Understanding Deficiency Judgment After Foreclosure
One of the reasons homeowners is anxious of being sued by their bank for a deficiency judgment after facing foreclosure is that almost any lawyer they contact will bring up this possibility. Some attorneys may even use the threat of added legal action after foreclosure as a reason to file bankruptcy in advance or else pressure borrowers into having a legal advocate throughout the process of disposing the home. Lawyers have a vested interest in keeping clients in fear of lawsuit, even for such an unusual case as deficiency judgments.
Deficiency Judgment is only effective when it has been approved by the court which is known as “Final Judgment” amount in nearly all states. On the other hand, in some states, the property must be sold to determine the expected net loss. The borrower will be the one who is responsible for the mortgage or deed of trust payments. The bank may not be able to ask for a deficiency judgment depending on whether the foreclosure is judicial or non-judicial.
Deficiency is the deficit amount the bank will not get back from the mortgage balance and expenses due. In nearly all states, the lender has a choice to obtain a judgment against the borrower. On the other hand, these laws are not effective in all states. They vary state-by-state and must be examined thoroughly to determine which is appropriate to the reader. You must weigh your rights and options when you make a decision before letting your home to be foreclosed as there are many alternative and helpful solutions for you besides foreclosure and deed transfer to the lender. Do not be afraid that the lender will follow you forever just to collect the deficiency judgment. Remember that you have several options to fight this including attacking the validity of the original loan.
Leave a Reply