Deficiency Judgments
Recently, there was an article posted on a major news website about how mortgage lenders are pursuing homeowners after foreclosure. It seems that with the downturn in the housing market, more and more lenders are choosing to pursue their former customers for additional money after the foreclosure and repossession, most likely in an attempt to recoup their substantial losses amid the recent foreclosure epidemic.
Many homeowners may be under the impression that after a foreclosure, deed-in-lieu, or even a short sale, they’re done – the debt is gone – and the only issue with which they now have to contend is the damage to their credit. On the contrary, it is possible (and entirely probable) that lenders pursue deficiency judgments, which may result in wages being garnished or even time spent in jail if that money is not repaid.
Pretty scary, huh?
Who is looking out and actually reading those short sale approval letters and explaining them to you? I’m sorry to say that most REALTORS are not because they don’t understnad the difference between a total account settlement and simply a lien release. It’s certainly not obvious when reading these short sale approval letters.
Our company always fights for a settlement (no deficiency balance), but I’ve been seeing this more frequently, unfortunately. Lenders are refusing to waive their legal right to pursue for any deficiency. We, of course, always want to help our sellers start over with as clean a slate as possible. We can’t promise this will happen – we can’t promise you’ll walk away with no additional debt. We CAN promise, though, that we will do our best to that end, that we’ll exhaust all options to keep you safe from any pursuit by your lender.
If you’re facing foreclosure and the scenario I described may fit your situation, feel free to give us a call. We’ll see what we can do to help you get back to better times.
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