Dealing with Foreclosure? Watch Out for a Deficiency Judgment

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A deficiency judgement is the difference between what you still owe on your home in foreclosure and how much the home sold for at a sheriff sale or short sale. If your home sells for less than what you still owe, then you are required to pay the difference or deficiency judgement. The foreclosure defense lawyers at Doucet & Associates have experience helping homeowners in Ohio avoid liability for the deficiency judgment. In Ohio if you are left with a deficiency judgment after your home sells in foreclosure, a lender can only collect on the deficiency judgment for two years. The lender must file a waiver with the clerk of courts to collect on the deficiency judgment longer than two years. What is a sheriff sale?

A sheriff sale is the auction where a home in foreclosure is sold to a new owner. If the current homeowner owes $100,000 dollars on their mortgage loan, and the home sells for $80,000 at the sheriff sale, then the homeowner will be required to pay the $20,000 difference. The $20,000 is the deficiency judgment.

A lender takes action of selling the home in a sheriff sale based on the lenders rights to repossess the property listed in the mortgage. In Ohio, a lender can typically repossess a property based on the factual evidence that the borrower did not keep the promises listed in the note. If you want to learn more about what foreclosure is and why it is happening, click here to read our Foreclosure Frequently Asked Questions.

What is a short sale?

A short sale is the process of selling a home with the approval of a lender for less than what is still owed on the mortgage loan. The homeowner selling the home would still be required to pay the difference, or the deficiency judgment, on the loan. The foreclosure defense lawyers at Doucet & Associates have experience informing homeowners in Ohio about their options during foreclosure and learning about the positives and negatives of choosing a short sale. A short sale can be less harmful to a homeowners’ credit report and credit score if they successfully pay off the deficiency judgment in a timely manner. That means making payments on time and not missing payments. You must negotiate a waiver of the deficiency in order to avoid having to pay it back.

What is a deed of lieu?

A deed of lieu is when the homeowner and lender agree to transfer the title of the home to the lender. The homeowner will then move out of the property, and any remaining amount due on the mortgage loan can be forgiven, but it does not need to be. A homeowner will not profit from a deed of lieu and may try to request their lender to accept a deed of lieu for a variety of reasons. The homeowner may be in foreclosure, may owe more money on the loan than what the property is worth, may be unsuccessful at selling the home, and other reasons.

The lawyers at Doucet & Associates take pride in helping homeowners dealing with foreclosure. If your lender has filed a foreclosure lawsuit against you in Ohio, please do not waste any more time and contact our foreclosure defense lawyers for help. You can reach our lawyers by calling Doucet & Associates at (614)944-5219 or click here to send us a message online.

You can also read more about our foreclosure defense strategies on our website by clicking here.

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