Surplus funds

🏛️ National News: What Are Surplus Funds? Surplus funds arise when a property is sold at a foreclosure auction for more than the amount owed on the mortgage and any associated foreclosure costs. After all valid liens and debts are paid, any remaining balance is considered surplus — and in most states, it legally belongs to the former homeowner or their heirs. Who Can Claim Surplus Funds? The rightful claimant is typically the property owner at the time of foreclosure. In cases where the owner is deceased, heirs may be entitled to the funds. However, certain subordinate lienholders, such as second mortgage lenders or judgment creditors, may also file claims if they haven’t already been satisfied through the sale. How to Recover Surplus Funds Claiming surplus funds requires specific legal steps, which vary by state but usually involve: Filing a formal motion or petition with the court Submitting proof of ownership or heirship Complying with deadlines and procedural requirements Attending hearings, if required Failure to follow the correct process can result in the loss of these funds, as unclaimed surplus is often turned over to the state after a certain period. Warning: Scams on the Rise There has been a rise in fraudulent operators targeting former homeowners, offering to recover surplus funds in exchange for high upfront fees or signing over rights to the funds. Homeowners should be cautious and seek guidance from licensed professionals or the court directly before signing any agreements. The Bigger Picture With foreclosure rates slowly rising across the country, surplus fund claims are expected to increase. Many homeowners and heirs remain unaware of their rights, leading to millions of dollars going unclaimed every year. Raising public awareness and improving access to surplus recovery services has become an emerging priority in the real estate legal space.