A deficiency judgment is the legal, financial obligation for the remaining balance on a defaulted home loan that the foreclosed homeowner is obligated to repay under most circumstances. It is an enforceable court judgment against the homeowner.  This blog focuses on facts about deficiency judgments, so homeowners who are facing foreclosure can make informed decisions about how to handle their foreclosure.

Why Deficiency Judgments Occur

1. You might think that the bank would not sell a foreclosed property for less than the original borrower owes on the property. They do. This isn’t ideal, but there are times when they cannot sell the house for the amount still owed. They know that the borrower is obligated to pay the difference. The short story here is that the bank will reclaim a portion of what they invested in the house as quickly as they can.
2. In Ohio, most banks do not pursue deficiency judgments, but they can and sometimes do demand payment.
3. The only way to guarantee that there is no risk of a deficiency judgment is to get the bank to put that in writing. Because these types of judgments are court-ordered in Ohio, and the foreclosure process is also enforced through the court system, homeowners that are in foreclosure have options that prevent the bank from taking their property. This means the best way to deal with deficiency judgment may be to ensure that the property is not legally foreclosed.

What You Can Do About a Foreclosure or Deficiency Judgment

4. A foreclosure attorney may be able to help save your home, stop foreclosure, work to obtain a loan modification to cure your default, or give you more time to explore other options. In some cases, if you do not want to keep the home, a foreclosure attorney can attempt to negotiate a settlement to eliminate any potential deficiency judgment.
5. You can do nothing and hope that the bank does not demand payment on a deficiency judgment. They have two years to start the collection process before the statute of limitations runs out, and they can no longer harass you for payment. This is obviously not encouraged.
6. During the foreclosure process, your foreclosure attorney can ask that the deficiency judgment be waived as part of the settlement. There are different ways that can lead to a potential deficiency judgment waiver which can include things like consent judgments, short sales, and deed in lieu. A foreclosure attorney can help you understanded the differences and help you to select your best options.

Contact Cozmyk Law If You Are Facing Foreclosure

Cozmyk Law is a Foreclosure and bankruptcy law firm that has decades of experience. If you are facing foreclosure or are already in the foreclosure process, call and learn more about your rights under Ohio law. It may not be too late to save your house, or for you to make other arrangements with the lender under the approval of the court. We help you understand your legal rights and options.