Foreclosure is a legal process in which the rights to a property is taken away from the owner and the property is then sold to satisfy unpaid mortgages and liens against the property.  If the property sells for more than is owed including legal costs and interest, the owner receives the balance.  If, however, the proceeds of the sale are less than what is owed, the mortgagee or lien holder has 20 years to collect the difference.

In today's real estate market, typically homes are worth less than the mortgages securing them.  After a foreclosed home is sold, the holder of the judgment of foreclosure can petition the court for a deficiency judgment, and can seek to collect the amount owed for up to 20 years no matter where you live in the United States.

MPA's FAST Program is designed to compel mortgage lenders to accept Short Sales of homes, whereby no foreclosure is recorded and the lender

forgives all the money that is due them after the sale of your home. Additionally, with MPA's Rent Share Program you can receive monthly checks of at least $100.00 for the rent of your home until closing of the Short Sale. If your home is your primary residence there is a federal program that most borrowers can participate in that will pay you $3,000.00 at the closing of the Short Sale.

A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and the balance of your mortgage will be paid off. Other benefits include:

• Elimination or reduction of any remaining mortgage debt including interest, late fees, legal and seller's closing costs
• In some cases, federal funds or lender cash inducements are available
• Your credit is far less damaged and able to begin the repair process immediately
• If you have no bad credit for the next 2-3 years you can get a mortgage to purchase a home

Under the current economic conditions, most homeowners, who have their debt forgiven by Short Sale, are exempt from income taxation by virtue of IRS insolvency rule (consult a MPA Case Worker for details), or by the enacted Emergency Economic Stabilization Act of 2008, which recently extended the exclusion from gross income for the discharge of qualified principal residence indebtedness by an additional 3 years. This exclusion now applies to debt discharged after 2006 and before 2013.

The most concise and understandable explanations of a deficiency judgment was published in the St Petersburg Times, to wit: