When it comes to deficiency judgments and a short sale, the lender and the seller often negotiate these judgments. In many cases, lenders are happy to forgo deficiency judgments just to get the property off their hands. In certain cases, if the home is the personal residence of the seller and was financed through purchase money, no deficiency judgment is made.
Foreclosures differ greatly from short sales in this area. In most cases, after a foreclosure, lenders are unwilling to negotiate the deficiency judgment. When foreclosures take place under a judicial foreclosure, deficiency judgments may be filed in many cases. Consumers that go through foreclosure are often more likely to end up dealing with a deficiency judgment than those that choose the short sale option.