Anyone with a mortgage who has gone through a foreclosure may breathe a sigh of relief when it's all over. What he may not realize is that the clock has started ticking on something called a deficiency judgment. And now that Maryland's foreclosure backlog is dwindling, consumer advocates are concerned that the state could be in for a rush of deficiency judgments.
In a foreclosure auction or a short sale, the property sells for a price lower than the mortgage debt owed. The lender loses money -- but just for a while, because the lender can then sue the borrower for the difference. In Maryland, lenders have 12 years from the date of sale -- the date the loss was incurred -- to file this default judgment.