Home Selling in Boise>Question Details

Mark, Home Seller in San Jose, CA

deficiency judgement for the unmet balance on a mortage?

Asked by Mark, San Jose, CA Mon Jan 5, 2009

I understand lenders can pursue a deficiency judgement for the unmet balance on a mortage if the property is sold for less than the mortage. If so, are lenders doing this often in your area?

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Whether in a foreclosure or a short sale the mortgagor can come after the seller for the deficiency unless it has been agreed that they won't. This is also true for a deed in lieu. In fact, not only can the lender seek a deficiency, but if there is private mortgage insurance, the PMI company can also seek a deficiency. And yes, they will and do. I know of several instances where this has happened. And they seem to be getting more aggressive about it. As someone who does a lot of short sales, I can tell you that the banks have been changing their tactics lately. They are no longer issuing approval letters on short sales that indicate that they will issue a 1099 to the seller. This is because a 1099 bars them from seeking a deficiency judgment.
David O'Dell
Keller Williams Realty Boise
1 vote Thank Flag Link Mon Jan 5, 2009
A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage or deed of trust secures. Deficiency actions must be brought within 90 days after the foreclosure sale. Judgment cannot exceed the difference between the amount of the debt and the fair market value of the property. Costs and fees in filing the deficiency can also be recovered.

Personally, I haven't heard of anyone being sought after for Deficiency Judgment although I bet some have.

The real question is whether or not the lender feels as though they can get a judgment that is significantly higher than the actual costs of judicial foreclosure.
1 vote Thank Flag Link Mon Jan 5, 2009
Mark, From my experience most are not coming after the defiecency, but a few hire collections agency to hound you, but they almost never take it to court to come after you. The reason is the market. There are so many people unemployed and they know that most people who let there house go have no money. You can't get something from a person that they don't have. I have some great information on Idaho Foreclosure and Short Sales on my web page. I have take the time to get certified in short sales and stay up on the latest issues in foreclosures and short sales.
0 votes Thank Flag Link Sat Apr 4, 2009
Thanks for the thoughtful answers.

0 votes Thank Flag Link Wed Jan 7, 2009


There are currently 254 Homes for sale in Kuna, 25 have gone pending in the last 30 days, and 191 sold in the last 6 months. There's about 8 months worth of inventory in Kuna.


There are currently 1323 Homes for sale in Nampa, 63 have gone pending in the last 30 days, and 633 sold in the last 6 months. There's over 12 months worth of inventory in Nampa.

Bottom line there's a lot of competition out there. Pricing the homes correctly before losing them to foreclosure will be critical. I put together a website for distressed home owners that you might find informative about foreclosure and shortsales in Idaho. You can visit it at http://www.hopeforidaho.com.

Depending on where you're at in the process will determine just how much time you have to act. Sooner is always better than later. Also keep in mind that the statistics I gave you are very general. Your specific properties and their locations will help to narrow down the results and get a more conclusive veiw.

That means a lot of competition out there. Pricing it right to generate and offer before fo
0 votes Thank Flag Link Tue Jan 6, 2009
OK. I didn't mention the house is in kuna idaho and the lender is countrywide financial with a second from citi mortage. Also have another place in nampa with first horizon with a second from ocwen. SOunds like in Idaho that they are sometimes seeking deficiency judgements for the first mortage in addition to the seocnd mortage? is this correct???. Geeze..... what a nightmare....

Can someome elaborate on the current sales climate for houses in kuna and nampa if I even put these things on the market could I get a sale? Looks llike things are not moving at all from what I can tell on realtor.com.
0 votes Thank Flag Link Tue Jan 6, 2009
The bank certainly can come after the owner for any deficiency. State rules vary and can limit this in some areas. In a short sale especially, if it is not negotiated that the owner will not be responsible for it, the bank assesses whether the owner can pay now or in the future as well if they own any other property. If they deem they can pay now or later they will ask them to sign a note, go after a judgement or forgive the debt if there is no ability and issue a 1099 for the loss. Again this is a case by case and state by state decision, if you are in the middle make sure you check with a real estate attorney in your area. good luck.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Tue Jan 6, 2009

Most of the previous answers are correct. It does depend on what state you live in. In a short sale situation I see it becoming increasing common for the bank to issue an unsecured note for the difference in order for them to approve the sale. This can be negotiated if you can prove that you don't have the ability to pay.
0 votes Thank Flag Link Tue Jan 6, 2009
It depends on a number of factors, and it varies from state to state.

0 votes Thank Flag Link Mon Jan 5, 2009
If all of the money was used to purchase the home, they most likely cannot come after you for a deficiency judgment unless there was fraud involved.
0 votes Thank Flag Link Mon Jan 5, 2009
The Hagley G…, Real Estate Pro in Pleasanton, CA
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