Deficiency judgments Indiana are subject to terms and provisions of an original mortgage agreement made between the homeowner and a lender secured by a given homestead property. In short, a deficiency judgment is a court award as the result of a lawsuit filed by a lender against a homeowner/borrower following the sale of a property. In essence, the deficiency award amounts to the amount of money a lender is still owed on an outstanding mortgage loan, even in light of earlier repayment and sale via a foreclosure auction. The amount deficient following a foreclosure sale, which can include costs associated with the fees and costs of the foreclosure proceeding for the lender, becomes what is known as the deficiency judgment amount.
State Indiana Statutes Governing Deficiency Judgment in Foreclosure Sales
Per the Indiana Code, Article 29 Chapter 7, deficiency judgments are allowed in the following circumstances:
- If a property is sold via foreclosure auction, and the ensuing sale price is less than the outstanding amount of debt owed on a mortgage including foreclosure fees and costs, a borrower can be subject to the difference via a deficiency judgment
- It is also notable that second and subsequent junior mortgages may also incur the potential, and likelihood, of a lender attempting to recover losses via a deficiency judgments as well
State of Indiana Statutes Governing Deficiency Judgment in Foreclosure Alternatives
Unless otherwise explicitly stated and prevented in a no-deficiency provision in a given foreclosure prevention action, borrowers engaging in a short sale or deed in lieu of foreclosure deal will be subject to deficiency judgments, if pursued by the lender.
Getting Legal Help with Deficiency Judgment in Indiana
In reality, a homeowner can greatly mitigate their risk and losses during or before foreclosure through consulting with a foreclosure lawyer in Indiana. Not only are certain mortgage agreements exempt from deficiency awards per the provisions of the original loan agreement, but additionally, certain lender actions may negate their ability to recover a deficiency award in certain cases. Furthermore, a homeowner can avoid foreclosure, while also preventing a deficiency judgment in Indiana, by negotiating a short sale or deed in lieu deal that includes a no deficiency provision. All of these options are highly case-specific and encompass relative complex real estate and foreclosure laws applicable to the state of Indiana. Consulting with a foreclosure lawyer in Indiana is the only viable method for a homeowner to prevent future financial losses following or before foreclosure.
