Like all locations throughout the country, the state of Utah has its fair share of foreclosures. Losing your house there is bad enough, but like other parts of the country, having your house foreclosed upon in Utah can be made additionally worse when it is coupled with a deficiency judgment.
Deficiency Judgment
In cases of foreclosure should the home's selling price be less than the remaining loan balance, it's possible for the mortgage company to request a deficiency judgment. This is a court order that makes the owner personally liable for the unpaid portion of the debt.
Upon default of a loan the lender re-takes possession of your property. It's possible under these circumstances and with an unstable economy that the value of the property is not sufficient to pay off the original loan amount. For example, an individual might owe $300,000 on their loan, but the value of the house has dropped to $250,000, making the owner short by $50,000. The lender will want his entire loan repaid, but because the value of the house was unable to provide the full amount, the lender can take legal action against you to collect the remaining amount; this is called a deficiency judgment.
Not only can the lender sue for a deficiency judgment to cover the remaining amount of the loan, but the deficiency judgment may require the owner pay the costs associated with foreclosing the property as well as those the lender spent to pursue the deficiency judgment.
A Successful Deficiency Judgment
If the lender is successful in his suit for a deficiency judgment, the owner becomes personally liable for the entire amount of the judgment. The owner is legally bound to satisfy this deficiency judgment, and failure to do so allows the lender to come after the owner for the money he is owed. They are legally allowed to garnish wages, collect through a bank levy or take personal items of the owner as payment. These don't necessarily include the owner's car, home or retirement accounts, however.
Likelihood of Deficiency Judgment Collection
If a lender is legally allowed to pursue a deficiency judgment there is no telling if he will take advantage of this option. Quite often the lender will choose not to because of the expense and time it takes for a legal action of this sort. Also, those going through a foreclosure generally don't have the assets or income necessary for payment. Some states don't allow lenders to pursue a deficiency judgment following a foreclosure. In the case of non-recourse loans there can be no deficiency judgment.
Deficiency Judgments in Utah
Deficiency judgments are allowed in Utah, but they must be brought against the borrower by the lender in separate lawsuit following the foreclosure auction. The amount that can be requested is limited by the fair market value of property. Additional limits on deficiency judgments in Utah include the restriction that the action taken to pursue a deficiency judgment must be filed within 3 months of the property sale date. All judgments are limited to the difference between the amount owed and the fair market value of the property, plus the fees and charges present on the account.
Speak with a Legal Professional
Issues involved with a foreclosure and legal actions that follow, such as a deficiency judgment, can be complex and intricate. To avoid making a costly mistake, contact an attorney who specializes in foreclosure law so that your rights are protected.
