A Texas property is sold at a non-judicial foreclosure sale for $180,000. The outstanding debt is $250,000. The borrower's independent appraisal shows the property's fair market value is $230,000. The lender sues for a $70,000 deficiency. Under Texas Property Code §51.003, what is the maximum deficiency the court should award?
Correct Answer
C) $20,000, because the court credits the fair market value ($230,000) against the debt ($250,000), not the sale price
Under Texas Property Code §51.003, when a borrower raises the fair market value defense, the court credits the greater of the sale price or the fair market value against the outstanding debt. Since the fair market value ($230,000) exceeds the sale price ($180,000), the court credits $230,000 against the $250,000 debt, resulting in a maximum deficiency of $20,000.
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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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