Should have saved this segment for Halloween because deficiencies induce blood-curdling, spine-tingling misery... Too much?!?
First of all, a deficiency after foreclosure is exactly what it sounds like, it's when one owes a mortgage lender money after the foreclosure sale of their home because the house sold for less than the mortgage balance (did you think all the debt went kaput after foreclosure, yeah right!).
Say the total debt owed is $220,000, but the home only sells for $160,000 at the foreclosure sale. The remainder to be owed back to the lender is $60,000, hence a deficiency.
Yes people, that's $60,000 you STILL have to pay back to the lender, you can't just say ala- kazaam and voila, gone! (If only... I can only imagine being able to do that every month with my credit card statement... anyways that's beside the point...)
Ok, so where were we?... Yes, the flipping horror of a deficiency after foreclosure, hanging above your head like a black cloud, every single day... I mean, in all fairness, it could be worse...? (wishful thinking?)
The nitty gritty is, even if you feel like you can ignore this black cloud, it comes back to haunt you. In some states, “The lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount (in our example, $60,000) from the borrower by doing such things as garnishing the borrowers’ wages or levying the borrowers’ bank account.”
THAT'S NOT ALL: