Antideficiency Protection | Propertylogy

Antideficiency Protection

By on January 23, 2019

Antideficiency laws mean that borrowers who owe more than what they property is worth will not be subject to deficiency actions by creditors.

For example, if a lender is owed $200,000 but the foreclose of a house was only able to fetch $150,000 in sales proceeds, then the lenders cannot seek a personal judgment against the borrower for the balance of $50,000.

This helps to protect consumers from further financial catastrophe.

However, whether this is a fair practice to creditors is up to debate.

In most states, creditors can seek personal judgments from the courts by filing a suit.

But antideficiency legislation in some states prevent these events from occurring.

In such cases, lenders will just have to take on the loss in the books.

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