Wen a lender forecloses, can they go after borrower’s assets to try to recoup their loss?

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Wen a lender forecloses, can they go after borrower’s assets to try to recoup their loss?

The lender has the right to foreclose on the house, taking the homeowner’s downpayment with it. In addition, the borrower’s credit rating will usually get destroyed, and, in some states, the lender can come after his or her other assets to recoup the capital the lender has lost.” In WA what is the law?

Asked on August 28, 2010 under Real Estate Law, Washington

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

What you are referring to here is something known as a "deficiency judgment"; this is a judgement obtained by a lender if a property is sold at public sale for less that what is still owned on the trust deed note (plus costs/fees).  In WA, generally a deficiency judgment may be not obtained using the "non-judicial foreclosure". A deficiency judgment can be obtained in "judicial foreclosure sale", unless the property had been abandoned for the preceding 6 months prior to the foreclosure judgment or decree that would preclude any deficiency.

By way of background, the primary method of foreclosure in WA involves non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly called "notice of sale".  In WA, however, a lender can also go to court in for a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. Whether a judicial or non-judicial foreclosure will be involved depends on the wording in the deed of trust.


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