Does Louisiana allow deficiency judgments for the outstanding balance on mortgages?

Often when a house appears in public auction, the price fetched is less than the amount borrowed for the original purchase. In foreclosure, the lender may be able to obtain a deficiency judgment. A deficiency mortgage balance can result in a judgment favoring the lender across the United States.

Treatment of a Deficiency Mortgage Balance in Louisiana

In Louisiana, the state does allow the lender to recover any disparity between the funds brought in by the sale of the house and the amount loaned. The Louisiana Deficiency Judgment Act (LDJA) assures this. However, the process is possible only if:

• The sale is legal - follows the legislation regarding foreclosure procedures exactly
• The sale is public
• The lender uses the correct process or launches a separate lawsuit to obtain the deficiency award. This action must be outside of any foreclosure proceedings including the executor process

One important aspect of the LDJA is its reliance on the exact sale price of the home at auction – the highest bid, rather than fair market or appraisal value, to determine the deficiency amounts. Furthermore, the borrower may also be in debt to other costs incurred by the lender for the foreclosure process.

Hire a Lawyer

The laws regarding deficiency judgments can be complicated. This is particularly true in Louisiana, which does not adhere to certain English Common Law practices. If you want to simplify the process, talk to a skilled advocate. A trained lawyer understands what laws apply to a deficiency mortgage balance in Louisiana. This will at least ensure you understand the process.