A Virginia property is sold at a non-judicial trustee's sale for $480,000. The outstanding first deed of trust balance is $390,000. Trustee's fees and foreclosure costs total $12,000. There is also a second deed of trust with a balance of $65,000. After all distributions are made from the foreclosure proceeds, what is the total deficiency amount that the second lienholder may pursue against the former borrower through a separate lawsuit?
Correct Answer
A) $0 — the second lienholder is fully satisfied from the sale proceeds
Foreclosure proceeds are distributed first to costs and senior liens. The sale produced $480,000. After $12,000 in trustee fees and foreclosure costs, $468,000 remains. Paying the $390,000 first deed of trust leaves $78,000. The second deed of trust balance is $65,000, so the second lienholder is fully paid and there is no deficiency. The remaining $13,000 is surplus.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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