In their most basic form, deficiency judgments Louisiana are a procedural method afforded to secured lenders, which allow the lender to sell collateral securing a loan for an amount less than the total amount owed on the loan, as well as the ability to take legal action to collect the difference or amount deficient from the borrower in default. This means that during any foreclosure proceeding involving sale of a home, as the result of a default on a deed of trust or mortgage agreement, a lender also is afforded the right to collect from the delinquent borrower any amount of money not recovered from the sale of the home itself.
Provisions Supporting Lenders in Louisiana’s Deficiency Judgment Statutes
In the state of Louisiana, per Louisiana Revised Statutes, Title 10: 9-629, a borrower is subject to deficiency judgments following foreclosure, if the sale of the property securing a home loan does not produce sufficient funds to cover the outstanding debt balance owed by the borrower. The state of Louisiana also follows a statutory policy of determining deficiency amounts using the exact sale price of the home at auction, rather than a fair market or appraisal value as seen in some states. Additionally, the borrower in a deficiency judgment may become responsible for other costs and fees associated with foreclosure incurred by the lender.
Provisions Supporting Borrowers in Louisiana’s Deficiency Judgment Statutes
However, there is one major caveat in Louisiana statutes that may dissuade certain lenders from actually pursuing deficiency actions and liens. Per Louisiana statutes on foreclosure and deficiency judgments, a lender must pursue a deficiency award in a separate lawsuit, outside of the executory process and other foreclosure proceedings. In short, this can create further costs and time losses for lenders, if they elect to pursue such an action. Not only that, but also, most homeowners going through foreclosure are already financially depleted, and in certain cases, viable recovery of deficiency judgments is simply not feasible within a given timeframe.
Getting Legal Help with Deficiency Judgments in Louisiana
In practice, foreclosure is often a calculated risk taken by borrowers, especially those that may be subject to large deficiency judgments. Though not every foreclosure case involving deficient amounts will result in a separate suit seeking a deficiency judgment from a lender will occur, the risk of such a thing occurring is very real and notable. For any homeowner considering foreclosure, you must consult with a foreclosure lawyer in the state of Louisiana to ascertain all of your legal options to prevent foreclosure, or at the very least, mitigate the potential future losses and other debts that foreclosure may cause.
