Hello I am from Canada and I am just asking this question on American banking system situation. Homes that people foreclosed on and their homes become empty I would presume the houses are owned by the banks, but even on the banks side are those homes paid off or are the banks also in deep dept for those vacant or unpaid homes . Thanks
Most foreclosing banks hold mortgages encumbering the subject properties with first priority as against all other liens except property taxes. When banks holding such mortgages foreclose the process wipes out all junior indebtedness encumbering the same property. So the banks start fresh and sell the foreclosed properties at lower prices than the amount of the foreclosed mortgages. The foreclosure process ensures that the foreclosing bank doesn't obtain title subject to other debt.
