Stop Foreclosure – Foreclosure Prevention

Due to financial crisis across the globe, unemployment rate is peaking and as a result many home owners are unable to meet their mortgage monthly payments. Having defaulted on mortgage payments, banks issue foreclosure notice and therefore judgment from lenders to homeowners who are facing foreclosures.
Usually many people think about foreclosure means losing home only but this is not the case it affects in many other ways like damaging credit score, affecting future buying power. The other one thing that many people have no idea about is the lender can sue you for the deficiency judgment.
The question is can lender really has a right to sue the previous home owner for deficiency judgment? Before answering this let first understand what is deficiency judgment? Having an idea of about how foreclosure process works help you understand how actually deficiency is created? Having foreclosed by the sheriff’s sale or auction, the proceedings will be used to clear of the liens that are affecting the property. In some cases, first mortgage holder buys the house back by submitting the bid at foreclosure auction. If he wins the auction buy submitting minimum bid then the total loan amount can not be cleared from the foreclosure proceedings. In this case the difference between the entire loan amount and the actual sale price of the home at auction is what called deficiency. Now is the home owner is responsible for that deficiency? Can lender is legally allowed to sue the homeowner for that deficiency?
First, in order to sue for the deficiency created during the foreclosure process, the foreclosure laws of the state in which the actual foreclosure was held have to allow the lender to the former home owner for the deficiency. Surprisingly, not all states permit the lender to do this. To answer this you must check your state laws, if law does not permit this then you are safe from being sued by lender for the deficiency judgment. You have got nothing to worry because lender has no right to take other assets like cars to cover up the deficiency.
In case law permits the lender to sue the home owner for deficiency, it is very rare that bank will sue them. Just think that home owners who have faced foreclosures only because they are having financial hardship due to which they missed the mortgage payments and lost their home. Banks have to think about this because how can they manage to collect money from people who are facing financial hardship at the same time if bank sues the home owner than they have to spend money for the law proceedings. And if previous home owners files bankruptcy, because it is a way for the borrower to clean up all the financial burden then it is all waste of time and money for the bank.
In conclusion, you can rest assure that there are very few chances that bank will sue you for the deficiency judgment even if the law permits or not.