Can a Mortgage Company Seek a Deficiency Balance After Foreclosure in Georgia?

In Georgia, a mortgage company is allowed to seek a deficiency balance on a foreclosed home if it follows the provisions of O.C.G.A. Section 44-14-161, which outlines the process for obtaining a deficiency judgment against a borrower where a foreclosed property sells for less than the amount of the mortgage.

To obtain a deficiency balance in Georgia, a mortgage company is required to file what is known as a confirmation proceeding in the superior court of the county in which the property is located within 30 days after the foreclosure sale. So, for example, let’s say your home located in Fulton County, Atlanta is scheduled for foreclosure on the first Tuesday of the month and is sold on the courthouse steps for $100,000.00. You owe $200,000.00 on the note. That would mean that there is a $100,000.00 difference between the amount you owe on the loan and the amount for which the property was sold.

If the mortgage company wants to recover that difference, it must file a notice of the sale of the property in Fulton County Superior Court within 30 days after the foreclosure sale. The mortgage company must also show that the property was sold at its true fair market value and that the mortgage company property advertised the foreclosure sale. The Fulton County Superior Court judge can either confirm the foreclosure and allow the mortgage company to pursue you for the deficiency balance, deny the confirmation and the right to pursue a deficiency judgment, or order a resale of the property.

In this market, most residential foreclosures are on properties that are underwater. And, most of those properties are purchased by the bank or mortgage companies themselves. Thus, where a mortgage company purchases its own property at the foreclosure sale, it is easier to show that the purchase was for true fair market value because no other bidders were present at the foreclosure sale. And, thus, it is more likely that the court will confirm the sale and allow a deficiency judgment to be collected against the borrower.

For homeowners who lose their homes to foreclosure, the possibility of losing your home and then being sued for the deficiency is scary. Luckily, filing bankruptcy in Georgia is way to ensure that a mortgage company cannot collect that deficiency judgment. Chapter 7 and Chapter 13 will result in a discharge of such debt and prevent the mortgage company from suing and garnishing bank accounts and wages.

If you have concerns about losing your home to foreclosure and then being hit with a deficiency judgment, you should talk to Atlanta bankruptcy attorneys Law Offices of Charles Clapp about your options. Please call the 404.585.0040 for a free bankruptcy consultation in Atlanta.