What is a Deficiency?
Explanation
If your house sells for enough money to cover the amount of the loans against it, the lender is made whole.
If the house sells for less than the loan there is a "deficiency."
After a trustee’s sale, the lender is generally unable to go after the borrower personally for any deficiency—a major disadvantage for the lender. The lender is said not to have recourse and the loan is "non-recourse".Find out whether your state is a recourse or non-recourse state.
In most states, anti-deficiency laws only apply to purchase money loans. These are loans made for the actual purchase of your property. If you took out a second loan, such as a Home Equity Line of Credit (HELOC) or refinanced, you are probably not covered by the anti-deficiency rules. The lender has "recourse" against you.
State's vary in their rules regarding deficiency judgments and you should check the summary for your state in the State-by-Foreclosure Guide. You should also follow the link to your state's statutes.
Agree to IndyMac Short Sale terms?
We purchased an investment property in Fresno that we are now attempting to do a Short Sale on. There is no second, and the paperwork is just about complete, but we are concern with this statement in the Short Sale Lender Agreement:The borrower must sign the attached acknowledgment to all terms specified in this approval and must acknowledge that Indymac Mortgage Services retains all deficiency rights as provided by the note, deed of trust and/or security agreement in accordance with local and federal laws.Can IndyMac come after us for the deficient amount if the sale is approved?
Re: Short Sale terms
Anti-deficiency statutes generally don't apply to investment property. The lender appears to be stating that they are not giving up any rights that they had prior to entering into a short sale agreement with you. I highly recommend consulting with an attorney--an examination of all the paperwork and attendant facts is essential.
Primary in Illinois, Rental in Nevada
I own a home in Illinois, with a mortgage of 250k, and a market value of 500k. I have stocks of 200k. I bought a house in Nevada for 360k and have a mortgage on it of 300k. I rent the property, but it's market value is now 170k. The renters moved out and I can't get it rented. I would like to "let it go" through a foreclosure. I am concerned if the Nevada lender can lien my Chicago primary residence, and/or go after my stocks, and/or garnish my wages with a deficiency judgment. Do you know if they can? Also, I have contacted an attorney in Illinois who directed me to find a NV attorney, but my RE agent in Nevada said I need an Illinois attorney. Any thoughts? Your advice is greatly appreciated.
Residential loan non-recourse?
Thank you so much for replying to my questions about deficits in foreclosure. When this property was re-financed, it was refinanced for a residential loan, not a rental. My understanding is that this would make it a non-recourse loan? If it is a non-recourse loan, I was thinking that the bank could not sue me for a deficiencies. Is this generally true? Again, thank you so much for your response. I can not tell you how appreciative, I am.
Residential loan non-recourse?
Most Deed’s of Trust have an occupancy requirement which determines whether a property is considered a principal residence. Here’s a typical clause:“Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in write, et. Cetera.”This clause, if there is one in your Deed of Trust (or mortgage) is subject to interpretation by North Carolina law. Consult a North Carolina lawyer for a legal opinion.
Deficiency judgment on rental property?
I have a question in regards to what happens to other property that a person might own if a person is forced to foreclose on a home. I have had renters in a home and they have just given me notice that they are vacating. Without the rental money, I can not make the mortgage payment. I do not have the money to go in and do a rehab on the property. It is not rent-able until it can be rehabbed. I owe the bank approximately $190000 and the tax value of the property is approximately $220000. I think it would take about $50000 to do the work needed. I was declared disabled three years ago and the disability that I receive is not enough to make the mortgage payment on the rental property and pay my bills. I have another rental property that is in my daughter's name and mine. Can the bank take the other rental property that is held in my daughter's and my name? The rental properties are in N.C. Thank you for your help.
Re: Deficiency judgment on rental property
Owners of rental property generally are not protected by anti-deficiency legislation, which North Carolina apparently has. The tax value of your property is greater than what you owe the bank, but the tax value isn't the important number--you need to talk to a real estate broker about the probable market value of your home. If the market value (even after disclosing the need for rehab) is greater than the amount you owe then consider putting the house up for sale. If, on the other hand, you lose money on the sale, the bank will need to sue you to get any shortfall. Since your daughter is on the title of your other property, they theoretically can only go after your interest in the property. A lien would be placed on that property, and the bank would recover its money when that property is sold. There are a lot of variables--it depends on how you and your daughter hold title, when she acquired title with you, etc. Most of all it depends on North Carolina law--you need to speak with a North Carolina lawyer to sort through the issues. Call a lawyer and ask whether he or she does real estate work and how much the fees are. Advice from a good North Carolina lawyer would be money well spend in your situation.
requesting information about foreclosed
hello Mr. Thompson i just have a question i hope i dont have to pay to get an answer because i wont be able to afford it :-) but if you could be kind just to answer me this question.I was told that when you let your house go on foreclosed the bank or whoever will try to look into your other properties and take them from you, sale them so that they can get some money back to pay what they lost by giving you the loan. IS THIS TRUE MR.THOMPSON?.
Re: requesting information
It depends on the state that you live in and whether you have a 2nd mortgage on your house. Every state has difference rules. Go the State-by-State foreclosure guide on ForeclosedDreams and look up your state. In some States the lender isn't allowed to sue you if you default on your first mortgage--if the money obtained was used to purchase your house. If you can't afford an attorney, call HopeNow at 888-995-HOPE. It provides free foreclosure prevention assistance and isn't a scam. See www.hopenow.com..
Garnish my wages?
I live in California and we are behind on mortgage. We got denied on a loan mod for the 1st loan. Both my loans 1st & 2nd are with our lender. The 2nd is claiming they will garnish my wages if house is forclosed on and they don't get money back from sale. Can they take my wages? Thank you,
Garnishment
In California, a lender can not pursue a deficiency judgment on a loan that was used to purchase a primary residence. However, you can be sued on a 2nd deed of trust. The lender can't just garnish your wages--it needs to file and win a lawsuit. Then it needs to execute on the judgment to obtain a garnishment or other assets. A bankruptcy can wipe out the deficiency. Depending on your circumstances it may be your best option.
Can my lender invoke a deficiency on me if I walk away?
How can I determine if my present mortgage is covered by the anti-deficiency rules?
Depends on the state your home is located in.
Each state has its own anti-deficiency rules. For general guidance visit the State by State Foreclosure Laws on this website. You can find a link on the right side of this page. For more specific guidance, call HOPENOW at 888-995-HOPE for free advice (www.hopenow.com). For in-depth, professional assistance, consult an attorney in your state who has experience helping homeowners. Please be careful of scammers.
if my 2nd loan is in purchase money rule or not
we purchase this house by have 1st loan for $400,000 and 2nd loan for 103,000 we put down payment 5% the purchase price $530,000 in 2005 never been refinance, my 2nd loan is in purchase money rule or not, if we borrow in the same day
if we are in purchase money rule, and they can't sue us for unpaid balace, do i still have to pay other bills like tax or something else?
we do not have enough to pay for other bills if they have, we need to file bankrupt if necessary,
thanks,
sarah
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