The Deficiency Judgment: Yes, You Can Even Owe Money After A Foreclosure
So it’s not bad enough that you lost your home to foreclosure or had to sell it via a short sale because you couldn’t make the payments anymore.
Now some many months later you get a letter in the mail or a call on your phone and somebody tells you that you owe hundreds of thousands of dollars on something called a deficiency judgment.
It’s then that the reality of the situation smacks you dead in the face. What in the world happened and what do I do about it!
Well it seems that more and more mortgage lenders have started using a deficiency judgment to recover the loan balance form the homeowners. The primary objective of these lenders is to allow them another way of for them to recoup as much of a defaulted loan “deficiency” as possible.
Well the way to avoid a deficiency judgment is to begin taking action as soon as you begin your short sale. If you don’t do anything and let it go to auction via sheriff sale or courthouse auction you could be pretty much toast!
A deficiency judgment can be obtained by lenders in most states when they don’t recoup what they are owed when the sell the house. For instance if you owe $100,000.00 and they sell the house after they get it back for $70,000.00, they theoretically can come after you for the $30,000.00 that they lost. Sucks doesn’t it? I mean you’ve lost your home and you still owe a ton of money.
That’s why a short sale, done correctly, can help you avoid this dilemma. Unfortunately too many real estate agents do not know how to structure short sales so that their clients don’t get saddled with deficiency judgments.
Don’t put yourself in a situation where you are subject to a deficiency judgment because of some incompetent Realtor. Dowload our book on the Truth About Deficiency Judgments and learn what you need to know to avoid one.
