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 ?
The seminar will focus on current trends and emerging issues with lenders obtaining deficiency judgments, the sale of judgments to investors, settling outstanding balances prior to obtaining deficiency judgments, and how to avoid getting caught in the crossfire.
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.
The district court entered a deficiency judgment in the amount of $2 million on March 19, 2013.
The seller was released of a deficiency judgment and given $3,000 for relocation assistance.
He said the association opposes the bill, because of the time-period reduction to file for a deficiency judgment from five years to one.
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.
However, what if that obligated former spouse fails to pay the mortgage, the home is foreclosed, and a deficiency judgment is entered?
This process is required if the lender wants to obtain a deficiency judgment to hold the borrower liable for the unpaid balance of the debt.
A lender cannot obtain a deficiency judgment through a non-judicial foreclosure.
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.
The Sixth Circuit affirmed the deficiency judgment but reversed the decision on the penalty.
In computing the mortgagee's gain or loss on disposition, the amount realized represents a recovery of capital, such as proceeds from the sale or other disposition of the property, payments on the original indebtedness made by or on behalf of the mortgagor and any collections on a deficiency judgment obtained against the mortgagor.

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