Real Estate Law
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Yes, this is true. Under New Jersey law, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures.
This means that you still owe the lender for the difference between what the property sold for at auction and the amount of the original loan. New Jersey however has a "Fair Market Credit" doctrine set forth under N.J.S.A 2A:50-3 which is a safeguard against low or minimal bids which may give rise to a windfall in the event of a deficiency proceeding. Under this doctrine the defaulting borrower is given credit for the fair market value of the property regardless of what the bid at the foreclosure sale was. This is however an affirmative defense which must be raised in a deficiency proceeding.
Deficiency actions must be brought within three (3) months of the foreclosure sale.
The lender can even pursue a deficiency judgment even if you do a short sale - if the sale amount doesn't satisfy the loan.
That's right. Either way, the deficiency will be due.
If you're filing bankruptcy, the deficiency can be included in the bankruptcy and discharged. However, you need to make sure that the foreclosure or short sale occurs before or during bankruptcy so you can include it.