Currently, foreclosure law is handled at the state level and varies widely. But in some states, banks have up to six years to pursue a homeowner for a deficiency judgment— that is, a money judgment against a borrower whose mortgage foreclosure sale did not produce enough funds to pay the underlying loan in full. In general, when a time frame is longer, it favors lenders over borrowers.
The Fairness in Foreclosure Act standardizes the length of time after a foreclosure that a mortgage company can bring a deficiency judgment against a homeowner, while also prohibit lenders from bringing a deficiency judgment against low-income borrowers.
The bill will provide the shorter of one year, or whatever the state law provides, as the time period during which lenders may bring forward a deficiency judgment action.
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