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Failed flip flirts with foreclosure

Desperation drives investor to risk credit, deficiency judgment
Published on Apr 20, 2009

DEAR BENNY: I am retired. About 18 months ago (before the economic crash), I bought a fixer-upper and renovated it, but have been unable to sell it. If I let the property go into foreclosure, can/will the bank that gave me the mortgage try to get at my other assets (equity in my home, stocks, etc.)? --Irvine DEAR IRVINE: You are asking about a legal concept known as a "deficiency judgment." Let's take this example: You owe the bank $200,000 when you go into default. The bank -- after trying to work something out with you -- forecloses on the property. At the sale, the property is sold for $150,000. The difference -- $50,000 -- is the deficiency. Your state law will provide the answer as to whether your bank can seek a judgment against you in a court of law. Recently, the National Consumer Law Center, located in Boston, Mass., issued a comprehensive report entitled "Foreclosing a Dream." According to this report, "in 36 states and the District of ...

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