If a property sells at a foreclosure auction for a price that's less than the amount the borrower owes to the lender, the difference between the sales price and the total debt is known as the deficiency. For example, if the borrower owes $250,000 to the lender and the property sells at the foreclosure sale for only $200,000, the deficiency is $50,000.
In some states, the lender is allowed to get a personal judgment (called a "deficiency judgment") against the homeowner for this difference. The deficiency judgment allows the lender to collect the remaining debt by, for example, placing a lien on other property owned by the borrower, levying the borrower’s bank account, or garnishing the borrower’s wages. Not all states allow a lender to obtain a deficiency judgment.
Read on to find out whether lenders may get a deficiency judgment in New Hampshire.
New Hampshire law places no significant restrictions on deficiency judgments. Lenders may obtain a deficiency judgment with either a judicial or nonjudicial foreclosure.
To obtain a deficiency judgment following a nonjudicial foreclosure, the lender has to file a lawsuit following the foreclosure sale. The lender must demonstrate that the foreclosure sale price was fair and reasonable. What constitutes a fair price depends on the circumstances of each case, and is not necessarily based on fair market value.
If you want to learn more about the foreclosure process in New Hampshire or want to find out if you have any potential defenses to a foreclosure, consider talking to a foreclosure lawyer.
It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different foreclosure avoidance options.