A deficiency judgment usually occurs when the foreclosure sale price does not satisfy the outstanding mortgage balance, the lender sues the borrower for the difference and "wins." For example, let’s say that a house with a mortgage balance of $500,000 is sold for $300,000 at foreclosure.
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Although deficiency judgments are normally only filed in case of a foreclosure, mortgage companies can sometimes demand one in an effective.
A deficiency judgment obtained by a creditor in court can be used to force borrowers to pay the difference between the amount of money collected in a short sale — or a sale after a foreclosure — and.
A "Deficiency Judgment" refers to the amount of money still owed on your mortgage after a short sale, deed in lieu of foreclosure or your decision to walk away from the mortgage. The remaining amount plus collection costs, attorney’s fees and interest make up the deficiency balance and once the bank obtains a judgment for that balance.
That means mortgage companies have recourse; they can recover the deficiency from the homeowner, even after the house is lost to foreclosure sale. illinois is also a judicial foreclosure state. That means mortgage companies must go to court, receive a judgment, and hold an auction in order to foreclose on a homeowner’s property.
A deficiency judgment is a legal order to pay off a loan balance after foreclosure or repossession. When a lender takes your property and sells it, the sales proceeds pay off your debt and any additional fees related to collection. But if the property does not sell at a price that’s high enough to satisfy the debt, you may still owe money.
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Nearly every buyer will take out a mortgage loan in order to pay for the purchase of a home. Mortgage documents contain details on important aspects of the loans, such as loan amounts, interest rates, repayment schedules, fees, and circumstances that can lead to default or mortgage foreclosure.