Local Law Firms Home > Real Estate Law Overview > Deficiency Judgments Mortgage lenders may seek deficiency judgments if the list price of a foreclosed property is less than the pending balance on the mortgage plus the legal costs of the foreclosure. What this means is that homeowners with an underwater mortgage who get foreclosed may end up liable to pay even more after giving up the home or being evicted. Even so, it is not a given that the lender will be granted a deficiency judgment. Do you or does someone you know need legal information regarding deficiency judgments? Our real estate lawyers are here to help. Contact a real estate attorney in your area today for more information. There are many state laws and circumstances that can limit the lender's powers in this matter, as detailed below:
Some states may not allow this process without prior consent of the borrower. In such states, lenders may ask homebuyers to enter into a recourse mortgage and provide their informed consent to this clause as a part of the mortgage contract. Even then, the courts may only allow a deficiency judgment based on the fair value, which is likely higher than the property's list value after foreclosure. Some states have laws against deficiency judgments on first mortgages for your primary residence. You lawyer may also be able to postpone the deficiency judgment by asking the courts to delay it until the actual auction sale of the property. The property may end up getting more than the list price, which will reduce the deficiency judgment amount to be paid. Do you have additional questions regarding deficiency judgments? Our real estate attorneys are here to assist you throughout the process and answer any questions you may have. Contact a real estate lawyer near you today. Did you know? Deficiency judgments may not be available for lenders taking possession through non-judicial foreclosures. If the lender is foreclosing a property without filing a court lawsuit and based only on mortgage documents and the state law, then the court can refuse to grant deficiency judgments to the lender.
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