Being in foreclosure can be very difficult and draining, but if there is equity in the home, you could be entitled to “Surplus Funds” after a sheriff sale.

Beware scams and scam artists who try to take large portions of these funds. These scams specifically target people who have just lost their home, or people who inherited property from homeowners who have died.

What are Surplus Funds?

Foreclosure is the legal process after there is a default on mortgage payments in which the lender seeks to sell the property at a Sheriff’s Sale to recover the money owed. The Sheriff’s Sale is the public auction of that foreclosed property, occurring at the end of the foreclosure process.

Sometimes, a foreclosed property sells for more than the amount owed, resulting in Surplus Funds. Surplus Funds (also called “Mortgage Surplus”) are any proceeds from a Sheriff’s Sale that exceed the debt originally owed to the lender, and you may be entitled to them.

What is a Surplus Funds Scam?

As detailed by the NJ Office of the Attorney General, Surplus Funds Scams are carried out by predatory individuals or companies that seek to take advantage of, and capitalize on, people who lost their home due to foreclosure.

Once a Sheriff’s Sale has concluded, the foreclosed individuals or heirs receive calls, emails and letters, offering assistance to apply for Surplus Funds. Many times this assistance comes with exorbitant fees and in many cases the “assistance” will cost 30% of the total amount of the funds, or more.

How to Avoid Surplus Funds Scams

If your property was foreclosed and sold at Sheriff Sale, and you have received calls from groups or individuals offering to apply for Surplus Funds on your behalf, or if they charge noticeably high fees for their “services,” beware.

While the application process can be difficult and time consuming, in truth, you can apply for Surplus Funds on your own.

Additional steps and precautions you should take to avoid Surplus Funds Scams include:

If you need assistance with obtaining Surplus Funds, you should contact a licensed New Jersey attorney, or contact Ira J. Metrick, Esq.

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