Tag Archives: deficiency judgment

Deficiency Judgments: Are Short Sales Worth the Risk?

If you’re facing foreclosure, you may have done a little research on a short sale as a means of avoiding foreclosure. A short sale is when you sell your home for less than you owe on your outstanding mortgage debt, and the lender releases the lien on the property.

This might sound like a great option, but there is a lot of risk that comes with short sales. There are a number of things that can delay the proceedings or even stop them altogether. And even after the sale is complete, you might not be off the hook for the remainder of what you owe. This week, we’ll focus on the later risk, the risk that you could still owe a lot of money even after the short sale is over. This is called a deficiency judgment.

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New Bill Would Reduce Debt Collection Time After Foreclosure

A new bill in the Maryland legislature would reduce the time that lenders have to collect debt owed on a mortgage after a house has been foreclosed on. Right now, lenders can collect outstanding mortgage debt up to 12 years after a foreclosure, a process known as deficiency judgment. This means that homeowners who went into foreclosure might have to pay their remaining debt long after the foreclosure process. In addition, the interest on this debt continues to accrue during this time, so by the time lenders come to collect, the amount owed can easily have ballooned by tens of thousands of dollars.

The new bill, sponsored by Senator Jamie B. Raskin, would reduce the time that lenders have to collect remaining mortgage debt to 180 days after the foreclosure. However, this provision would only apply to homeowners who went into foreclosure after the law passes, if it does pass. Homeowners who have already been foreclosed on would still be at risk of a long wait for possible debt collection.

That’s why it pays to look for options other than foreclosure. If you’re under threat of foreclosure now, you don’t have time to wait and see if a law does or doesn’t pass. Talk to Grays Home Solutions today about how you can avoid foreclosure in Maryland. You can start getting your finances back on track now without having to worry about debt collectors knocking on your door in 12 years.

Maryland foreclosure bill

Finding a buyer for your home doesn’t have to be a difficult process. Gray’s Home Solutions will buy your home quickly. We’re looking for properties of all types across the state of Maryland. Whether you’ve got a townhouse in Frederick, a rowhome in Baltimore, a rancher in Carroll County or a duplex in Rockville, we’d like to make you an offer. It doesn’t matter if your house is in pristine condition or if it has seen better days, we buy it all. Best of all, in addition to our speed, you pay no fees or commissions when we buy your home. Now there’s an offer that you can’t refuse.

Even if you’re not looking for a buyer, you can participate in our sellers referral program. Here’s how it works. Send us the phone number and property address for a For Sale By Owner or vacant property. We’ll take a look, and if we buy the property we’ll pay you $250 as a thank you for providing the lead.

Are you interested in learning more about selling your home fast? Our ebook has a ton of great information for you. We also have an ebook with information on how to avoid foreclosure, available for download here. They’re both free, so give them a look. You can also connect with Grays Home Solutions on FacebookTwitterGoogle+, and LinkedIn for more real estate made simple.

 

Source

http://www.washingtonpost.com/investigations/new-maryland-bill-could-help-foreclosed-homeowners-avoid-lengthy-debt-collection/2013/12/30/d9812934-6f11-11e3-b405-7e360f7e9fd2_story.html

What is a Deficiency Judgment?

A deficiency judgment is a legal process that can occur either after a foreclosure, or after a short sale. Basically, a lender can use a deficiency judgment to attempt to get the rest of the money they are owed that they didn’t get from a foreclosure or short sale. For example, if a property is worth $150,000, and it was sold at a short sale for $100,000, the lender can file a deficiency judgment to try to get the remaining $50,000 of the property’s value. The lender has to go through the court system and file a lawsuit to do this, and if it is successful, your wages can be garnished or bank account levied as a means of paying back the remainder of the loan.

Many states prohibit lenders from filing deficiency judgments after a foreclosure, and three states prohibit them after a short sale. However, Maryland does not prevent deficiency judgments after foreclosures nor short sales. A lender can seek a deficiency judgment up to three years after a foreclosure.

So how do you prevent the lender from seeking a deficiency judgment? One option is to negotiate with the lender during the short sale process. You can attempt to get them to waive their right to seek judgment or, if they refuse, you can try to make a settlement offer of a smaller amount. The lender may be willing to do this because collecting a deficiency judgment is both time consuming and costly. A more risky option is to take the chance that, because of the difficulty of the process for the lender, they may decide not to sue you for deficiency. They may send you letters demanding payment, but they can’t actually freeze your bank account or garnish your wages unless they file a suit.

 

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Negotiating with a lender during the short sale or foreclosure process can help prevent the threat of a deficiency judgment. If you’re considering a short sale and are concerned about a deficiency judgment, Gray’s Home Solutions can help you through the process and save you time by buying your home quickly. We’re looking for properties of all types across the state of Maryland. Whether your house is in pristine condition or if it has seen better days, we’ll make an offer fast. Best of all, in addition to our speed, you pay no fees or commissions when we buy your home.

Even if you’re not looking for a buyer, you can participate in our sellers referral program. Here’s how it works. Send us the phone number and property address for a For Sale By Owner or vacant property. We’ll take a look, and if we buy the property we’ll pay you $250 as a thank you for providing the lead.

Are you interested in learning more about selling your home fast? Our ebook has a ton of great information for you. We also have an ebook with information on how to avoid foreclosure, available for download here. They’re both free, so give them a look. You can also connect with Grays Home Solutions on FacebookTwitterGoogle+, and LinkedIn for more real estate made simple.

Sources

http://www.nolo.com/legal-encyclopedia/how-avoid-short-sale-deficiency-judgment.html http://www.nolo.com/legal-encyclopedia/deficiency-judgments-after-foreclosure-maryland.html