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Here Come the Deficiency Judgments

By
Real Estate Agent with Universal Realty, Inc.

I was recently contacted by a client whose house we had tried to sell as a short sale a year ago.  Despite bringing multiple offers to the lender in the $250,000 to $260,000 price range, the lender refused all of them.  The property eventually went back to the lender and was sold for $207,500.  My client has now been sued by the insurance company for the shortfall of $180,000.  Of course, there was no incentive for the lender to sell short, as they knew they would be reimbursed by the insurance policy.  I have been concerned for some time about the fall out from the foreclosures.  We as agents have exposure as we must ask our clients to waive the protections normally afforded them. Homeowners who have lost their homes are in danger of being sued for deficiencies in payments on mortgages.  How will the economy be impacted by the bankruptcies which will no doubt result from the deficiency judgments?

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