A homeowner obtains a
mortgage from a lender.

The homeowner pays
part of the loan

But then cannot make
mortgage payments.

The mortgage lender takes back the property
and the debt attached to it.*

The property deed
goes back to the
mortgage lender.

The lender can turn
around and sell the
property to recoup
some of its losses.

The lender can sue the homeowner for the deficiency by filing a motion for deficiency judgment against the person in court . . .

. . . hire a debt collector
to collect the debt from the homeowner for the lender . . .

. . . sell the mortgage debt to a debt collector, who can pursue the homeowner for the deficiency . . .

. . . forgive the debt and not pursue the homeowner.

*Interest accrues at a daily rate between the time of foreclosure and when a lender comes after the debt. If the lender is a failed bank, the property is sold at an auction in which some entities that are buying may file a motion for deficiency judgment based on the homeowner’s credit history, loans and properties.

SOURCE: Staff reporting of industry experts. GRAPHIC: The Washington Post.