Default judgement: A legally binding judgment in favor of the lender based on a failure of the homeowner to take action.
Default judgement: A legally binding judgment that is rendered after a homeowner fails to take action on a complaint. As a result, the lender or bank will be granted the relief sought in the lawsuit, in most cases the foreclosure and sale of the property. Depending on the state laws, the lender or bank may also be granted a deficiency judgment.
Default Judgement: Failure to Appear in a Foreclosure Process
When a homeowner fails to take action in a foreclosure proceeding, the bank may file a motion for default judgment. A default judgement against the homeowner will be granted if the homeowner has broken the mortgage contract, which in most cases is due to a failure to repay their mortgage loan.
If the homeowner disregards the foreclosure process and fails to respond in court, the judge will assume the homeowner has no objection to the claim and issue a default judgement.
In order to avoid a default judgment, homeowners should take immediate action after their first missed mortgage payment. Loan modification programs and short sales can halt a lengthy foreclosure process. If the homeowner fails to qualify for a program, they can challenge the foreclosure claim in court. Banks must substantiate their right to foreclose before a judgment is granted.
Following a default judgement, the bank will be allowed to sell the home, which usually occurs 30 days after the default notice is sent. Once sold, the homeowner will be given between five and 30 days to leave the home.
According to Arizona bankruptcy lawyer, John Skiba, “If you believe that the default judgment shouldn’t have been entered against you or that there was some other sort of error you can ask the court to set the judgment aside and let you fight the lawsuit. However, just any old reason won’t do. There are certain basis on which a court can set aside a default judgment.
“The first place you need to look is the Rules of Civil Procedure for your state. Most state’s rules are based upon the Federal Rules of Civil Procedure. Look at Rule 60 which is likely entitled “relief from judgment or order” or something similar. Rule 60 provides six reasons that a court can set aside a default judgment: a mistake, inadvertence, surprise, or excusable neglect; newly discovered evidence which by due diligence could not have been discovered in the prior proceeding; fraud; the judgment is void, or the judgment has been satisfied, released, or discharged.”