Can the lender come after you for the rest? Deficiency judgments in North Carolina

Deficiency rules in North Carolina, point by point

• The lender has 1 year to sue

  Within 1 year after the foreclosure deed is delivered

  A suit for a deficiency must be filed within 1 year from delivery of the deed after the foreclosure sale. If another time limit on the debt would run out sooner, that shorter limit controls.

  N.C.G.S. § 1-54(6)

• You must have been served with the hearing notice

  Before the clerk's foreclosure hearing

  The lender must serve the notice of hearing on every person it plans to hold liable for the debt. A borrower who was not served is not liable for any deficiency after the sale.

  N.C.G.S. § 45-21.16(b)(2)

• Value defense when the lender buys at its own sale

  In your answer to the deficiency lawsuit

  If the lender or note holder bought the home at a power of sale foreclosure, you can show that the home was fairly worth the debt, or that the bid was substantially less than its true value, to defeat or reduce the deficiency. This defense does not apply to court-ordered sales.

  N.C.G.S. § 45-21.36

• Seller-financed purchase loans

  Applies to any foreclosure of that loan

  No deficiency is allowed on a mortgage or deed of trust given to the seller for part of the purchase price, as long as the note shows on its face that it is for purchase money. A seller who leaves that wording out of a note it prepared is liable to you for the loss.

  N.C.G.S. § 45-21.38

• Rate spread and nontraditional loans on your home

  If you lived there when the foreclosure started

  No deficiency is allowed on rate spread home loans made since 2005 or nontraditional loans that allow deferred payments and negative amortization, if you occupied the home as your principal dwelling when the foreclosure began. For loans recorded on or after January 1, 2010, this covers both power of sale and court foreclosures; HELOCs, construction loans and most second loans are excluded.

  N.C.G.S. § 45-21.38A

• Short sale or deed in lieu: the written deal controls

  Before you sign

  The protections above apply to foreclosures. We found no North Carolina statute that limits a deficiency after a short sale or a deed in lieu, so ask the lender to put a full waiver of any remaining balance in writing.

• How long a judgment lasts and wage protection

  A suit on a judgment must be brought within 10 years

  A judgment can be sued on within 10 years of its entry. North Carolina law protects your earnings for personal services from the last 60 days when they are needed to support your family.

  N.C.G.S. §§ 1-47(1), 1-362

The short answer in North Carolina

Common questions in North Carolina