What is the likelihood for a mortgage company to go for a deficiency judgement on anFHA secured loan?

UPDATED: Sep 6, 2011

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What is the likelihood for a mortgage company to go for a deficiency judgement on anFHA secured loan?

Asked on September 6, 2011 under Real Estate Law, Connecticut


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Whether or not the lending institution can sue for a deficiency judgment on a foreclosed property depends upon whether or not the loan foreclosed upon is "purchase money" or not. Meaning, was the loan being foreclosed upon used to purchase the primary residence of the person who owns it?

If the loan is "purchase money," does your state have anti-deficiency laws precluding a deficiency judgment on a purchase money loan? If it does then the lender cannot go after a deficiency judgment. Another consideration is whether the foreclosure proceeding is done by way of judicial foreclosure or non-judicial foreclosure.

In California, even if a loan is not purchase money and the lender forecloses upon the security by way of a non-judicial foreclosure, the lender cannot obtain a deficiency judgment.


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