Expansion of California's Anti-Deficiency Laws Means More Litigation For Creditors

By: Donna L. Wilson
– DS News

Turning a narrow consumer shield into a potentially broad sword, this summer California expanded its anti-deficiency judgment laws to prohibit not only the judicial pursuit of mortgage deficiency balances, but also to declare that post-foreclosure deficiencies can be neither "owed" nor "collected."

In doing so, the California Legislature may have created a potentially significant compliance headache and increased litigation risks for a wide range of financial service companies - from mortgage servicers and debt collection agencies to credit reporting agencies and those relying on credit reports.

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