Are you protected from deficiency judgement with FHA Loan?

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Icon Mini Profile sportscarvell





Joined: 26 Jan 2010

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Post Posted: Tue Jan 26, 2010 11:34 pm    Post subject: Are you protected from deficiency judgement with FHA Loan?
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I am asking this question for a friend: He is facing layoffs at a job but feels he will survive. He wants to buy a house in S.C., but if he loses his job worries about foreclosure and even more about a deficiency judgement to go after his other assets. Has anyone heard any stories about deficiency judgments with FHA loans? Thanks
Icon Mini Profile jenkin7
jenkin7




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Post Posted: Thu Jan 28, 2010 3:01 am    Post subject:
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Hi sportscarvell,

It depends on an individual lender if they would pursue deficiency judgment against the borrower. There's no such rule that eliminates the chances of a deficiency judgment on an FHA loan. However, lenders generally pursue deficiency judgment on an FHA loan if the mortgagor is a non-occupant borrower or if he has walked away from the property or if the borrower previously defaulted on an FHA loan. Your friend can look for loss mitigation options like a loan modification or a deed in lieu to avoid a judgment.
Icon Mini Profile sportscarvell





Joined: 26 Jan 2010

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Post Posted: Thu Jan 28, 2010 3:10 am    Post subject: Thanks and ...
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So, in other words, you are saying that an FHA loan is about equal to a Conventional loan when it comes to protection from a deficiency judgment? Thanks so much for taking time to answer. Mahalo!
arnie

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Post Posted: Fri Jul 15, 2011 8:48 pm    Post subject: fha loans
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Wheather or not fha will seek a judgement or a lender , will depend on which state you live in. Most states are non-recourse states, and a non- judicial forclosure would be free of judgements in a non-recourse state. A judicial foreclosure is not as attractive for a lender because of the expense involved.
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