A deficiency is the difference between the homeowner debt (or balance) on the property and what the home sales for in foreclosure auction.
A deficiency judgment is a money ruling made by a court against the homeowner to pay the amount that was not obtained in the mortgage foreclosure sale. The foreclosure sale usually does not cover the original mortgage balance, fees plus all other liens that are applied to the property. (Other liens could include homeowner association, code enforcement, mechanics liens or Internal Revenue Service debt. This is why it is not smart to just walk away from your house and why it is important to settle your debt.
Our negotiators can dissolve all deficiencies! We will provide you with legal representation, a buyer for the home (if needed) and obtain a full deficiency waiver for all debts associated with the property. At NO COST to you!
The owner will be liable to pay back the difference between the total amount owed and what the house sold for in foreclosure sale or auction. Banks have one year (after foreclosure) to file the deficiency judgment against the homeowner. They can require the homeowner to pay this balance after foreclosure. This is called “Zombie Debt” because this judgement doesn’t die and follows you around until you get rid of it!! It attacks the homeowner when they least expect it.
Example Of A Deficiency Judgment
What Could Happen?
When your lender wins the deficiency judgment against you, you are personally liable for the amount of the judgment: Again, this is why you cannot just walk away from a house. You’re legally obligated to pay your lender. If you don’t pay, your lender can try to collect using other methods. Your judgement can also be sold to a debt collector or collection firm and the debt collector pursues the debt. Debt collectors may try several approaches:
- Garnishing your wages: Taking a portion of your paycheck until the debt is satisfied.
- Levying your accounts: Taking cash from your bank account to reduce the debt.
- Putting liens on other property: Taking a legal interest in items you own (although your home, car, and other essential items are often protected)
- Contacting you and requesting money: Debt collectors can be persistent and persuasive. If you don’t intend to pay or communicate with collectors, you can request that they stop contacting you. However, that doesn’t prevent them from taking the legal actions listed above.
Keith Jackson is a Licensed Real Estate Broker, Appraiser with a CPL and CPME property management certifications. He is a Debt Settlement and Disposition Specialists with over 16 years and 10,000 of experience in Distress sales. Email or Call Keith Jackson today.