"What Is A Deficiency Judgment?" Short Sale Questions & Answers In CA. Series 3.
Q 3. What is a deficiency judgment?
A A deficiency judgment is a judgment obtained by the lender in court against the borrower for the difference between the unpaid balance of the secured debt and the amount produced by sale or the fair market value of the security, whichever is greater, in a judicial foreclosure. (Cal. Code Civ. Proc. § 726 (b).) A lender may obtain a deficiency judgment only with a judicial foreclosure. With a trustee's sale foreclosure, the lender cannot go after a deficiency judgment.
With a short sale, except under certain circumstances--see Question 4, the lender may demand the balance still owed on the note that the sales transaction did not cover (e.g., short sale of the property pays the lender $120,589.23 but the full amount owed on the note is $250,000). This difference may be referred to as a "deficiency balance." It is not really a "deficiency judgment" since no court has issued such a judgment as part of a judicial foreclosure.
A A deficiency judgment is a judgment obtained by the lender in court against the borrower for the difference between the unpaid balance of the secured debt and the amount produced by sale or the fair market value of the security, whichever is greater, in a judicial foreclosure. (Cal. Code Civ. Proc. § 726 (b).) A lender may obtain a deficiency judgment only with a judicial foreclosure. With a trustee's sale foreclosure, the lender cannot go after a deficiency judgment.
With a short sale, except under certain circumstances--see Question 4, the lender may demand the balance still owed on the note that the sales transaction did not cover (e.g., short sale of the property pays the lender $120,589.23 but the full amount owed on the note is $250,000). This difference may be referred to as a "deficiency balance." It is not really a "deficiency judgment" since no court has issued such a judgment as part of a judicial foreclosure.
**Please note this link will provide you with recent legislation for the Senate Bill, SB 931, State of CA and the release of deficiency. Governer Schwarzenegger put into law late 2010.
Series of common questions, inspired by CAR legal services division. And the many homeowners we have successfully helped lift the burden of a toxic mortgage.
(Homeowners that know more do more. Be informed. You have options. Don't allow stress or banks to run your finances.)
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