How to Avoid a Deficiency Judgment



"Making the right decision"


As you probably aware a deficiency judgment is something that looms over the head of anyone that has experienced a foreclosure, a deed in lieu of foreclosure and/or a short sale.

This is certainly not the law in every scenario, different states have different laws and you should be able to check on this quickly by consulting the office of your state's attorney general or anyone that is experienced in distressed properties.


Usually the lending company is allowed to seek a deficiency judgment for the overdue debts after they experienced a loss on the original loan. I can assure you that if you have money, plenty of assets and a great paying job. ., the bank will be coming after you simply because they can.


The other side of this is WHY?

In my state of Maryland, any lender can pursue a deficiency judgment up to 3 years after the closing of an asset.

My question is . .knowing that you just had a hardship and you couldn't pay the mortgage of your house. .why would they hire an attorney, pay them a lot of money when you don't even have $500 in your checking account?

Most people that experience this do not have the resources.. even if the bank wants to send you a team of attorneys against them. .you can get blood out of a stone. .that is certain.


In most cases, the only way you can avoid a deficiency judgment is by discussing it with the lending institution prior to a foreclosure of any type of agreement. . you want it in writing.


But the question remains. .


How could you assure yourself 100% from a deficiency judgment after a foreclosure, a deed in lieu of foreclosure or a SHORT SALE?


Before I can tell you how to avoid it 100%

You need to know exactly what a deficiency judgment is

Very simple..

It is what you signed for as a loan when you originally purchase your property


What the banks gets after the disposing of. . It's their loss that could become a deficiency judgment


It doesn't matter if they dispose of the property via


Foreclosure: At the court steps, it gets sold and you could get the bill for the difference.


Deed in Lieu: Even if the first lender approves this and promised not to pursue a deficiency against you, BEWARE OF THE SECOND . they are not happy that are excluded and will receive ZERO at the end. .they still have the right to come after you unless there was some kind of prior agreement with them.


Short Sale: When a short sale was approved, they may still preserve the right to pursue. . Unless is specifically addressed on their final short sale approval.


So, how can you be certain that the lender will never come after you with a deficiency?


It's called The HAFA SHORT SALE


As a matter fact, every short sale that we do must go first to trough the HAFA test. We want a HAFA approval for our client because it guarantees that the lender will not seek a deficiency judgment against our them. . EVER!

As you know, that could make any homeowner happy. .in some cases we are getting a deficiencies waive on over a hundred thousands of dollars that the lender promises not to pursue!


Of course the person you are seeking help from must know the guidelines to qualify you for it. .

There are many exceptions and rules a homeowner must follow. .but it is to your best interest to seek this first.

Now, there other program that has surface with the same guarantees. and each bank has its own rules.

Bank of America has their "Cooperative Program" that has the same virtues of the HAFA short sale.


In closing, you must understand that each case is different and a consultation with an experienced professional should be your next call. . if you live in Maryland or Virginia, I really hope you call me (240-426-5754)


Another added benefit of a HAFA shorts sale is that they will also give you up to $3,000 for relocation costs. .

Of course that is changing now as we speak. .some banks are offering up to $30,000 in relocation costs.

A good example s our last client that we got $23,000 for relocating costs and her property was only worth $60,000!!!

Check it here. .I even got it in video!


There is no charge for a short sale. .NAD, ZIP ZERO. . run the other way if they ask you for money. The lender pays all commissions period


More about HAFA Short Sales here