Recovery of Surplus Funds
When a mortgage is foreclosed on a home the mortgaged premises will eventually be sold at public auction with minimum bid requirements of at least ⅔ the appraised value of the real estate. The proceeds of sale will generally first be applied to the balance owing on the mortgage being foreclosed and then any lien holders who have filed answers in the case. If a lien holder does not file an answer, their interest in the property will be extinguished and they will recover no proceeds from the sale.
More about Surplus Funds
A scenario that is becoming more common is when there is a surplus of funds remaining after the mortgage and any answering lien holders have been satisfied. In other words, the proceeds of sale from the public auction are in excess of the mortgage loan and any other liens. So where does the surplus go? It sits in a court fund until an interested party – such as the homeowner of a personal representative or administrator of a deceased homeowner – files an application with the court for the foreclosure judge’s consideration. Time can be of the essence in seeking recovery of the surplus funds because the court clerk of the county where the foreclosure was brought will eventually turn the funds over to the State of Oklahoma’s unclaimed property fund.