What happens to a lien if your home is repossessed?

This will depend on the specific situation. Let’s say that it is a normal foreclosure with only 1 lien, the first mortgage against the title. If you were foreclosed on by that lender, the property goes to sheriff sale. At that point the lender is paid from the funds of the sale and the property transfers to the new owner. If the sale amount was not enough to satisfy the lien in full, the lender has the ability to apply for a judgement against you. A mortgage is a lien against the title of a home, so it doesn’t follow you, a judgement however is attached to an individual and will follow you regardless of property ownership or not. This type of judgement is known as a ‘deficiency judgement’ and would be for the difference in the amount of the sale and the amount owed to the lender at the time of the sale. This doesn’t always happen, but it is important to know that the lender could pursue you for the amount they are still owed.

The situation gets more complicated if there is more than 1 lien against the property. When it goes to sheriff sale, funds from the sale go to the first lien first, and then to the subsequent liens. If these lienholders are not able to be paid in full from the sale of the home, they too can attempt to attach a judgement to you for the balance owed. Even if the foreclosure is initiated by a secondary lienholder, they will not receive any payments until all the seasoned liens are paid in full first.