Foreclosure Strategies
May 10 2018
The best way to deal with a foreclosure is to take aggressive legal action when the foreclosure laws... [Read More...]
July 14, 2015 By
Deficiency Judgment
Here is an example of what a deficiency judgment is: let’s assume there is a home worth $300,000, and a mortgage on the home in amount of $400,000. The house sells for $250,000 to a speculator at a foreclosure sale. There is a $150,000 deficiency which is still owed by the borrower. The deed in lieu of foreclosure prevents the bank from getting a deficiency judgment in the amount of $150,000.
This is the selling point used by many attorneys. It is usually a false selling point. Banks, generally speaking, do not pursue deficiency judgments in the Metropolitan New York area if the homeowner has no assets. Even if the bank desires to move forward for a deficiency judgment, the homeowner can simply file a Chapter 7 bankruptcy and eliminate the debt.
Fighting the Foreclosure Proceeding
When the homeowner decides to hire an attorney and fight the foreclosure proceeding, both the homeowner and his or her family will probably spend the next three or four years living in their home and not facing the problems of finding a place to live without credit and financial resources.
Deeds in Lieu of Foreclosure Won’t Always Work
A deed in lieu of foreclosure is usually only accepted by financial institutions where there is no equity in the property, and there are no liens or other mortgages attached to the property. In these types of cases, most banks will agree to a deed in lieu of foreclosure transaction.
If there is a second mortgage, monetary judgments on the property, mechanics’ liens, or other types of liens on the property, the bank will generally not agree to a deed in lieu of foreclosure transaction. In these situations they want the foreclosure sale to go forward. At the foreclosure sale, the second mortgage, the mechanics’ liens, and the judgments will be eliminated. The bank will obtain clear title to the property and not have to deal with the nuisances involved with other title impediments. In situations where there are second mortgages, mechanics’ liens, or other judgments or liens on the property, most banks will simply want to continue with the foreclosure process to obtain clear title.