Foreclosure Auction Deficiency

My home is going into auction. Will I have to pay the difference if it sells for less than what I owe?

1 Answer

If it sells for less than what you owe on the mortgage, this is called a deficiency. Whether your mortgage company comes after you for the deficiency depends on whether they have demanded a deficiency judgment against you or whether they have waived their right to a deficiency judgment. If the mortgage company waived deficiency judgment, it cannot come after you for any difference between the amount owed on your mortgage and the successful bid amount at the foreclosure sale.

You can tell this by looking at the foreclosure complaint (the initial lawsuit itself). It should say right in the caption whether deficiency judgment is demanded or waived. If not, it should be somewhere in the body of the lawsuit.

Depending on the state, bidding will remain open for 30 days after the foreclosure sale if deficiency judgment is demanded. Therefore, mortgage companies in these states often waive deficiency judgment in order to finalize the sale and speed things along. The quicker the foreclosure sale is finalized, the quicker they can re-sell your house and make their money back.