text: if a house if forclosed, isnt all debts against the house forgiven (such as 1st and 2nd mortgages)?   no.  in most cases you can still owe money.  your house was merely the security for the loan.  lenders are in the business to make money - "forgiveness" is not usually a business term.    example:  lets say you had a mortgage for $100,000.  when you made your payments you mostly paid the interest so at the time of the foreclosure you owned $97,000 on the loan you signed.    after it is foreclosed the bank/lender sells the house for $85,000.         $97,000  (amount you promised to pay)  -     85,000  (amount the lender got for selling the house) ____________      $12,000   (the amount still owning on the note you signed)  they can sue you to recoup the amount they lost.  also, when a house is foreclosed the house now "belongs" to the lender.  it is no longer your house.  if the bank sells the house for a profit (more than you owe) they keep the difference.  after all, they just sold their house.