Wednesday, April 4, 2012

Appraisal cost / quality prevents deficiency judgments in foreclosure

No the banks are generally not so nice about giving away their money; so one would wonder why they don't always pursue a deficiency judgment after a foreclosure auction.

The reason is that the bank has the primary burden of establishing the fair market value of the property at or about the time of the foreclosure auction pursuant to the RPAPL's section 1371 in order to get a deficiency judgment.

To accomplish this task the bank must hire an appraiser and, still more, a quality appraiser who produces an appraisal report that has evidence beyond a conclusory affidavit.

In such, the appraisal should go into the different appraisal techniques available and explain why a chosen technique is appropriate. Therefore, just getting a comparison analysis does not satisfy the burden so says the Supreme Court in Brooklyn in a recent decision, Flushing Savings Bank FSB v. Bitar.

So there you have it, its not necessarily kindness, but instead a difficult legal burden that motivates a decision not to pursue the deficiency judgment.