You have lost your home to foreclosure. While you no longer have the debt associated with that home, you’ve just received a notification by mail that your mortgage lender is suing you for the shortfall between what they sold your home for and what you owed. You may think it is impossible for an attorney who provides foreclosure defense services to help but you’d be wrong. In some cases, the lender may be overstepping.
What is a Deficiency Judgment?
Lenders who make home loans are required to go through the courts to obtain a foreclosure. This is known as “judicial foreclosure”. By law, a lender has the right to sue the homeowner for a judgment to make up what they lost on the foreclosure. But, there are specific protections put in place for homeowners. Some of these include:
- Time frames – lenders generally have only one year to file for a deficiency judgment. This may be slightly different in limited cases but if a lender has filed a deficiency judgment after one year, the court may dismiss the case. Talk to your foreclosure defense attorney about these time frames as they can be very important.
- Amount of judgment – the courts may limit the amount the lender can collect. In most cases, the difference between what the lender obtained for the property and the fair market value on the date of sale is the maximum amount the lender may collect.
- Property status – the courts will typically only allow the lender to file for a deficiency judgment if the property was owner occupied. This is important because it may limit your lender’s ability to collect more money from you.
It is important that you are protected from the adverse impact of a deficiency judgment. In some cases, primary lenders will turn the deficiency over to a third party. They must then prove they have the right to file and collect on a judgment. Don’t take any chances, contact Jonathan Kline, P.A. immediately if you have received notification a mortgage lender is suing you for the difference between what your home sold for after foreclosure and the value of the home.
