Avoiding a Deficiency Judgement After Foreclosure

A deficiency judgement is one that allows your lender to sue you for the difference between either what they are owed or the current market value of the home and what was paid for it at the foreclosure auction. The laws regarding a deficiency judgement after foreclosure vary from state to state so it is important to know how the process works in your state before proceeding. In many cases, lenders do have the right to pursue this type of judgement.

Talk to Your Bank
The best way to avoid a deficiency judgement after foreclosure is talk to your bank before the foreclosure is complete. Ask them directly if they will pursue a deficiency judgement against you. Ask them if they would agree to sign legal paperwork waiving their right to pursue a deficiency judgement. If you are doing or at least trying to do a short sale on the home, your lender may be more inclined to waive their right to this kind of judgement. Talk to the realtor handling your short sale to see what help they can provide. If you are doing a deed in lieu of foreclosure, you will also want to ask your bank to include this as part of the paperwork. If you are simply walking away from your home and have not tried to workout a deal with the bank, it may be difficult to get them to agree to this.

Check With an Attorney
If you have tried to talk to your bank about this issue and they either will not talk to you about it or refuse to waive their rights to a deficiency judgement after foreclosure, check with a lawyer to see what, if any, options you have. They should be able to give you a clearer idea of whether or not the bank will pursue a judgement in your case. They may also have suggestions for how you could get your bank to agree to not pursue one.

The good news is that banks do not often pursue a deficiency judgement after foreclosure. In states where there is a non-judicial foreclosure process, the bank would typically have to file a lawsuit against you for the deficiency judgement. This takes more time and legal resources on their part. If you live in a state where judicial foreclosure takes place, the deficiency judgement can sometimes be included in foreclosure case. It is worth your while to check to see if this is the case in your situation.

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Foreclosure is enough of an issue to get over without having to worry about a deficiency judgement after foreclosure. Try to resolve this issue before your foreclosure process is complete. Get more information at http://www.stopping-home-foreclosure.com/DeficiencyJudgementAfterForeclosure.html