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California Deficiency Judgment |
California Deficiency Judgment is one of the consequences of non payment of mortgage and is against borrower or debtor or defendant. This happens because the sale of the foreclosed homes does not generate enough funds that complete the mortgage payment. So it is the difference between the mortgage amount given by the lender and fair price after selling the home during foreclosure. For homeowner, this is the further financial set back after foreclosure auction or sale of the home. But normally the lending institutes do not go after foreclosure deficiency judgment in CA. The foreclosure laws must be checked to know the the details of deficiency judgment and protections available. For this professional foreclosure attorney must also be consulted.
Bank usually avoid deficiency judgment as it leads to further charges in terms of attorney, paperwork, filing a lawsuit and getting the judgment from the court. Bank needs to spend lots of time and money on this. Moreover the mortgage foreclosure happens because the homeowner does not have money to pay, so how the homeowner can pay the amount in deficiency judgment if the orders are against him or her, is the biggest question. On the other hand bank generally thinks that if the court's order will be against it then the whole money will be lost. So the bank, in most of the cases, go for the sale of the home instead of deficiency judgment in California. Moreover if the balance is not much then generally the CA deficiency judgment is avoided.
According to the California deficiency judgment law, in non-judicial foreclosure process, lender is not allowed to go for deficiency judgement filing. So to have foreclosure deficiency judgment one must, from the beginning, have the judicial foreclosure process.
In case borrower has taken FHA or VA home loans that secured then the lender has every right to sue the borrower for foreclosure deficiency judgment. In this case it does not matter whether the process has taken place through judicial or non judicial foreclosure method.
Now, in case the borrower has given the promissory note to the lender then with deed of trust then the loan is termed as "hard money" loan. In this loan cash is taken directly with repayment guarantee in the form of promissory note. Now in this case two things can happen:
- Lender can sue the borrower on promissory note
- Lender may follow the judicial foreclosure for the deficiency judgment
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A promissory note is a promise made by the borrower to pay back the whole amount and it is on personal liability.
Exemption in CA deficiency judgment
One to four units residential dwelling that has been purchased by the home loans is exempted from deficiency judgment according to California foreclosure deficiency judgment law. Therefore, in order to protect yourself further it is better to get information on deficiency judgment in California before hand so that you do not suffer further. Along with this also check the links given by Realestatezing.com for further reading.
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