Deficiency judgment is the assessment of unsecured money against borrowers whose foreclosure mortgage sales do not generate sufficient funds to pay promissory notes, or loans, in full. The availability of a deficiency assessment depends on whether the lender has a recourse or nonrecourse loan, which is largely a matter of state law. In some jurisdictions, the original loan (s) acquired to purchase the property is/non-recourse, but subsequent refinancing of the first mortgage and/or acquisition of the 2nd (third, etc.) is a recourse loan.
In short, many jurisdictions argue that loans obtained at the time of property acquisition ("buy-money") are non-recourse, and most, if not all, of the next loan is another way.
Countries that follow the title (trust-deed) mortgage theory usually allow for the procedure of fast, non-legal seizure, but do not allow deficiency assessment. Countries that follow mortgage mortgage theory require judicial procedure of seizure, but allow the assessment of deficiencies to the debtor, although some countries have narrowed the time period to seek assessment of deficiency.
It is important to note that there is a difference between deficiency and deficiency assessment. "Lack" is the difference between the amount owed on the loan and the total amount received/collected on the loan closing. A deficiency assessment is a court decision that is a public record of the amount owed and by whom. In many states, the items included in calculating the number of deficiency assessments include: loan principal, accrued interest and attorney's fees, minus the number of lenders on foreclosure sales.
In 2014, Geoff Walsh, a staff lawyer with the US National Consumer Law Center, told NPR that the United States "sees uptick" in pursuit of claims for shortages, as technological developments have allowed large debt-purchase agencies and mortgage insurance firms to be more easy to pursue former borrowers, who often do not know their legal rights.
Video Deficiency judgment
References
Maps Deficiency judgment
See also
- Bankruptcy
- Foreclosure
- Mortgage law
- Real estate
Source of the article : Wikipedia
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