A lender in Idaho holds a deed of trust on a borrower's property. The borrower has defaulted, and the lender wants to foreclose. The lender's attorney advises that proceeding with a non-judicial trustee's sale will likely result in a sale price below the outstanding loan balance. Which of the following correctly describes the lender's options regarding a deficiency judgment under Idaho law?
Correct Answer
A) The lender must choose between completing the trustee's sale or seeking a deficiency judgment, as pursuing the trustee's sale waives the deficiency claim
Under I.C. § 45-1512, when a lender proceeds with a non-judicial trustee's sale in Idaho, the lender generally waives the right to seek a deficiency judgment against the borrower. This is the anti-deficiency protection associated with Idaho's non-judicial foreclosure process. If the lender wants to pursue a deficiency judgment, it must instead proceed through judicial foreclosure in district court, which is a longer and more expensive process. The lender faces a strategic choice between speed (trustee's sale, no deficiency) and potential full recovery (judicial foreclosure, deficiency possible).
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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