Just Foreclosures
Why you shouldn’t just walk away from a property
If you walk away from your property without negotiating a deed in lieu or some other settlement with your lender they can sue you directly for a deficiency and seek to liquidate your other assets (bank accounts, cars, boats, other real property, household items, etc.) for payment. A deficiency is the difference between the total amount owed on the loan and the amount the bank realizes from the foreclosure sale of your property. In the markets we are now experiencing you will almost always have a deficiency after a foreclosure proceeding. In some cases banks don’t even wait for a foreclosure. Some banks are taking an aggressive approach and suing directly on the full amount of the note even before filing foreclosure proceedings. These banks feel that the property securing the loan is certainly valued less than the loan amount due and is looking to the borrower’s other assets for payment (this seems prevalent in cases of investment properties).
Your lender already has an idea of what major assets you possess since you have supplied all that information on your original loan application. Once a deficiency judgment has been docketed your lender can seek to execute on the judgment in order to liquidate certain assets for payment. If you don’t have assets of any value today, you might acquire and accumulate valuable assets in the future and since judgments in North Carolina remain docketed for 10 years (and can be extended); your exposure to having some of your assets liquidated for payment lasts for years to come. So, in sum, it is unwise to simply walk away from a property without negotiating a settlement, especially if you have other major assets you want to protect.
For more information about Charlotte foreclosure and foreclosure alternatives, please visit: http://zellersrudd.com/areas_of_practice/charlotte_foreclosure_alternatives.aspx
About the Author
Prior to founding Zellers Rudd PLLC, Dan Zellers and Scott Rudd worked together in the real estate finance group of some of the top international law firms in the nation. They represented large national banks and servicers in multi-million dollar commercial property transactions as well as multi-billion dollar commercial loan securitizations. These transactions included the negotiation of large servicing contracts as well as conducting large commercial loan transactions, loan assumptions, defeasances, parcel releases, and other consent matters on large commercial properties located all across the nation. In addition, their work prior to that has afforded them extensive experience in all aspects of residential real estate and residential real estate transactions including loan closings, foreclosure, landlord-tenant law, work with homeowners’ associations, default judgments and private transactions.
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