Foreclosure Sale and Deficiency Judgment Laws Specific to Colorado
Under past and current Colorado foreclosure sale laws, lenders have had the ability to collect deficiency judgments against borrowers. Typically, the terms of a loan agreement may preempt a lender’s ability to do so, or in other cases, may explicitly allow such actions to occur. Furthermore, any second or third mortgage secured by a given property in foreclosure, which is sold, can result in deficiency judgment awards, as well.
Short Sale and Deficiency Judgment Laws Specific to Colorado
Per the Colorado Division of Real Estate, short sales resulting in deficiency can be pursued by lenders in form of court awarded judgments. Though federal laws provide protections for homeowners with debt forgiven related to a mortgage under the Mortgage Forgiveness Debt Relief Act of 2007, this is only applicable to tax liability and not the amount owed to the lender per the deficiency award. In essence, a short sale transaction can create deficiency liabilities for homeowners in the same manner as foreclosure sales do, unless a homeowner takes action to prevent such judgments from being obtained during the negotiations of a short sale agreement.
Make sure you are working with a realtor with experience negotiating with banks to waive the deficiency judgment. This is not always easy to do and it does require perserverance & strong negotiating skills. My success rate is very high and I’d be happy to provide a free consultation to homeowners to see if we might be a good fit to work together towards a successful short sale.
You can reach me at ShortSaleExpert@MikeMalvey.com.
Mike Malvey
The Group Real Estate
