In some states the lender can obtain a deficiency judgment against a homeower for any amount they are unable to recuperate through a foreclosure or a short sale. This means that if the mortgage is for $200,000 and the bank forecloses and sells the property at auction for $125,000 they could obtain a deficiency judgment for $75,000.
In most cases this does require and additional legal action and causes the mortgage company to incur additional expenses attempting to collect a debt.
There are 6 Non-Deficiency states in the US. They are as follows:
1. California
2. Minnesota
3. Mississippi
4. Montana
5. North Dakota
6. West Virgina
Mortgage companies are acutely aware of a borrowers inability to pay so they often see further collection attempts fruitless.
