Deficiency Balance

I am researching this for some friends who are in foreclosure who bought this duplex property in North Carolina a few years back, who live in California.
I am trying to see if they can do a short sale without a deficiency judgment.
I found this law:
45‑21.38. Deficiency judgments abolished where mortgage represents part of purchase price.

In all sales of real property by mortgagees and/or trustees under powers of sale contained in any mortgage or deed of trust executed after February 6, 1933, or where judgment or decree is given for the foreclosure of any mortgage executed after February 6, 1933, to secure to the seller the payment of the balance of the purchase price of real property, the mortgagee or trustee or holder of the notes secured by such mortgage or deed of trust shall not be entitled to a deficiency judgment on account of such mortgage, deed of trust or obligation secured by the same: Provided, said evidence of indebtedness shows upon the face that it is for balance of purchase money for real estate: Provided, further, that when said note or notes are prepared under the direction and supervision of the seller or sellers, he, it, or they shall cause a provision to be inserted in said note disclosing that it is for purchase money of real estate; in default of which the seller or sellers shall be liable to purchaser for any loss which he might sustain by reason of the failure to insert said provisions as herein set out. (1933, c. 36; 1949, c. 720, s. 3; c. 856; 1961, c. 604; 1967, c. 562, s. 2.)

The title says: Deficiency judgments abolished where mortgage represents part of purchase price.
It reads to me, that if the seller does not disclose that the note is for purchase money of real estate the seller can be responsible for the deficiency.

Does anybody know more about this or anything else that could be helpful to my friends?

Hi!

Welcome to forums!

To gb,

You may voluntarily give it back to the lender but it would be the lender's discretion whether or not he would accept it. In my opinion, you should apply for a deed in lieu of foreclosure with your lender and sell off the property. Though this would affect your credit badly, you would be able to get rid of the property and won't be liable for the deficient balance.

To Lorraine,

Depending upon the state laws, your friends won't be liable to pay the deficient amount resulting from the short sale. Whether not a mortgage is purchase money will be mentioned in your friends' mortgage documents. Depending upon that he may or may not be charged the deficient balance.

Sussane

here's an idea deadbeat, PAY YOUR DEBT!!!!!

Now that you "Have No House Payment" set up a payment plan and stop contributing to the down fall of America!

You are probably a democrat, so why not write Obama and ask him to help you.

Is WA state a walk away state?

Hi LW!

Welcome to forums!

As far as I know, Washington is a walkaway state. Thus, the lender will not be able to come after you for the deficient balance resulting from the property sale.

Sussane

Is Texas an anti-deficiency state?
Can the bank force be to pay the deficiency balance after foreclosure?

Hi Chaco,

As far as I know, Texas is not an anti-deficiency state. You will be liable for paying off the deficient balance resulting from the foreclosure sale of the property.

Thanks,

Jerry

Just to help clear up more. NC is a deficiency state and the early infomation on here was referencing purchase money loans that where privately held by the seller of the home. If you purchased your house through a bank they can still get a deficiency judgment but that doesn't always been they will.

Is Arkansas a walk-away/no deficiency state? Thank you and this is a cool web-site. :)

Hi dm,

After a foreclosure, the lender can come after you in order to recover the deficient balance in Arkansas. However, Arkansas has a redemption period of 1 year. You will get 1 year's time to redeem your property.

Thanks