When a lender forecloses and sells the property for less than what the borrower owed on it, the lender has the right to seek a deficiency judgment. If a lender obtains a deficiency judgment against a borrower, it may pursue all legal remedies for collecting the debt from him.
Georgia Non-judicial Foreclosures and Deficiency Judgments
If a lender conducts a non-judicial foreclosure in Georgia, the sale must be confirmed before the lender may pursue a deficiency judgment against the borrower. A lender has thirty days from the date of the foreclosure sale to begin confirmation proceedings. If the confirmation proceeding is not initiated within the thirty day window, the lender is barred from ever seeking a deficiency judgment. Additionally, the lender must give the homeowner at least five days notice of the confirmation hearing.
At a confirmation hearing, the court will examine the following two issues:
- Whether the foreclosure sale price was equivalent to the actual fair market value of the property; and
- Whether the foreclosure sale was conducted in accordance with statutory notice, advertisement, and procedural requirements.
Georgia courts are prohibited from addressing matters that do not relate to the above issues. Therefore, a borrower may not raise questions as to:
- Whether there actually was a default necessitating acceleration of the debt and foreclosure;
- Whether the proceeds from the foreclosure sale were misapplied;
- Whether the debtor actually owed any money to the lender; or
- Whether other agreements, such as forbearance, short sale, or loan modification agreements were violated.
How is Fair Market Value Determined?
In a confirmation hearing, the lender has the burden of proving that the amount garnered at the sale was equal to the fair market value. Fair market value is determined as of the date of the foreclosure sale and is defined as the price a ready, willing, and able buyer would pay for the property in an arms-length transaction. Expert witnesses are typically relied on to prove fair market value.
Was the Sale Conducted in Accordance with Georgia Law?
A court will not confirm a foreclosure sale if all procedural requirements set forth in the foreclosure statute were not followed by the lender. If the sale took place on a date other than the date specified in the foreclosure notice or if the sale was not properly advertised, confirmation will be denied. Moreover, if a debtor proves that the sale was conducted in a manner which made it impossible for the lender to get fair market value for the property, confirmation will be denied.
Getting Legal Help
A qualified foreclosure defense attorney can represent a borrower who wishes to challenge a lender’s right to confirmation. Having the representation of an experienced foreclosure defense attorney can mean the difference between avoiding a deficiency judgment without resort to bankruptcy and having to file bankruptcy to avoid it.
