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the outstanding debt on a property in Iowa is
rarely sufficient to justify preserving the right to a
deficiency. Further, trial courts in Iowa are quick to
admonish servicers and their counsel if deficiency
rights are preserved, particularly since the economic
downturn. Servicers and investors should work
with local foreclosure counsel in such jurisdictions
to determine whether waiving deficiency is
required or recommended as a best course of action.
Future Considerations Regarding Pursuit of
Deficiencies
Jurisdiction is just one of the factors to consider
in concluding whether or not to seek a deficiency
judgment against a borrower. In order to further
minimize losses, investors would benefit from
considering additional factors and creating clear
policies so that the appropriate course of action is
determined from the outset of the foreclosure. For
instance, investors could set a threshold unpaid
principal balance amount in order to avoid the
cost of preserving a deficiency in cases where the
deficiency is bound to be a negligible amount.
Another factor to consider might be whether
or not the property is confirmed to be vacant or
abandoned. In order to ensure best practices in each
jurisdiction, servicers are encouraged to consult with
their local foreclosure counsel and to heed counsel's
advice as to whether deficiency rights should be
preserved or pursued in that particular jurisdiction.
1 FHFA's Oversight of the Enterprises'
Efforts to Recover Losses from Foreclosure
Sales. http://origin.www.fhfaoig.gov/
Content/Files/AUD-2013-001.pdf
(October 17, 2012).
2 Management of Deficiency Balances,
AB 2013-05. http://www.fhfa.gov/
SupervisionRegulation/AdvisoryBulletins/
AdvisoryBulletinDocuments/20130916_
AB_2013-05_Management-of-Deficiency-
Balances_508.pdf (September 16, 2013).
3 DC ST § 42-816.4 735 ILCS 5/15-
1508(b)(2).5 Roberts v. Murray, 232 S.W.2d
540, 546 (Mo. 1950); Cockrell v. Taylor,
145 S.W.2d 416, 422 (Mo. 1940).6 F.S.A.
§ 702.06.7 K.S.A. 60-2415.8 Olathe Bank
v. Mann, 252 Kan. 351, 357 (1993).9 A.R.S.
§ 33-729.10 Cal.C.C.P. § 580(b). 11 I.C.A.
§ 654.6.
