Can Mortgage Lenders or Investment Companies Sue for Losses?
The threat of a deficiency judgment being initiated by the lender after the sheriff sale is always being raised by foreclosure consultants, attorneys, and representatives of the bank trying to wring more money out of borrowers. We are in uncharted territories, because prior to 2007, short sales, deeds in lieu of foreclosure and loan modifications were extremely rare. “Why would lenders not legally take action over the deficiency judgments if the bank loses hundreds of thousands of dollars whether it is from a short sale or foreclosure?” In the 4th quarter of 2008 we saw the Federal Reserve, FDIC Chairwoman, Sheila Bair and the Secretary of the US Treasury, Henry Paulson all promote mortgage relief remedies like, loan balance write-downs, mortgage rate reductions and other types of loan workouts to make stem the foreclosure crisis. When you negotiate a short sale, the agreed upon price is supposed to be considered payment in full, but you may still owe the difference between the mortgag
