Freddie Mac: No on Deficiency Judgments

The secondary mortage market company Freddie Mac has updated its bulletin to servicers of Freddie Mac mortgage loans to make clear that they aren’t to pursue a deficiency judgment against a borrower after a short sale or deed-in-lieu of foreclosure if the transaction was processed in accordance with Freddie Mac’s guidelines.

In a deficiency judgment, a lender goes after the borrower to collect the amount of loan that was “shorted” in a short sale or deed-in-lieu of foreclosure, even after the lender approved the short-pay agreement. State laws apply differently to the practice, but in some states a lender can go after a borrower several years after a transaction closes–sometimes to the surprise of the borrower.

The new language, says the company, reinforces “the requirement that the Servicer, for itself and on behalf of Freddie Mac, must waive all rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie Mac Mortgages that have closed in accordance with the Guide.”

You can find the updated language in Freddie Mac Bulletin 2012-5, dated February 15, 2012.

If you have any questions about the language, the company asks you to contact your Freddie Mac representative, if you have one, or call 800/FREDDIE and select “Servicing.”

Robert Freedman

Robert Freedman is director of multimedia communications for the NATIONAL ASSOCIATION OF REALTORS®. He can be reached at

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  1. pat navadomskis

    my bank and many banks in CHICAGO have long standing problems.
    If you worked where I worked and saw what i saw you would see why I have a loss of TRUST. It starts with THREATS and sabatouge. The more money was messed up and bills ect. went not paid,people blaming everyone else but themselves. As far as calling FAMILIES and destroying TARGETS information . I just want to pay what i bought,drop some of the late fess and excessive intrest. Can an Older women find a safe job? you would not think making deposits at BIG BANKS could get you in such a mess. if the big banks are FIXING thier part of this fiasco WHEN ? It seems that no one at the banks all the way up to forclousure judges PAY NO ATTENTION.
    overcharged,underpaid run around and can not get it fixed. Back to about 1994
    people sat on work for years you had to fight them off to try and do your job
    2001 ? no one STOPS to fix anything now you have years of lost wages for millions of people who did not cause this accounting mess. who sets housing prices ? a bunch of incompetant morons and incompetant banks lending money to people who will not pay it back and not helping people who have OVERPAID should have been given a forbarance and was treated like a derilic BY MY OWN BANK finacial privacy invaded no lawyer will help me and how can you trust the financial system after militants destryed it as a revenge thing.