Home Loans and Support

How long do lenders have to pursue you for a defiency?

Discussion in 'Deed in Lieu of Foreclosure - Do You Need Help to ' started by La Biondina, Jul 8, 2010.

  1. La Biondina

    La Biondina LoanSafe Member

    Hello all,

    Just starting my walk here in Utah and I've been trying to find out how long lenders have to pursue you for a deficiency. I did some research but haven't found anything concrete. I read that the first mortgage has 3 months from the date of the trustee sale to try and recoup its losses, and that the second mortgage company has 6 YEARS! Does this sound right?

    I was under the impression that Utah was a one-action state (something I took to mean as they can EITHER foreclose, or pursue you legally to get their money back, but not BOTH), so I'm a little confused by what I read. Can anyone clear this up for me? The way I understood it was that if they foreclose, that's their one action. So how can they then pursue you for money also? I understand that the second mortgage company only really has one choice, as they can't foreclose on me if the first has already done so...

    Just confusing myself now! Trying to figure out what to expect down the road. Any help would be so appreciated. Thanks for your time and help!

  2. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    Hello La Biondina,

    Utah is a deficiency state. Please keep in mind that I just research this and I am not an attorney. What I researched says that the when the first mortgage forecloses they have only 3 months to pursue a deficiency judgment in Utah. The 3 months begins the day the trustee sale occurs.

    My understanding is that the 2nd loan is wiped out by the 1st mortgage foreclosing. The 2nd may collect up to 6 years or sue for a deficiency for up to 6 years, but the 1st mortgage has only 3 months to do so.

    Here is some more information from the state of Utah's .gov site:


    Here is some information on the one action rule and deficiencies:

    USFN | Utah?s ?One Action Rule? Doesn?t Bar Pre-Foreclosure Suit Against Guarantor
  3. La Biondina

    La Biondina LoanSafe Member

    Thanks Moe!

    How scary...
    This almost has me re-thinking my whole decision. For some reason I thought the one-action rule meant that lenders could do one thing or the other, but not both.

    When you say the second is wiped out by the first, what do you mean exactly? If my house DID sell at the trustee sale, I don't think there's any way that there would be enough money left over to satisfy the second.

    Time to hit the books and do more research... all of this is so depressing.

    Thanks again for your time, Moe. Best wishes to all out there!
  4. Moe

    Moe Call 1-800-779-4547 Staff Member Loan Safe Mortgage

    Hello and you are most welcome! Yes, this can be scary, but you are getting educated and informed which is powerful ;)

    The one action rule is supposed to be valid and if the first foreclosed, it would wipe out the 2nd. But in Machock v. Fink, 2006 UT 30 that says otherwise.

    Please keep us posted on what you end up doing here.
  5. La Biondina

    La Biondina LoanSafe Member

    Hi Moe!

    Thanks again for the valuable information, it is so very appreciated. You're right, knowledge is power, and the more you know, the fewer things can crop up to blindside you and set you back down the road...

    So, I think I may have been mis-interpreting the whole "one-action rule" thing from the start. Aside from the Machock v Flint ruling, only one action can be taken against me as a lender in the state of Utah? I thought this whole time that it was one action PER lender, resulting in two actions against the borrower, not one! That eliminates some of the worry, aside from the ruling referred to above.

    Another thing for me to think about then...

    One more question: So, to your knowledge, once a court or a judge (or whoever it is that does that sort of thing) rules in a certain way, as in the Machock v Flint case, is that immediately how things happen from that point on? Have all defaulters since then been subjected to pursuance by the second lender before the first? Or is it more of on a case by case basis? Sorry if that doesn't make any sense, I've never had a head for this sort of thing and it's so complicated to understand.

    Thanks again for all of your patience and kindness, best wishes to everybody!
  6. Arizona Deficiency

    Arizona Deficiency LoanSafe Member

    Maybe someone can clarify this for me. We live in AZ. We had just one mortgage, we strategically defaulted, and the Trustee's Sale was held on July 7, 2010. The property is 3 acres, so the non-recourse statute does not apply.

    Does the mortgage company have 3 months from July 7th to sue us for the deficiency, or does the "one-action" rule prevent them from suing us at all? Thanks, this is really confusing.
  7. StickAForkInMe

    StickAForkInMe LoanSafe Member

    Our property is 9.5+ acres and it's my understanding that because the non-recourse statute doesn't apply on properties over 2.5 acres, they would have to judicially foreclose on us in order to be able to pursue the deficiency. It doesn't sound as though they judicially foreclosed on you, so you should be okay as far as coming after you for deficiency goes. It's also my understanding that judicial foreclosure is rare, but our foreclosure isn't complete yet, so we're not yet comfortable that we'll be okay.
  8. Arizona Deficiency

    Arizona Deficiency LoanSafe Member

    Thank you for the input. This is all so confusing, it is unbelievable. Our trustee sale was originally set for April 2nd. I received a collection call about April 5th, so I called the mortgage company (Indymac) to see what was up. That's how I discovered they had postponed the sale. That happened two more times before they finally sold it on July 7th. It seemed to me like they just kept extending the 90 days they had to file suit.
  9. underwaterinseattle

    underwaterinseattle LoanSafe Member

    can b7 clear oneself from the 6 years of the second's attempts to pursue the deficiency?
  10. La Biondina

    La Biondina LoanSafe Member

    I was also wondering that, underwaterinseattle. I hear a lot of people have just filed BK7 along with their foreclosure to avoid the deficiency filing, but I'm still wondering if the second can collect...

    I don't understand this part of things very well, sorry!
    Hopefully someone can chime in.

Share This Page



"Hello Moe, I just wanted to tell you, your website has saved my life (literally), I stumbled on your site in the middle of losing my home, I was able to network with people going through the same thing as I am. I didn't feel alone anymore, I have tried to give back and counsel those that haven't walked in my shoes yet. We hear so much about what is wrong with America, I just wanted you to know, you are whats "right" with America."

Nina Mitchell
Loansafe & MoeSeo Inc. © 2014 | LoanSafe.org is not a bank, lender, mortgage broker, law firm or affiliated with the US Government. Privacy Policy