Lenders are permitted under Ohio foreclosure laws to file for deficiency judgments in Ohio. If the judgment was obtained prior to the sale of the property being confirmed by the court, the lender has two years to collect on the judgment on property that consists of no more than two units. Even if lenders have the right to obtain a judgment, most of the time they don’t pursue deficiency judgments in Ohio. They know that the borrower doesn’t have any assets worth going after, and it costs them additional time and money. Lenders would rather spend their time making loans and making money.
How to Avoid a Deficiency Judgment?
To avoid a deficiency judgment, you should try and work out a solution with your lender to prevent your home from being sold at a foreclosure sale. Lenders are willing to work with their borrowers. Most lenders have a variety of foreclosure prevention programs. If you let your lender know your intentions, you can avoid a foreclosure and a deficiency judgment. Where many people make a mistake is they just walk away from their homes because they don’t know what else to do. This creates more problems like facing deficiency judgments in Ohio. You should also speak to an Ohio foreclosure defense attorney to find out all your options.
The most common foreclosure prevention options are:
- Mortgage modification
- Short sale
- Deed in lieu of foreclosure
A mortgage modification is when your lender modifies your existing loan to lower your interest rate and extend your loan term with the purpose of lowering your monthly mortgage payment. A short sale is when you cannot afford to keep your home, and you owe more on your loan balance than your home is worth, so you need your lender’s permission to sell the home. You also need to get something in writing from your lender that the short sale proceeds satisfy your mortgage debt in full. Otherwise there is a chance that your lender could come after you later for a deficiency judgment. A deed in lieu of foreclosure is when you transfer title to your property back to your lender by signing a deed, handing them the keys and walking away owing nothing.
Consult with an Attorney
If you are facing foreclosure or your home has been sold at a foreclosure auction, and you are worried about whether your lender is going to file a deficiency judgment against you, you should speak to an Ohio foreclosure defense attorney. The attorney can negotiate with your lender and represent you in court.
