Why Won't You Stay Poor?!

If you were having a nice day prior to this, sorry to ruin it, but a thing on the rise lately that banks are doing- and set to ramp up- is called a deficiency judgment.

Here's how it works:

You've been foreclosed on, and you've lost your house. The bank sold it. Now you're on the street living out of your car. Thing is, though, the bank didn't get the amount you owed for it. They got, let's say a quarter of what you owed. Not your problem anymore, right?

Wrong.

A 'deficiency judgment' is something the bank can obtain to come after you- the person who's already had their house taken away- for the amount they didn't get for the house when they resold it.

'But I'm poor now! I'm freaking homeless because of that! I don't have any money to give them!'

Don't worry. They'll wait until you get back on your feet so you build up some money again. THEN they'll come after you and take it in the deficiency judgment. Most states allow the banks to wait 20 years before they come after you. Oh, and while they wait, the interest on that outstanding debt can grow at an 8% rate.

'I refinanced, didn't I? Didn't I owe less?'

As far as the banks are concerned, you can take your petty refinancing and shove it up your ass.

Usually, because they've been worried about the public outrage that's almost guaranteed to result from such a thing, the banks have only really used deficiency judgments on people who were flipping houses and abandoned them the second they became money-losers, but now they're getting more brazen and starting to attack homeowners who simply got underwater. It's not like their public image can get much worse anyway.

Have a nice day.