8/2/2023 0 Comments Deficiency judgmentIf you don't have a good legal argument to save your house, this may be a good tactic to use. You could agree to the foreclosure in exchange for the mortgage company dropping any claims to a deficiency judgment. Your bargaining position will be based on your ability to potentially save the mortgage company some money. If you do answer the foreclosure complaint, you may be able to negotiate with the mortgage company. If you don't answer the complaint, you'll lose your right to contest a deficiency. If you're subjected to a judicial foreclosure, you'll need to answer the foreclosure complaint. Other states allow lenders to file a separate lawsuit after a nonjudicial foreclosure to get a deficiency judgment. Some states require a judicial foreclosure to pursue a deficiency balance. State laws vary when it comes to foreclosure. The legal procedure for a non-judicial foreclosure can involve as little effort as a few advertisements of the foreclosure sale in the legal notices of a local newspaper. With judicial foreclosures, the time from default to foreclosure can be as little as a few months and as long as three to four years. The speed of the process is important for these companies because, from their perspective, time is money. Mortgage companies prefer nonjudicial foreclosure because they're cheaper and quicker. Where there is a choice, mortgage companies usually choose the nonjudicial foreclosure route. The District of Columbia and 30 states allow nonjudicial foreclosures. All other states either allow or require judicial foreclosures. Only Michigan, New Hampshire, Tennessee, West Virginia, and the District of Columbia do not allow judicial foreclosures. Most states allow both judicial and non-judicial foreclosures. Other states allow mortgage companies to foreclose without going to court. Some states require a mortgage company to go to court and get a judge’s order before pursuing foreclosure. That's why it’s important to carefully review your options before agreeing to a short sale. These agreements usually preserve the mortgage lender's right to sue you to recover the deficiency balance. If you reach a short sale agreement with your mortgage company, you won’t necessarily be out of the woods. The financial institution can then choose to sue you to recover this balance. If the amount owed on your mortgage loan exceeds the amount your home sells for at a foreclosure sale, you will have a deficiency balance. State laws usually require these foreclosure auctions to be advertised in newspapers for a period of time before a home can be sold. Your real estate is sold to the highest bidder at a foreclosure sale. What Is a Foreclosure?įoreclosure is the legal process of a creditor taking your home and selling it after you have defaulted on your mortgage. This article will take an in-depth look at what happens after foreclosure and whether the mortgage company can try to collect any remaining debt from you. If you fall behind on your mortgage payments, you're at risk of having your home foreclosed.
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