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Are you protected from deficiency judgement with FHA Loan?

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

jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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 [url=http://www.mortgagefit.com/loss-mitigation.html]loss mitigation[/url] options like a loan modification or a deed in lieu to avoid a judgment.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:25 | Post subject:

sportscarvell's picture
sportscarvell | Joined: January 26, 2010 10:30 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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!

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:25 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 02:25 | Post subject:

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