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?
1 Answer from Attorneys
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.