What to Know About Maryland Deficiency Judgements  

 Posted on November 19, 2024 in Home Ownership and Bankruptcy

Sometimes, even after a lender has foreclosed on your property in Maryland, you may still owe them money if the price at which the property was sold was insufficient to cover the debt. The difference between the selling price and what you owe the bank is called a deficiency, and the legal process the lender initiates to obtain that remaining amount grants the lender something called a "deficiency judgment." An experienced Maryland foreclosure attorney can advise you on the law of Maryland deficiency judgments.

How Do Maryland Foreclosure Deficiency Judgments Operate?

Say you owe the lender $100,000, but the property is sold for $70,000 at foreclosure. You will still owe the lender $30,000 to make up the difference. Maryland law allows a lender to file a motion for a deficiency judgment to recover this remaining debt.

Following a foreclosure, a deficiency judgment is the only way that a lender may recover on a deficiency. If a lender fails to do so for any reason they may not recover this amount in any other way. For instance, a lender may not then turn around and sue for breach of contract to recover the deficiency.

Lenders may also file for a deficiency judgment if the proceeds of a short sale are insufficient to cover an outstanding property debt. In a short sale, you sell your home for less than the balance of the mortgage and the lender can either forgive the remaining balance or compel you to pay it.  

Similarly, a lender can ask for a deficiency judgment if a deed in lieu of foreclosure does not cover the outstanding debt. When a lender obtains a deed in lieu of foreclosure, the lender gets a deed to the property rather than foreclosing on it. If the debt exceeds the property’s fair market value, the lender can recover a deficiency.

Can the Lender Still Recover a Deficiency if I Cannot Pay?

If a court enters a deficiency judgment and you are unable to pay the deficiency, the lender may resort to a number of legal processes to obtain the outstanding amount, including:

• Putting a lien on other assets

• Garnishing your wages

• Levying your bank accounts, which allows the lender to freeze your account to obtain the deficiency.

How Much Time Does a Lender Have to File a Deficiency Judgment?

Maryland lenders of mortgages, deeds of trust, or promissory notes secured by residential property have just three years from the foreclosure to ask the court for a deficiency judgment. If a lender files a deficiency judgment after the three-year limitations period has passed, you may use that as a defense to a foreclosure deficiency. If you cannot pay the deficiency, you may consider filing for bankruptcy protection to discharge your foreclosure deficiency debt.

Contact a Prince George’s County, MD Foreclosure Lawyer

If you are facing a deficiency judgment or foreclosure, contact The Law Office of Donald L. Bell and consult with a Greenbelt, MD foreclosure defense lawyer. Our foreclosure defense attorney has more than 20 years of experience and offers clients hands-on guidance. Consumer bankruptcy clients can call our firm at 301-614-0535 today for a free consultation.