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Can lender pursue deficiency judgment for the difference after a short sale?
Some states allow deficiency judgments after the short sale. Some states allow deficiency judgments after repossession or foreclosure. Each state has its own rules.
In Arizona is there a deficiency balance owed by the seller on real property in a short sale?
I thought that Arizona was a non-deficiency state, but when the bank accepted my offer they alerted me that they would be coming after me for the difference between the sale price and what I owe (which is over $100k). They said that if the house was sold for less than 90% of what you owe, than they have authorization to come after you for the deficiency.
How does the bank make up for short sale deficiency?
When a borrower defaults on a short sale, the bank may face a deficiency if the sale price is lower than the mortgage balance. To recover this loss, the bank can pursue a deficiency judgment against the borrower, allowing them to claim the remaining balance. Additionally, banks may adjust their lending practices or increase fees to mitigate future risks, and they often sell the property at auction to recoup some of their losses. Furthermore, some banks may offer loan modifications or other solutions to help borrowers avoid default altogether.
What is a short-sale?
A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens' full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any shortfalls on the loans, unless specifically agreed to between the parties.
What is the process for obtaining an Illinois deficiency judgment after a foreclosure sale?
To obtain an Illinois deficiency judgment after a foreclosure sale, the lender must file a lawsuit within 90 days of the sale. The court will then determine the amount owed by the borrower, taking into account the sale price of the property and the outstanding loan balance. If the court finds a deficiency, the lender can seek a judgment for the remaining amount owed.
In Florida are sellers of a home responsible for deficiency judgments?
If the sellers sold the home for as much as they owed on the loan, there is no possibility for a deficiency judgment, since there is no deficiency. If the sale was through a short sale where the bank took less than it was owed but allowed the homeowners to sell and walk away, the bank would have to sue for the deficiency judgment.
Deficiency judgments on foreclosures in KY does it happen?
Yes, there are deficiency judgements on foreclosures in the state of Kentucky. A person could have a personal judgement for the balance owed. An attorney can help you decide the best course of action.
What is a short fall sale?
A "short sale" refers to a home that is being sold for less than the balance owed to the mortgage company. For example, a home is listed for 450,000, but the owner owes 600,000 on the home. This would be a short sale.
Does a deficiency balance include interest?
A deficiency balance typically does not include interest unless specified by the terms of the loan or agreement. It generally refers to the amount owed after a collateral asset has been repossessed or sold, minus the amount received from the sale. However, if the agreement states that interest can be added to the deficiency balance, it may include accrued interest as well. Always check the specific terms of the contract for clarification.
Is New Jersey a deficiency judgment state?
Deficiency Judgments Deficiency judgments are permitted in New Jersey. A lawsuit for a deficiency must be commenced within three months from the date of the foreclosure sale, or confirmation of the sale if confirmation was required. Although the deficiency suit is a separate lawsuit, it can only be brought against a person who was joined to the foreclosure lawsuit and who is personally responsible for the mortgage debt. Such a person must be served with the process. On a note that is dated on or after May 1,1980, the debtor may dispute the deficiency by introducing evidence of the fair market value of the mortgaged premises at the time of the foreclosure sale. The deficiency is limited to the difference between the fair market value of the premises and the balance due on the loan. However, a borrower should object to the foreclosure sale price prior to the confirmation of the sale. The failure to do so may set the borrower up for a larger deficiency. However, some New Jersey courts are refusing to confirm the foreclosure sale unless the lender agrees, as part of the confirmation, not to sue the borrower for a deficiency greater than the difference between the fair market value and the balance owed on the loan.
Does gap insurance cover a repossession?
Gap insurance only pays if the vehicle is totaled in an accident or stolen and not recovered. It does not cover the deficiency balance after a repossession sale.
What are the pros and cons of a short sale verses a foreclosure?
Both a foreclosure and a short sale will ruin your credit for many years. With a foreclosure, it's best to file a Chapter 7 bankruptcy to protect you from the lender. The lender has up to 10 years to come after you for the loan deficiency. For example, if you owed $200,00 on a mortgage, and it cost the lender $75,000 to re-sell your property, you could be liable for that $75,000 deficiency. On a short sale, the lender can still come after you, but the amount that is short can be issued to you on a 1099 as a "loan forgiveness" causing you to pay income tax on that money.
