Ronald S. Webster

One of the most common questions I receive from sellers who are upside down on their mortgage(s) is what a deficiency judgment is and whether or not it may apply to them if they sell at a short sale, offer a deed in lieu of foreclosure or are foreclosed upon. The answer is it can occur in any of these situations.

Unfortunately, borrowers have no control when it comes to deficiency judgments. The ball is solely in the lender’s court since lenders have the legal right to pursue the full amount of any deficiency. When the promissory note was originally signed at the time of purchase or refinance, the borrowers legally obligated themselves to pay the full amount. Whether or not the lender elects to pursue is at the lenders discretion and usually not determined until the last minute.

Few people are really aware of how proper estate planning can minimize the bite that federal estate taxes and state inheritance taxes take from their estates. Everyone should be reasonably knowledgeable of the federal estate tax and the state inheritance tax; people need to know how to minimize these taxes and, where appropriate, how to eliminate these taxes altogether. In addition, people should be aware of when their estate will be subject to estate and inheritance taxes and how much of their estates will be affected.