Tip 11-2012:
Foreclosures and Deficiencies
A prior tip (Tucker's
Tip 4-2012) discussed the recent trend that certain lenders in
special circumstances may foreclose more quickly on a delinquent
loan. In these circumstances, the foreclosure may occur sometimes as soon
as the Borrower is only four months delinquent. (The normal foreclosure
does not occur until the Borrower is many more months delinquent.)
A related problem with
foreclosures is the amount the foreclosing bank may bid at the foreclosure
sale. The foreclosing bank is usually the successful bidder at the
foreclosure auction. Whatever they bid is then deducted from the amount
owed (outstanding principle, accrued interest, foreclosure fees,
etc.) The foreclosing bank appears in most instances to be bidding
less than the amount owed. This results in a deficiency that the Borrower
may still owe the foreclosing bank.
In this same regard, the
Borrower may also have a second mortgage (HELOC, Line of Credit, Equity Line,
etc.) The foreclosure by the first lender will unfortunately create
another deficiency for the Borrower of the entire balance owed on these
subordinate mortgages.
The possibility of these
deficiencies created by a foreclosure is just another reason why foreclosures
need to be avoided at all costs.
The benefits of a successful
short sale far outweigh the disadvantages of a foreclosure. With a short
sale, the Borrower has a reasonable possibility of having the deficiencies
waived.
Contact me at 434-951-0858 or Tucker@TGBLaw.com
if you have questions, or visit our blog for previous tips. Thanks for
allowing us to send you this email.
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Looking Forward: Google to sell 'Terminator'
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William
D. Tucker, III
Charlottesville
434-973-7474 | Lake Monticello 434-589-3636
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