When the sale proceeds from a foreclosure are insufficient to repay the full amount of a mortgage loan, the difference between the sale price and the total mortgage debt is called a "deficiency." Many states -- including the state of Illinois -- allow lenders to get a personal judgment against the borrower for the amount of this deficiency. This is referred to as a "deficiency judgment."

Can a homeowner still owe the lender money even after losing their home in a foreclosure?

A deficiency judgment allows a lender to collect additional money from the borrower even after the sale of the foreclosed home.

How can a lender collect on a deficiency judgment?

Lenders can use standard collection techniques -- such as wage garnishment, freezing of bank accounts, or attaching liens to property -- in order to collect on a deficiency judgment until it is paid off.

What options does a homeowner have to avoid a deficiency judgment?

Borrowers/homeowners are sometimes able to avoid a deficiency judgment by selling their home in short sale, agreeing to a deed in leiu of foreclosure, or filing for banktupcy. Some lenders don't pursue deficiency judgments as a matter of policy, while others are willing to bargain for its wavier (especially if the foreclosure case is being aggressively defended). The amount of the deficiency, a borrowers' financial strength/assets, and the posture of the foreclosure court case are all factors that can impact whether a lender will seek a deficiency judgment. An experienced attorney can help a borrower leverage its position to avoid a deficiency judgment altogether.

At The Law Center, we are a team of specialists that are passionate and up to date about the foreclosure process from start to finish and helping homeowners at the highest level. Our staff and attorneys approach each client and each property as a new challenge, one that requires thorough analysis, zealous representation, and thoughtful strategy. It’s your home, let The Law Center help you defend it.

Call us now and speak with a foreclosure expert on how you can make the foreclosure process work for you -- not against you. (312) 600-8815

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