Once the house is sold at the foreclosure auction, will I owe anything else?

This will depend on whether the mortgage company has demanded a Deficiency Judgment against you. If the winning bid at the foreclosure sale is less than the balance on your mortgage, the mortgage company can hold you responsible for the difference. The court can issue a Deficiency Judgment against you for that difference.

A Deficiency Judgment lasts for ten years. It also acts a lien against any real estate you own in the county where it is recorded. The mortgage company can record it in other counties to place liens on other real estate that you own as well. In South Carolina, a Deficiency Judgment cannot be collected through garnishment or through criminal law. The mortgage company can ask the Sheriff’s department to “attach,” or seize, other personal property you own, and sell it at public auction to pay towards the judgment. However, South Carolina does offer some exemptions which allow you to protect up to a certain value of specific types of assets that cannot be taken and sold to pay a judgment. The specific values of these exemptions change from year to year.

As noted above, sometimes the mortgage company will waive that deficiency judgment, but that is their decision. If they do so, they have given up their right to collect a money judgment against you if the home sells for less than you owe.

If the mortgage company cancels the remaining debt, you could end up owning a tax debt.  A mortgage company can in some circumstances tell the IRS that it has cancelled a debt that you owe.  The mortgage company is supposed to send you a 1099-C form if it cancels your debt.  This is how you know that the IRS will consider the waived debt to be income to you. 

The problem is that the mortgage company might send the 1099-C form to the house you just lost, so you might not receive it if you did not have your mail forwarded. It is also a good idea to check with your mortgage company or the IRS in the tax year following your foreclosure to see if a 1099-C was issued.

You are allowed to challenge a Deficiency Judgment if you believe that the foreclosure sale price was less than the home’s actual value. In South Carolina, you have what are called “appraisal rights.”  These rights are found in S.C. Code Sections 29-3-680 through 29-3-770. If you follow the procedures in those statutes, you can have the house appraised after the Foreclosure sale and to have the appraised value substituted for the highest auction bid when calculating the amount of the Deficiency. 

For example, if the house sells at auction for $30,000 leaving a Deficiency, you timely exercise your appraisal rights, and the house appraises for $50,000, your Deficiency will be reduced by up to $20,000 (the difference between the appraised value and the winning auction bid).  You may want to contact an attorney to assist you with this.

Sometimes, the home sells for more than you owe on it. If this occurs, the court will hold a hearing to determine who is entitled to those surplus funds.