Title 12, Banks and BankingRelease 119-110

§3712 Disposition of Sale Proceeds

Title 12 › CHAPTER 38 — MULTIFAMILY MORTGAGE FORECLOSURE › § 3712

Last updated Sep 22, 2026|Official source

Summary

Money from a foreclosure sale must be used in a set order. First pay the foreclosure costs under section 3711. Next pay valid tax liens or assessments that come before the mortgage. Then pay any other liens recorded before the mortgage that the sale notice said must be paid. After that pay service charges and any advances for taxes, assessments, and property insurance. Then pay interest, then the mortgage principal (including costs for protecting, preserving, or repairing the property if the mortgage allows), and then late charges. Any money left over goes to lienholders recorded after the mortgage and then to the mortgagor. If a payee can’t be found, claimants disagree, or someone objects, the foreclosure commissioner can put the disputed money with a court or official that holds disputed funds. If that is not possible and the commissioner asks a court to decide or is sued, the commissioner’s necessary costs in doing that can be taken from the disputed funds.

Full Legal Text

Title 12, §3712

Banks and Banking, Source: USLM XML via OLRC

Money realized from a foreclosure sale shall be made available for obligation and expenditure—

(1)first to cover the costs of foreclosure provided for in section 3711 of this title;

(2)then to pay valid tax liens or assessments prior to the mortgage;

(3)then to pay any liens recorded prior to the recording of the mortgage which are required to be paid in conformity with the terms of sale in the notice of default and foreclosure sale;

(4)then to service charges and advancements for taxes, assessments, and property insurance premiums;

(5)then to the interest;

(6)then to the principal balance secured by the mortgage (including expenditures for the necessary protection, preservation, and repair of the security property as authorized under the mortgage agreement and interest thereon if provided for in the mortgage agreement); and

(7)then to late charges.

Any surplus after payment of the foregoing shall be paid to holders of liens recorded after the mortgage and then to the appropriate mortgagor. If the person to whom such surplus is to be paid cannot be located, or if the surplus available is insufficient to pay all claimants and the claimants cannot agree on the allocation of the surplus, or if any person claiming an interest in the mortgage proceeds does not agree that some or all of the sale proceeds should be paid to a claimant as provided in this section, that part of the sale proceeds in question may be deposited by the foreclosure commissioner with an appropriate official or court authorized under law to receive disputed funds in such circumstances. If such a procedure for the deposit of disputed funds is not available, and the foreclosure commissioner files a bill of interpleader or is sued as a stakeholder to determine entitlement to such funds, the foreclosure commissioner’s necessary costs in taking or defending such action shall be deductible from the disputed funds.

Reference

Citations & Metadata

Citation

12 U.S.C. § 3712

Title 12, Banks and Banking

Last Updated

Sep 22, 2026

Release point: 119-110