deficiency judgment


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deficiency judgment

A lawsuit and judgment against a debtor for the remaining balance due on a promissory note after giving credit for any repossessed or foreclosed collateral.

Example:  Sarah has a mortgage for $200,000 on her home. She defaults on her loan, and the bank forecloses. The bank sells the home at a foreclosure auction to a third party who bids only $160,000 because the home has been allowed to deteriorate and needs many repairs. Sarah still owes the bank $40,000 unless she lives in a state that does not allow deficiencies on home loans. The bank may sue Sarah and obtain a judgment for $40,000, called a deficiency judgment.

References in periodicals archive ?
His most recent article, "Tools of Ignorance: An Appraisal of Deficiency Judgments," was published in the Spring 201 5 issue of the Washington and Lee Law Review.
If a lender desires to obtain a deficiency judgment, then he or she should make a reasonable effort to value the real property and then make a bid that is commensurate with that value.
Florida courts apparently will not be deluged, with a couple notable exceptions, with hundreds of thousands of actions from banks seeking deficiency judgments from older foreclosure cases.
Arizona's anti-deficiency law won't constrain lenders that foreclose unoccupied homes owned by home builders, despite a law protecting owners of one- to two-unit family dwellings from deficiency judgments.
Lopa, the Second Department held that the equitable relief doctrine does not prevent a plaintiff in a foreclosure complaint from also requesting a deficiency judgment.
Husband failed to pay, the house went into foreclosure, and a deficiency judgment was entered against the wife.
The statute did not limit the lender's ability to seek a full deficiency judgment if it agreed to forego the nonjudicial foreclosure process and use the state's alternative judicial foreclosure procedures instead.
Lenders using the nonjudicial foreclosure process are prohibited from seeking a deficiency judgment against the borrower (Sec.
Unlike in a non-judicial foreclosure, a lender may obtain a deficiency judgment in a judicial foreclosure and pursue the owner for the remaining loan balance and costs.
For example, a 1933 Idaho statute specified that "no deficiency judgment may be entered in any amount greater than the difference between the mortgage indebtedness, plus the cost of foreclosure and sale and the reasonable value of the property" (Central Housing Committee, 1936, p.
However, the lender may seek recourse by suing for a deficiency judgment.
The Sixth Circuit affirmed the deficiency judgment but reversed the decision on the penalty.

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