What To Do When You Receive A Deficiency Notice After Foreclosure In Ohio

For many Ohio homeowners, foreclosure feels like the end of a tough chapter. The house is sold, the case is closed, and now you get to move forward. However, in some cases, a new puzzling letter shows up in the mail after your house has been foreclosed on. You may end up getting a deficiency judgment or payment demand for the balance owed on the mortgage. If you’ve gotten a notice like this, it’s a good idea to know what it is and what your options are.

What is a deficiency balance?

A deficiency occurs when your home goes into foreclosure, and the amount the home sells for isn’t enough to pay the outstanding mortgage plus expenses. The difference between the amount you owed on the mortgage and the amount the home actually sold for is called a “deficiency.”

For instance, if you owed $180,000, but the foreclosure sale nets the lender only $140,000, the lender can argue that a $40,000 deficiency exists. In some cases, it may be more after fees are added. 

Can the lender collect a deficiency in Ohio? 

In the State of Ohio, the lender would not be able to get a deficiency judgment that would enable them to collect the balance from you. That doesn’t mean that every lender would be able to get one, but it means that you should take the notice seriously.

Collection efforts might include:

• Letters requiring payment
• Calls from the lender or debt collector
• A lawsuit seeking a judgment
• Garnishment of wages or bank levy 

Don’t ignore the notice 

The first thing that may come to mind when you see the letter is to throw it away, especially if you have just gone through the foreclosure process. However, this could make the situation worse. Some deficiency cases can end up in a lawsuit, and if you fail to meet the court deadline, a judgment would be granted to the lender without you having a chance to fully state your case. 

Confirm the foreclosure sale details 

Begin with the identification and collection of important documents, such as:

• The foreclosure judgment
• The sheriff’s sale confirmation
• Any final accounting statement, payoff, or other payment
• The deficiency demand letter or collection letter

You will want to verify the correctness of the numbers the lender has and that the foreclosure sale was conducted in the correct manner. 

Watch for errors or overcharges 

The balances for deficiency are not always determined in the correct manner. There are cases where the deficiency balances are comprised of improper charges, overcharged amounts, or book errors. In some cases, the determination of the sale amount may be in dispute.

Some potential issues that should be considered include:

• Inaccurate principal balance
• Incorrect calculations of interest
• Unnecessary attorney’s fees
• Misapplied payments
• Credit missing from the sale proceeds

Even the tiniest mistakes can greatly impact the amount the lender says you owe them. 

Talk to a Columbus, OH, Foreclosure Defense Lawyer Today 

Kohl & Cook Law Firm, LLC, represents the interests of Columbus or Dayton homeowners who are facing foreclosure. Call our Columbus foreclosure defense lawyers today to schedule an appointment, and we can begin discussing your next steps right away.