Deficiency is essentially the amount that the lender is unable to recuperate through a foreclosure or short sale.
Regardless of foreclosure or short sale, your lender has the right to collect the deficiency. In a foreclosure sale, you will be 100% liable for the deficiency; whereas in a short sale, it is possible to negotiate a waver of deficiency.
For example, if you owe $100,000 on your mortgage and the bank forecloses and sells the property at auction for $60,000, the deficiency amount would be $40,000. Typically, a well conducted short sale will result in higher sale price, thus lower deficiency amount.
In some states, such as Maryland, lenders can take additional legal action and obtain a deficiency judgment against you for the deficiency amount. In this case, your lender can pursue collections against you for the $40,000 deficiency amount, i.e. garnish wages and bank accounts, etc. This is one of the main reasons why it is so important to exhaust every option you may have to avoid foreclosure.
Did you know that nationwide short sale success is less than 15%? This is because most Realtors are unfamiliar with short sales and end up making many common short sale mistakes. Unlike most, Certified Distressed Property Expert designated Realtors have a success rate of more than 85%!
With your financial futures on the line, you need a specialist on your side. I urge you to contact MD Short Sale Real Estate today for a free short sale evaluation if you think short sale might be right for your situation. I will reach out to you right away to discuss your situation in strict confidence.
