A deficiency judgment is when the bank takes your house and then sues you for more money. The amount of the money judgment against you is the difference between the value of the property at the foreclosure sale and the amount you owe. This difference is called the deficiency, and your bank can sue you and attempt to collect this from you.
A bank has 1 year from the foreclosure sale, short sale, or deed-in-lieu to begin the process of chasing you for a deficiency judgment. Once the bank gets that judgment, it can be good for as long as 20 years. Typically, the possibility of that deficiency judgment is a primary concern for my clients. Negotiating a waiver of deficiency from the bank is a top priority, and is part of any foreclosure, short sale, or deed-in-lieu negotiation process. Additionally, certain banks tend to offer the waiver of deficiency more often than other banks, so having a working knowledge of the individual bank is critical to the process. This requires an in depth personal discussion with each client to determine the best course of action.