Posted by Mel on June 10, 2011 at 12:24:08:
Thank you very much. --Mel
Deficiency Judgment - Posted by Mel
Posted by Mel on June 09, 2011 at 21:24:40:
Hi:
Let’s pretend I own second position on a hard money loan in Calif. Due to non-payment by the borrower, the first forecloses, and since there is not enough equity remaining, I do not bid to buy him out. My understanding is that the foreclosure wipes out my DOT, so I don’t have any more claim on the property. However, is my promissory still valid so that I could seek a deficiency judgment if the borrower has enough resources?
I tried searching the archives, but could not find the exact answer.
Thanks,
Mel
Re: Deficiency Judgment - Posted by Ken
Posted by Ken on June 10, 2011 at 06:03:01:
I just had the same situation.The note is still enforceable.My attorney sued for me,I won,we filed the judgment this past week in a county where he owns a house free and clear so now my lien is attached to that house
Frcslr of 1st eliminates 2d lien, not debt - Posted by John Merchant
Posted by John Merchant on June 11, 2011 at 21:29:14:
A DOT foreclosure does eliminate subordinate liens but not their
underlying debts so when the 1st is foreclosed the only remedy left
for the 2d holder is to sue on his note.
This is not a suit on a “deficiency” and that is where the creditor who
did foreclose then sues for any deficiency he’s owed after creditor
bank sells the foreclosed RE but has some deficiency still owing…but
this is usually not permitted by state law on residential mortgages
(deeds of trust} that have been foreclosed out-of-court via that
state’s non-judicial option.
So where the 1st lien holder (bank usually) has such a DOT and note
but it thinks it’d net them more to sue,then go after debtor’s other
assets, it’ll just sue debtor to foreclose AND for a judgment on their
total debt that they can then record against debtor’s other assets.