Utah remains one of the states that allow banks to sue a home owner after a foreclosure for any amount still owing on the loan. This type of lawsuit is euphemistically called a “deficiency action.”
Many states have either greatly restricted a lender’s power to sue a borrower or abolished it altogether for policy reasons. It is not a coincidence that states most plagued by loan fraud and malfeasance on the part of loan originators are also those that allow deficiency action cases. Utah historically ranks in the top 5 in the nation for cases of loan fraud. From a policy standpoint, lenders and underwriters are arguably more relaxed in Utah because of the right to a deficiency if default occurs, which is one of the reasons why there are so many loan fraud reports.
Arnold, Wadsworth & Coggins Attorneys is one of the only firms in Utah that deals with deficiency cases extensively.
We are well experienced in defending these cases and with the firms that often represent lenders in these actions. It is also possible to recover money in a counter-suit against the lender! These cases can be very simple, but in some cases extremely complex considering the causes of the default or defaulted obligations by third parties against the borrower.
The usual parties and actors in a deficiency case are the bank or lender, the obligor/mortgagor/borrower (the party that was required to pay the note), and the appraisers. Becuase of the nature of the appraisal business, appraisers often disagree about how much a home is worth. This is critical in a deficiency case.
Also, you will need to have the bank’s accounting checked to make sure they are not over billing you, which is common. The other fact to consider is how long the bank took to foreclose on the property. If the bank took an unreasonable amount of time to foreclose, it is possible that the deficiency the bank seeks is grossly inflated to the obligor’s detriment. This is not allowed.
Contact an attorney at Arnold, Wadsworth & Coggins for a consultation. We have offices in Salt Lake City, Ogden, and Utah County to serve you best.