A Massachusetts lender completed a power of sale foreclosure on a residential property. After the sale, the outstanding mortgage balance was $420,000, but the property sold for only $380,000 at the foreclosure auction, leaving a $40,000 deficiency. The lender wants to recover this deficiency from the former borrower. Which of the following statements about deficiency judgments in Massachusetts is accurate?
Correct Answer
D) The lender may pursue a deficiency judgment, but the court must determine whether the foreclosure sale price was commercially reasonable
In Massachusetts, deficiency judgments are permitted after non-judicial power of sale foreclosures, but they are subject to judicial oversight. Under Massachusetts case law and statutory principles, if a lender seeks a deficiency judgment, the court may examine whether the foreclosure sale was conducted in a commercially reasonable manner and whether the sale price was fair. If the sale price was unreasonably low due to the lender's failure to conduct the sale properly, the court may limit or deny the deficiency.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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