Is there a law limiting the kinds of valid deficiency judgments in Rhode Island?

With the current mortgage crisis hitting Rhode Island, many people are wondering if going through foreclosure will be beneficial to their long-term financial stability. However, Rhode Island is one of the states that allow deficiency judgments in foreclosure proceedings.

What is a deficiency judgment?

A deficiency judgment occurs after a foreclosed home has been sold at a public auction. If the sales price is less than what the borrower still owed on the home, the borrower may be liable to pay back the difference to the lender. Also, a borrower may be liable to pay back court fees, back principle payments, and other fees.

Not all mortgages are subject to deficiency judgments. Non-judicial foreclosures are not subject to deficiency judgments.

For those who are wondering what is the deficiency law in Rhode Island, there are no laws limiting the kinds of valid deficiency judgments.

How likely is a deficiency judgment?

Even if a deficiency judgment is permitted in a certain case, the burden falls on the lender to pursue the judgment after the public sale. Because banks are dealing with so many foreclosures at this time, many banks are not bothering to pursue these judgments and eating the loss. However, that doesn’t mean that this will not happen.

Consult a lawyer

The actions taken any time during the foreclosure process may result in long-term financial damage. For those who may be considering foreclosure in Rhode Island, it is advisable to consult with a lawyer before making any decisions.