Friday, Dec 9 2011 5:01PM
The bill would place a one-year time limit on deficiency judgments against single-family homes, although it allows state laws that mandate shorter time limits to maintain precedence. The limit would be a federally imposed maximum, only having effect in states with longer time limits.
New York Congressman Ed Towns recently introduced the Fairness in Foreclosures Act of 2011 to the House of Representatives.
The bill would place a one-year time limit on deficiency judgments against single-family homes, although it allows state laws that mandate shorter time limits to maintain precedence. The limit would be a federally imposed maximum, only having effect in states with longer time limits. Some states, Towns noted in a release, allow deficiency judgments up to six years after foreclosure.
"A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to homeowners after they have gone through the arduous foreclosure process," Towns said. "Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely."
The bill would also prohibit such judgments being made in the cases of low-income borrowers and mandates that deficiencies not be reported to credit bureaus. These measures could help those who have been through a foreclosure or short sale avoid further economic consequences later, effectively serving as economic and
housing assistance.
The bill has been referred to the House Judiciary Committee for review. Some states, such as Nevada and California, have their own legislation preventing deficiency judgments in certain cases.
For further reference, check out this source:
Congressman Towns' press release