What is a deficiency judgment?

A deficiency judgment is a legal ruling that occurs in California when a homeowner forecloses on their property and the sale of the property does not cover the full amount of the loan. In other words, the homeowner still owes the lender money, so the lender seeks a deficiency judgment. When a lender wins a deficiency judgment, they are able to collect the difference between the amount of the loan and the sale of the property. The lender is then able to pursue the homeowner for repayment in the form of a lien or a lawsuit. The amount of the deficiency judgment is determined by the court and cannot exceed the amount of the original loan. It is important to note that if a homeowner loses a foreclosure case and a deficiency judgment is granted, the amount of the debt does not go away. The homeowner will still be responsible for paying the debt even if the property is no longer in their possession. This means that if the homeowner does not satisfy the deficiency judgment, the lender can take legal action to collect the money from the homeowner. It is recommended that any homeowner faced with a foreclosure in California seeks legal advice to understand their rights and obligations regarding a possible deficiency judgment.

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