Patty McMillen

Deficiency judgment are only in certain circumstances.  A deficiency judgment may not be obtained when a property in foreclosure is sold through a non-judicial public sale or if the foreclosure relates to a purchase money mortgage.  The reason I’m giving this explanation is that.. beware if your seller has refinanced their loan or done a modification on their loan. The loan is now not purchase money.

Most foreclosed properties involve a non-judicial foreclosure.  This means it does not involve a court action.  When the deed of trust is initially signed, it will have a clause in it that says power of sale clause, which upon default allows a trustee to sell the property in order to satisfy the defaulted loan.  The trustee acts as a representative of the lender to make the sale.  Here in California the title companies serve as the trustee managing foreclosure sales. If the court is not involved there is no deficiency judgment.  If a judicial foreclosure happens the lender may recover a deficiency judgment in certain circumstances….I personally have not seen this happen but it could..