Legal Question in Real Estate Law in Maryland

Foreclosure and Deeficiency Judgments

One of my clients has a 1st and 2nd mortgage with American Home Mortgage and the lender has refused their request for a deed in lieu transaction. If they ultimately foreclose, can they come after my clients for a deficiency judgment or force them to sign a promissory note for the shortfall? Also, do you have any experience with American Home Mortgage's practices in this regard specifically?

Asked on 8/29/08, 12:25 pm

1 Answer from Attorneys

Michael E. Hendrickson Attorney & Counsellor at Law

Re: Foreclosure and Deeficiency Judgments

My understanding is that if the deed of trust/mortgage is a so-called recourse loan, then, yes, the noteholder can pursue the mortgagee(s) for any deficiency judgment which might arise out of a foreclosure action.

However, if the deed of trust/mortgage is a so-called nonrecourse loan, the holder is not permitted to pursue those liable on the note for such a judgment.

And, one needs to scrutinize very carefully the language of the provisions of the deed of trust/mortgage to determine which may apply.

And, no, I have had no experience with AHM.

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Answered on 8/29/08, 1:28 pm

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