law will provide the answer as to whether your bank can seek a judgment against you in a court of law. Recently, the National Consumer Law Center in Boston issued a comprehensive report titled "Foreclosing a Dream." According to this report, "in 36 states and the District of Columbia, mortgage holders can pursue so-called 'deficiency judgment' claims against homeowners even after the foreclosed home has been sold at auction."

This report analyzes the foreclosure laws in all 50 states. It is available on the Web at http://www.consumerlaw.org.

However, even in those states that prohibit or restrict deficiency judgments, those laws apply to consumers but not investors. So in your case, it is possible that you are not protected. If you let your property go to a foreclosure sale, not only will your credit be ruined for a number of years, but you may be sued by your lender for any deficiency. Please talk with your lender and an attorney before you take any drastic actions.

Q:I have a family member living in a condo that my family paid off years ago. The only commitment to living in the property was to pay the condominium fees. If the payments stop, can my property be subject to foreclosure. What can they do to me? -- Kim

Answer: My first question: Is someone paying the real estate tax to the state or county? If not, the property can be sold at a tax sale.

If the condo fees are not paid, yes, the condo association has a number of alternatives. It can sue the property owner for the amount owed, or it can foreclose on the property.

While I know that times are tough, if community association homeowners do not pay their assessments, that will seriously affect all association homeowners. The association does not have enough money to properly maintain the property, and property values will continue to decrease, making it more difficult to sell.

I strongly urge all community association homeowners to make their assessment payments timely. It's your property; don't let it go to waste.

Benny L. Kass is a practicing attorney in Washington. Questions for this column can be submitted to .