Anti Deficiency Laws - Virginia Has None

Anti Deficiency Laws

Some states have anti-deficiency laws. These are laws that protect purchasers of residential real property used for his/her primary residence pursuant to a purchase money mortgage. In the event that the purchaser fails to make the mortgage payment and the property is foreclosed and sold to pay the mortgage, a deficiency between the sale price and the outstanding balance of the mortgage could occur. Under anti-deficiency laws, the purchaser will not be held responsible for any deficiency the lender can only recover the property and the proceeds of a subsequent sale; the purchaser does not pay any deficit between the sale proceeds and the outstanding loan balance.

What the Lender Can Recover
The lender can only recover the property and the proceeds of a subsequent sale. The purchaser does not pay any deficit between the sale proceeds and the outstanding loan balance. This allows the purchaser to walk away from a property without owing a deficiency judgment amount. Anti-deficiency laws typically provide no protection for second mortgages or home equity lines. Also, there is no protection when the property is not used as the primary residence of the purchaser.

Anti-Deficiency Laws
While anti-deficiency laws can protect a homeowner in some cases, the majority of Americans have recently obtained two loans in the purchase of homes, often referred to as a "piggy-back mortgage." The first mortgage would have been for 80 % of the purchase price with all or a portion of the balance of the purchase price obtained by means of a home equity line of credit or second mortgage. If the first loan is foreclosed and the amount of the sale is enough to only pay off the first lender, the second lender will be entitled to sue the owner for the value of its loan. Many anti-deficiency laws won’t protect the homeowner for amount owed on the second loan.

State Foreclosure Deficiency Laws (Virginia Does Not Have an Anti Deficiency Law)
ALASKA: Alaska has a broad form of anti-deficiency statute that precludes a deficiency judgment following the completion of a no judicial foreclosure.
ARIZONA: Arizona's anti-deficiency statutes prevent a lender from suing a person for any losses on a home after foreclosure.
CALIFORNIA: California's anti-deficiency law applies only to funds used to purchase a residence. The anti-deficiency law does not apply to additional financing such as second mortgages or home-equity loans.
FLORIDA: In Florida, mortgages must be foreclosed by filing a lawsuit in court. Florida is unusual in that the state has passed few statues regulating foreclosures.
MASSACHUSETTS: A proper sale prevents the borrower from exercising any right to reclaim the property through redemption. If the foreclosure sale proceeds are not enough to pay off the lender, then the borrower is liable for the deficiency.
NORTH DAKOTA: The lender may not ask for a deficiency in the foreclosure suit if it has already brought another suit just to collect on the loan. Any cash surplus from the sale, beyond that needed to pay off the mortgage and the foreclosure costs must be paid to the borrower.
OREGON: A deficiency judgment cannot be obtained through a non-judicial deed of trust foreclosure by advertisement.
SOUTH CAROLINA: Deficiency judgments are permitted.
TEXAS: Deficiency judgments can only be for the difference between FAIR MARKET VALUE and the balance owed on the loan. There is no right of redemption.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvillevarealestate.blogspot.com/
http://www.charlottesvilleshortsale.com/
http://www.theaverygroup.com/

If you are in the process of Foreclosure or maybe facing Foreclosure soon, Consult Your Case for Free with a local Charlottesville Certified Short Sale Specialist to see which legal options you have available.