DEAR BENNY: I am retired. About 18 months ago (before the economic crash), I bought a fixer-upper and renovated it, but have been unable to sell it. If I let the property go into foreclosure, can/will the bank that gave me the mortgage try to get at my other assets (equity in my home, stocks, etc.)? –Irvine

DEAR IRVINE: You are asking about a legal concept known as a “deficiency judgment.” Let’s take this example: You owe the bank $200,000 when you go into default. The bank — after trying to work something out with you — forecloses on the property. At the sale, the property is sold for $150,000. The difference — $50,000 — is the deficiency.

Your state law will provide the answer as to whether your bank can seek a judgment against you in a court of law. Recently, the National Consumer Law Center, located in Boston, Mass., issued a comprehensive report entitled “Foreclosing a Dream.” According to this report, “in 36 states and the District of Columbia, mortgage holders can pursue so-called ‘deficiency judgment’ claims against homeowners even after the foreclosed home has been sold at auction.” One might fight foreclosure here.

This report analyzes the foreclosure laws in all 50 states. It is available on the Web at www.consumerlaw.org.

However, even in those states that prohibit (or restrict) deficiency judgments, those laws apply to consumers but not investors. So in your case, it is possible that you are not protected. If you let your property go to a foreclosure sale, not only will your credit be ruined for a number of years, but you may be sued by your lender for any deficiency.

Please talk with both your lender and an attorney before you take any drastic actions.

• Judge Arthur Schack Fights The Foreclosure Crisis, One Case At A Time (huffingtonpost.com)

Filed under: Foreclosure, Legal Advice in Common Scenarios, Mortgage, Real Estate Market, Short Sale