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Who keeps the equity in a foreclosure
Who keeps the equity in a foreclosure. Do you get the money? Does the bank get the money? Who actually gets the money if you have to foreclose on a home?
KL
Kristopher Larson
January 1, 2024
Updated May 28, 2026
Who keeps the equity in a foreclosure. Do you get the money? Does the bank get the money? Who actually gets the money if you have to foreclose on a home?
Most people think the bank gets the equity. So let's say you have a $300,000 home and it's worth $300,000, but there's you only owe $200,000. There's going to be a hundred thousand dollars of equity there. Well, if you're going on a conventional loan, Fannie Mae, Fred Mack, or you're going on a government loan, FHA, your VA, whatever's leftover. You're going to get, but keep in mind, a lot of it's going to be tied up and taken up I should say, by the bank's attorney fees, may be different penalties and costs that you're going to have to pay. If you're in a homeowner's association, there could be a cost with that. If you owe any back property taxes, if you owe any money to any, say IRS or anything, it's all going to be taken up.
But if there's anything leftover, so maybe your home's worth $300,000, you owe $200,000, and let's just say all the fees and everything come up to $60,000. That $40,000 you're going to get. Now, if you go sign a private note or what's called a hard money loan with an individual or a corporation, they could write the documents however they want. And a lot of them will put down in there that if there is any equity, they get to keep it all.
I would also say, check your state and local ordinances, and what they'll allow to be done. Definitely read your note. Look it over. If you have any questions, ask the company who wrote it. But in most cases, you keep it.
Learn how to buy foreclosures in Utah
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