What Is a Foreclosure Deficiency Judgment & How Does It Work?
Foreclosure deficiency judgments give lenders the option to seek the balance of what is owed on a mortgage after a home is sold at foreclosure auction for less than the outstanding mortgage balance.
A deficiency judgment is a court-ordered decision that the borrower owes the lender money. The judgment is based on the difference between what was owed on the mortgage and the amount that the home sold for at foreclosure auction.
If the borrower does not pay the deficiency judgment, the lender can use various methods to collect, including wage garnishment, bank account levy, and property liens.
It's important to note that not all states allow lenders to seek deficiency judgments and that in some cases, borrowers may be able to negotiate with their lender to waive or reduce the amount they owe.
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