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What Is A Deficiency Judgement?

What Is A Deficiency JudgementA deficiency judgement is where the mortgage lender files in court to require the borrower pay them the difference between what they owed on their mortgage and what the property sold for in a short sale or a foreclosure.

The deficiency amount varies but can be a very significant amount of money, even hundreds of thousands of dollars if your Massachusetts short sale is not properly negotiated.

The deficiency judgment is the difference of the loan amount as well as it may include any legal fees, court costs, interests, penalties and other associated costs that were incurred while the property was being liquidated.


About Deficiency Judgments in Cape Cod

Here is an example of a deficiency amount:

Original Loan Amount: $200,000
Price Home Sold For: – $125,000
Deficiency Amount: = $75,000

Some states are recourse states and others are non-recourse states. If the property is located in a recourse state this means the bank experiencing the deficiency has the right to pursue the borrower after the property is sold. If the property is in a non-recourse state then they cannot pursue a deficiency if they sell the property.

States may have time limits on how long they have to pursue the deficiency. It is important for you to educate yourself on the laws for your state.

However, in many cases, a good REALTOR® can frequently get that deficiency waived for you through the Short Sale negotiation process, even if state law does not automatically protect you.


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