What is the likelihood that our lender will pursue a deficiency judgment?

UPDATED: Aug 23, 2011

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What is the likelihood that our lender will pursue a deficiency judgment?

We took out a 80/15 loan when we purchased our home 5+ years ago. The second is nota HELOC and was used as purchase money only. The house has never been refinanced. My wife and I have since divorced and we want to move on. The house has been on the market for 1.5 years with no offers. We are exploring a foreclosure as neither of us want to keep the house. What is the likelihood the lender garnishes our wages or goes after assets once the foreclosure has run it’s course?

Asked on August 23, 2011 Ohio


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Most states have laws precluding a deficiency judgment against the property owner under its "anti-deficiency" statutes if the loans that are secured by the property owner's primary residence were acquired when the home was initially purchased and are deemed "purchase money". If such is your situation and the home is later foreclosed upon where the loans are not paid off in full at the auction, most likely you would not be subject to any claims by the lenders for a deficiency balance owed.

Another thought is that if the foreclosure is through a non-judicial forelcosure, some states such as California have laws preventing a deficiency judgment in such a situation even if the secured loans  were not purchase money.

Your factual situation sound as though your loans for the home are all purchase money for your primary residence. Assuming Ohio has anti-deficiency laws for such loans, you should not be personally liable for any deficiency assuming the property sells for less than what is owed on the loans.

To be sure, you should consult with an experienced real estate attorney in this area.

Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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