There is an aspect to the foreclosure mess that people should be aware of, especially people who have had the misfortune of having lost their home after it was foreclosed upon. It so happens that in some states any proceeds left over after a foreclosure sale are owed to the original owner. In other words if there was equity left in the home after it was sold or auctioned off and all claims against the property were paid, that money belongs to the home owner who was foreclosed upon.
Normally this type of situation does not happen. It is rare for any funds to be left over after a foreclosed home has been sold. Once in a while, however, this situation does arise, and the state of Colorado, for example, has a fund of over $600,000 in the state Treasurer’s office that consists of money that is owed to former home owners who have lost their houses to the foreclosure process.
It is rare that people who are owed these funds ever learn about it. The state Treasurer’s office is only required to mail a notice to the evicted owner’s last known address. In most cases this is the home they no longer live in, and usually they have not left a valid forwarding address. The state Treasurer is also required to put a notice in a local newspaper for a week. Usually they pick a small local publication that few people have ever heard of. So it is not surprising that the people who are owed money by the state never are aware of this.
An example of this was a 63 year old man. He was injured and lost his job, and he also had to care for his sick wife, who eventually died. He lost his home to foreclosure and lived for two years in his car, when in fact he was due $50,000 from the state of Colorado. The only reason he ever found out about this is that a large local newspaper did a news story on the subject, and they found him and informed him of the situation. Having this money sooner would have saved this man a lot of pain.
The state Treasurer’s office might seem to be at fault in these cases, but they do what is required of them. They do not have a budget to search for people who are owed money in this way. It is a little hard to believe, however, that someone in the office couldn’t volunteer to put in a little effort beyond the minimum required to try and locate people who are in desperate need of the money their department is holding for them.
It is likely that each state has its own unique laws with regard to this type of situation. People who have been foreclosed upon should be aware of this eventuality in case they might be able to benefit from it. It is reasonable that those who have lost a home to foreclosure would need all the money they can get their hands on.