What is a deficiency judgment? A deficiency judgment is the amount of the money judgment that a lender can obtain whenever they foreclose on the property and after the foreclosure sale.
The amount of the deficiency judgment is the difference between the amount that is owed to the lender at the time of the final judgment, less the market value of the property on the date of the foreclosure sale. Many people are very concerned about deficiency judgments, but my experience has been that most lenders at this point are not pursuing deficiency judgments after they foreclose on the property.
Many people are very concerned about whether or not a lender can take any of their bank accounts or has a judgment against them when they file a foreclosure action. Not only does the lender not have a right to any of your money, they don’t have a judgment against you for a money judgment that can be collected against any of your assets, even after the mortgage foreclosure or the foreclosure sale.
In order to establish this judgment, the lender has to go through a supplemental proceeding (or a deficiency judgment proceeding) in order to establish the amount of the deficiency judgment. This is somewhat technical and therefore many of the lenders (from my discussions with this legal community in West Pasco) have not pursued these deficiency judgments.
So, until such time as the lender establishes deficiency judgment, you do not owe the lender any money, or it has not been reduced to a judgment amount to determine the amount of it. Also, if you go through a foreclosure, you won’t get a 1099 because the amount has not been established.
If you have any other questions about deficiency judgments, give me a call at (727) 847-2288. Thank you.