What Is A Mortgage Deficiency Judgment?

What Is A Mortgage Deficiency Judgment?

A deficiency judgment is a judgment lien against a borrower whose foreclosure sale did not produce sufficient funds to pay the mortgage in full. Deficiency judgments are limited to the fair market value of the property less the unpaid balance of the loan that was foreclosed.

A deficiency balance in a mortgage foreclosure is the difference between the outstanding balance due on the loan and the fair market value of the property on the date of the foreclosure sale. For example, if the balance of the mortgage is $200,000 and the fair market value is $130,000, the resulting deficiency would be $70,000.

There are two types of foreclosure systems, judicial and non-judicial. In judicial foreclosure states, the lender must sue the borrower (homeowner) and prove in court that the lender is entitled to foreclose. In non-judicial foreclosure states, the lender typically forecloses by giving notice of default,

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If it wins the lawsuit, the lender will get a judgment against you. Further, if your lender does sue you for the mortgage deficiency, you may be able to settle the dispute for pennies on the dollar.

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Their biggest fear is that the bank will file a deficiency judgment and try to get their teacher retirement. and sell the home to settle as much of the balance owed on the mortgage as possible. The.

Banks who have made mortgages in North Carolina are allowed to seek deficiency judgments against borrowers. The lesson to be learned is that if you owe more on your mortgage than your house is worth and the property is in a state that allows lenders to seek deficiency judgments, you may still owe money even after foreclosure.

A deficiency judgment is a court judgment that a mortgage lender gets against a homeowner after a foreclosure. Many states prohibit deficiency judgments, but Virginia, Maryland and the District of Columbia all allow them. Different states impose different limits on when a lender can pursue a deficiency judgment. But the basic premise is the same.

The judgment is filed only after the sale because the lender doesn’t know exactly what the bidding amount will be. Most probably the statute of limitation, that is the period up to which the lender can file the deficiency judgment is 4 years in Michigan. The statute varies from one state to another.

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