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Fatwa CenterPaying mortgage on foreclosed house
Question
I had a house with two mortgages that was foreclosed due to hardship. When the house was foreclosed, the first lender was paid in full. However, the second lender was never paid anything because the house was foreclosed during the 2009 housing crisis and was sold for less than the amount of the loan. I owe the second lender $50,000. What is my obligation to the lender considering that the collateral (the house) was foreclosed?
Answer
All perfect praise be to Allaah, The Lord of the worlds. I testify that there is none worthy of worship except Allaah and that Muhammad, sallallaahu ʻalayhi wa sallam, is His slave and Messenger.
You are obliged to pay the loan to the lender, and the fact that the house was sold for less than the amount of the loan is irrelevant. You should hasten to repay the loan in order to clear yourself of your liability. However, you are only obliged to pay off the exact amount of the loan, and nothing more. Hence, if there is any interest charged on top of the loan, then you are not obliged to pay that as long as it is possible for you to do so, as we have previously underlined in fataawa 86521 and 86136.
Allaah knows best.
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