What Is The Role Of A Deficiency Judgment In A Foreclosure?

A deficiency judgment is the balance of what is owed on the mortgage in a foreclosure. When the end of a foreclosure case occurs, the referee who is assigned to handle the case will go to the courthouse and essentially auction off the property. There is something called an upset price, which is the amount of money that’s owed to the bank and is generally the amount that the bank will bid up the property to. So, if there is $400,000 owed on a piece of property and someone is bidding $1000, the bank will typically bid it up to the upset price, which is $400,000.

If the upset price far exceeds the value of the property, then no one will really take the time to bid if they are not interested in paying more than the upset price. At that point, even if the house is sold for $300,000 and the bank is owed $400,000, the bank is entitled to enter a deficiency judgment. So, if the bank is owed $400,000 and then it goes to a foreclosure sale and sells for $300,000, then the bank is entitled to enter a judgment against the homeowner for the balance of $100,000.

How Can An Attorney Use The Chain Of Title To Defend Against Foreclosure?

When defending a foreclosure action, an attorney can make sure that the chain of custody is proper and that the person who’s prosecuting the action actually has possession of the note and is entitled to prosecute that foreclosure action.

To elaborate, when a mortgage gets filed in New York, it gets attached to the property. The promissory note, which is also a part of the lending procedure, theoretically attaches to the mortgage. However, that note could be transferred and sold to different lenders. It could be five, 10, one or sometimes no lenders during the time that you are repaying the loan. Each lender has to show that they received the note and that the Plaintiff who ultimately brings the action has the right to prosecute it.

How Can Promissory Notes Be The Key To Foreclosure Defense?

A promissory note gets attached to the mortgage which is attached to the property. The promissory note can get sold and transferred to a number of different lenders during the term of the repayment process. When the default occurs, sometimes the bank that did not lend you the initial money will be prosecuting the foreclosure action. You want to make sure that the bank has the note, has the mortgage, can account for the chain of title of the note and mortgage, and that they are entitled to prosecute that action.

What Other Defense Strategies Can My Attorney Employ In Foreclosure Defense?

The defense strategies that are used depend completely upon the goals of the client. Sometimes the client might just want to get out of the house as soon as possible and be done with it, and other times they might want to live out the value of the house. If there is equity in the house, they may want to sell it. If available, a client might want to opt for Cash for Keys in order to receive a little bit of money. When someone comes in to discuss a foreclosure defense, I certainly discuss whether or not I feel that I can accomplish their goal, whether that goal is to keep the house for as long as possible, sell the house, or get money for the house.

Additional Information On Foreclosure Defense In New York

The most important thing to know in the foreclosure defense arena is that people do have options. There are options to get some money out of the house, options to stay in the house, and options to modify the mortgage. It’s a scary process and it’s something that someone shouldn’t try to handle on their own.

For more information on Deficiency Judgments In Foreclosure, an initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (914) 230-0040 today.

Glen A. Kurtis, P.C.

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