What is a deficiency judgment in a foreclosure?

A deficiency judgment in a foreclosure is a legal order that holds the former homeowner responsible for a debt that remains after their foreclosure sale. In Virginia, lenders are allowed to pursue a deficiency judgment if the foreclosure sale proceeds are not enough to cover the full amount of a homeowner’s mortgage debt. Under Virginia foreclosure law, when a home is sold at foreclosure sale, the proceeds from the sale can go towards paying off the remaining loan balance. If the proceeds from the sale are not enough to pay off the full loan balance, the lender can pursue a deficiency judgment to recover the unpaid amount. The deficiency judgment amount is calculated by subtracting the outstanding mortgage loan amount from the foreclosure sale proceeds. If the unpaid amount is not paid within a certain period (usually 6 months after the foreclosure sale date) a personal judgment is issued against the former homeowner. The judgment acts like a lien and can remain in effect for up to 10 years. The lender can use the judgment to recover the unpaid loan amount by garnishing the former homeowner’s wages or bank accounts or by filing a lawsuit. A deficiency judgment can have serious financial implications for a former homeowner. They may be forced to pay the debt in full plus court costs and interest. In addition, the judgment may also reduce their credit score and make it more difficult to obtain future credit. It is important for former homeowners in Virginia to understand their rights under foreclosure law and speak to an experienced attorney if they are facing a deficiency judgment.

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