Deficiency Judgment

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Deficiency Judgment

An assessment of personal liability against a mortgagor, a person who pledges title to property to secure a debt, for the unpaid balance of the mortgage debt when the proceeds of a foreclosure sale are insufficient to satisfy the debt.

Legislation enacted during the Depression still restricts the availability of deficiency judgments in several states. In some jurisdictions, deficiency judgments are proscribed in certain situations, while in other states, they are limited to the amount by which the debt exceeds the fair market value of the property. Waiver, the intentional relinquishment of a known right, of the benefits conferred by antideficiency legislation contravenes public policy and is ineffective.

deficiency judgment

n. a judgment for an amount not covered by the value of security put up for a loan or installment payments. In most states the party owed money can only get a deficiency judgment if he/she chooses to file a suit for judicial foreclosure instead of just foreclosing on real property. Some states allow a deficiency action after foreclosure on the mortgage or deed of trust. The right to a deficiency judgment is often written into a lease or installment contract on a vehicle. There is a danger that the sale of a repossessed vehicle will be at a wholesale price or to a friend at a sheriff's sale or auction, leaving the debtor holding the bag for the difference between the sale price and remainder due on the lease or contract. (See: foreclosure, judicial foreclosure)

References in periodicals archive ?
To top it all, there was no deficiency judgement to the seller, thanks to the Mortgage Forgiveness Debt Relief Act the seller will not have to pay taxes on the forgiven debt, and Steve even helped the homeowner to receive a nominal check at closing as a homeowner incentive to help with moving costs.
The deficiency judgement would be calculated as the difference between the amount of the mortgage and the market value of the property or the highest bid at the foreclosure sale, which ever was higher.
This time, The Kristin Stampini Team helped a seller with an Ocwen Financial loan in Margate who was released of a deficiency judgement.

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