Mortgages, Deficiencies, and Bankruptcy.

Depending on the state that they live in, some consumers who file for bankruptcy & get their home foreclosed upon may be in for a rude awaking.

The difference between what a lender can get for a house & the mortgage balance is the “deficiency,” and in many states, debtors may be liable for this amount, depending on when they file bankruptcy (or if they do at all).

This post has a very interesting theory about a new industry that could emerge regarding collecting deficiencies:

http://www.bankruptcyorlando.com/2008/03/mortgage-defici.html#more

I never thought of it this way.

It certainly makes sense that lenders would want to pool & sell the deficiency debt to collection agencies. Heck, why would they want to chase the debts themselves?

Wild times ahead!

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