If a family has lost their home to foreclosure and had a buyer but the bank wouldn’t grant an extension to close, can the bank now sue for a deficiency?

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If a family has lost their home to foreclosure and had a buyer but the bank wouldn’t grant an extension to close, can the bank now sue for a deficiency?

What can they do? I understand their is a new law that cuts down the time limit for the bank to come back for the deficiency.

Asked on June 20, 2012 under Real Estate Law, Utah

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If the underlying loan that was foreclosed upon was the orignal loan (purchase money) then the bank that foreclosed upon the home is precluded under the law from filing any lawsuit for a deficiency judgment for any shortfall on the loan.

If the bank used a non-judicial foreclosure process as opposed to a judicial foreclosure process, most likely the bank cannot sue the borrower for any deficiency on the loan. I suggest that you consult further with a real estate attorney about your situation and the type of loan that was foreclosed upon.

 


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