Depending on the state that you reside in, you could be in for a rude awaking if your home was foreclosed upon. For what you asked? Well if your home sold for less than what was owed on your mortgage than you could be liable for the difference. This is known as a deficiency judgment claim.

There are more than 30 states that allow owners of these notes to go after you if they were not able to sell your home for what was owed on the mortgage. These states include, New York, Florida, and Texas.

Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.

So make sure you ask for a release from the bank.

Otherwise, you could be face with a lawsuit and harassing letters from collectors because in the next few years, banks will be selling many of these types of accounts to collection agencies and other third parties, at discount.

So there are two things you should take from this: (1) ask for a release and (2) read all your paper work carefully when you agree to allow the bank to take back your home. Make sure you don’t agree or acknowledge any debts because your home is going to be sold for less than what you owe on your mortgage.