Detailing deficiency judgments

No one in Gainesville wants to go through the struggle that comes with a foreclosure. Working with a lender to attempt to secure a loan modification is almost always the recommended course of action in order to stop the process. Yet for homeowners who are hopelessly upside down in their mortgages, allowing a foreclosure to happen may help them to get out from under their financial burdens and get the chance to find more affordable housing while they rebuild their credit. In such a situation, however, one wants to ensure that a foreclosure truly will net enough to pay off what they owe. 

In the cases where a foreclosed property sells for less than what is still owed on the mortgage, lenders may have the opportunity to file for a deficiency judgment to be placed on the mortgagor. This judgment holds the mortgagor responsible for the remaining amount owed. Section 44-14-161 of the Code of Georgia states that lenders have this option provided that they obtain a confirmation of sale through the court of the county in which the foreclosed properties are located. 

There are, however, restraints to power that lenders have in securing a deficiency judgment. First, the law only allows it in nonjudicial sales (which, according to, comprise just over 70 percent of foreclosures in Hall County). Second, a lender often cannot seek a judgment for the difference between what was owed on the mortgage and what the home netted at sale. Rather, the court will determine the fair market value of the home and come up with the difference from that value. The court also reviews the fair market value while confirming the sale to ensure that a foreclosed home was indeed sold for a price in that range. 

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