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Deficiency Judgments: Did You Know? What Is It A deficiency judgment is an unsecured money judgment against a borrower whose foreclosure sale didnt cover the mortgage in full. Where private mortgage insurance is in place, the insurance company will pay the lender the difference between what the house fetched on the market and what the borrower owed on his mortgage. Then, if the insurer thinks it can get its money back from the borrower, it will take the owner to court. It doesnt happen often because The bank knows they do not have it. It will cost more money to initiate a lawsuit and try to collect than they will ever recover. Thats why banks do not even bother suing after foreclosure. Short Sales Are Different Typically, mortgage insurers don't usually go after borrowers because a short sale is a negotiated settlement. A foreclosure or walk-away such as you are considering is not negotiated. However, in states where deficiency judgments are allowed and the borrower is still gainfully employed with resources you are vulnerable. In California, The lender can not sue the borrower for a deficiency judgment, and the borrower has no right of redemption after the sale of the property. But, thi is tricky stuff and you want to be sure that you understand the rules. Begin by checking out the California state website and then talk to professionals. However, not all states allow deficiency judgment. Check your local or state web site to determine if you are in a state that allows deficiency judgments before you consider walking away. REsourced from www.yourpropertypath.com You may republish this article, as long as you do not edit and you agree to preserve all links to the author and www.yourpropertypath.com
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