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Deficiency judgment surprises foreclosure victims

Many homeowners who have gone through foreclosure may think their financial woes are over when they lose their homes. Imagine the shock many D.C. area residents face, however, when they realize they may still owe more on the houses they lost. This trend, known as deficiency judgment, requires homeowners to pay the balance between the remaining mortgage amount and the funds fetched when the home went through foreclosure sale.

One Maryland man is struggling to make ends meet after he lost his home in 2008. Then, more than three years after the foreclosure was finalized, the man was served with a notice that he still owed about $115,000 on the home - and the interest was compounding at an alarming rate. That 42-year-old man is among a growing population of homeowners who are being sued for overdue amounts years after their homes have gone through foreclosure.

This is all part of a process called deficiency judgment, a process that is legal in about 80 percent of the United States. Even though many people think their home is considered a security on their mortgage, they are shocked to find out that they owe more. For example, if a homeowner took out a $200,000 mortgage, but the house sold for just $100,000 because of the slow housing market, he or she could potentially owe the remaining balance.

Since 2008, about 400 Maryland homeowners have fallen victim to this predatory practice. During the first four months of 2013, an additional 57 new court actions were taken against borrowers, far outpacing the projected numbers for the year. Sadly, even government-funded loan agencies such as Fannie Mae and Freddie Mac are seeking deficiency judgments, largely because they lost massive amounts of money in the recent real estate bubble bust.

If you are experiencing financial difficulty because of your home loan, consider seeking assistance from a qualified attorney. These professionals can help you learn more about your legal and financial options.

Source:  www.delawareonline.com, Years after foreclosures, old debt haunts homeowners Kimbriell Kelly, Jun. 23, 2013

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