Deficiency judgment

Deficiency judgment

A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full. [1] The availability of a deficiency judgment depends on whether the lender has a recourse or nonrecourse loan, which is largely a matter of state law. In some jurisdictions, the original loan(s) obtained to purchase property is/are non-recourse, but subsequent refinancing of a first mortgage and/or acquisition of a 2nd (3rd., etc.) are recourse loans.

In short, many jurisdictions hold that the loans obtained at the acquisition of a property ("purchase-money") are non-recourse, and most if not all subsequent loans are.

States that follow the title (trust-deed) theory of mortgages typically allow non-judicial foreclosure procedures, which are fast, but do not allow deficiency judgments. States that follow the lien theory of mortgages require judiciary foreclosure procedures, but allow deficiency judgments against the debtor.

It is important to note that there is a difference between a deficiency and a deficiency judgement. A "deficiency" is the difference between the amount owed on a loan and the total amount received/collected at the closing of a loan. A Deficiency Judgement is the constructive notice as well as legal and public record of that amount owed, and by whom.

References

  1. ^ See also Ballentine's Law Dictionary, p. 133.

See also


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Look at other dictionaries:

  • deficiency judgment — see judgment 1a Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. deficiency judgment …   Law dictionary

  • deficiency judgment — deˈficiency ˌjudgement , deficiency judgment noun [countable] LAW a decision by a court that a borrower still owes money after the security for a loan is sold for less than the amount owed * * * deficiency judgment UK US (US ► LAW a judgment in a …   Financial and business terms

  • deficiency judgment — The imposition of personal liability on a debtor for the unpaid balance of a mortgage debt after foreclosure has failed to result in full payment of the debt amount due, or for the unpaid balance due after the repossession and resale of personal… …   Glossary of Bankruptcy

  • deficiency judgment — n. Law a judgment in favor of a mortgagee for the remainder of a debt not completely cleared by foreclosure and sale of the mortgaged property …   English World dictionary

  • Deficiency Judgment — A judgment made by a court against a debtor indicating that the sale on a foreclosed piece of property did not cover the outstanding mortgage in full. It is a lien placed on the debtor for further money. A deficiency judgment is not considered by …   Investment dictionary

  • deficiency judgment — noun : a judgment for the balance of a debt after the security has been realized and the proceeds applied to payment; especially : such a judgment following foreclosure of a mortgage * * * Law. a judgment in favor of a creditor who has not… …   Useful english dictionary

  • deficiency judgment — A personal judgment, rendered against any person liable for the mortgage debt, in the event of a deficiency on foreclosure, for the amount of such deficiency. 37 Am J1st Mtg § 858. There are judicial, as well as legislative restrictions upon the… …   Ballentine's law dictionary

  • deficiency judgment — Law. a judgment in favor of a creditor who has not satisfied the full amount of a claim against a debtor. * * * …   Universalium

  • judgment — judg·ment also judge·ment / jəj mənt/ n 1 a: a formal decision or determination on a matter or case by a court; esp: final judgment in this entry compare dictum, disposition …   Law dictionary

  • deficiency — de·fi·cien·cy /di fi shən sē/ n pl cies: an amount that is lacking or inadequate: as a: the difference between the amount of tax owed and the amount of tax paid b: the difference between the amount owed under a security agreement and the amount… …   Law dictionary

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