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Auto Loans and Mortgage Loans

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gollum
 
Reply Mon 19 Jun, 2017 07:31 pm
1) I b0rrow to buy a house pursuant to a mortgage loan.

Then the mortgage becomes past due.

Then the mortgagee forecloses.

Then the mortgagee sells the house at the market price, but the proceeds are less than the amount owed on the mortgage.

Does the mortgagor/home buyer owe the lender for the deficiency?


2) I b0rrow to buy a used car via a dealership or subprime loan.

The loan becomes past due.

The lender repossesses the car.

The lender then re-sells the car but receives less than the balance of the loan.

Does the car buyer owe the lender for the deficiency?
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Type: Question • Score: 1 • Views: 1,472 • Replies: 5
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D45ist
 
  0  
Reply Mon 19 Jun, 2017 09:06 pm
@gollum,
With regard to the home loan, they will usually write off the balance. It's what's known as a short sale. They will not come after you for the difference.

A car loan is different, they sometimes will, but not always come after you for the difference. It often depends on the amount. Many times the difference is less than what it would cost to sue you.
gollum
 
  1  
Reply Tue 20 Jun, 2017 04:12 am
@D45ist ,
D45ist-

Thank you.

However, my question is not whether the lender will choose to not pursue the deficiency but whether in each case as a matter of law and contract it has the right to pursue the borrower for the deficiency.
D45ist
 
  0  
Reply Tue 20 Jun, 2017 05:56 am
@gollum,
You didn't say that in your op.

It depends on the language in the contract. I can just about guaranteed that they have included language that allows them to do so.
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Linkat
 
  1  
Reply Tue 20 Jun, 2017 08:21 am
@gollum,
States That Prohibit Deficiency Judgments Following Short Sales

http://www.nolo.com/legal-encyclopedia/states-that-prohibit-deficiency-judgments-following-short-sales.html

Have you talked with either of these lenders and see if there is something you can work out?
gollum
 
  1  
Reply Tue 20 Jun, 2017 11:31 am
@Linkat,
Linkat-

Thank you.

Then I guess all the States allow deficiency judgments on automobile loans.
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