Deficiency payments in Virginia

When doing a SS, is it common in VA for the lender to require deficiency payments be made by the previous homeowner?

Not really, I did a SS for one of my properties and I didn’t need to pay anything since I had PMI.

I just found something that said that deficiency judgements are legal in VA - which makes it a possibility.

Does the PMI cover the amount that was deficient? My guess is yes, but I just wanted to confirm. Are there any rules regarding PMI that I need to be aware of … like how much it usually covers?

YES, PMI covered all the deficit, which was around $50,000. I have one more prop which I am trying to SS, but if it doesn’t wokout, it could foreclose, and I am trying to gather the info about foreclosure deficiency amt

I think that there will only possibly be a deficiency judgement if the property sells as a REO, and the amount is lower than the original loan. However, I’m not sure how often a lender actually goes through with suing the HO for deficiency after foreclosure. What a nightmare for the poor HO who just wrecked their credit, and now still owes $ on the house. I haven’t done a SS myself, this is just from what I have read.

I take it back, it’s not only if it sells as a REO, but also if it sells at the Auction at a lower price than is owed. Not sure when this would happen thought, b/c I thought that the opening bid was the amount owed. Does anyone know if this is true?

I can’t say I know VA specifically but with regard to this stuff, it is pretty universal I believe.

If there is a deficiency resulting from auction or REO, the borrower is on the hook for it and fees. It is up to the lender to pursue it but most eventually do pursue it in my experience. They get a judgement and then pass it on to their collections people who are pretty dogged.

If there is a deficiency resulting from a SS, you can often negotiate in advance to waive the deficiency. And then the borrower will get the 1099C. Some lenders won’t waive…but it is lender driven, not locale driven I believe.

Yes it is Julie, I have worked with clients who did short sales and they had to sign promissory notes for a portion of the outstanding balance. This was for Countrywide, every bank is different and i’s all up to the lender in regards to how they decide to pursue. I haven’t run into the issue of a SS requiring a deficiency payment as of yet.