Washington Court of Appeals Confirms Lenders’ Right to Obtain Deficiency Judgments Against Guarantors Following Nonjudicial Foreclosure of Commonly Used Form of Deed of Trust
The Deed of Trust Act generally bars a lender from seeking a deficiency judgment against a borrower following nonjudicial foreclosure of a deed of trust securing the borrower’s loan. The Act contains some exceptions in the case of a commercial loan and it expressly permits a lender to seek a deficiency judgment against a guarantor of a foreclosed loan, subject to the guarantor’s right to challenge the fair value paid for the property at the trustee’s sale. RCW 61.24.100(3)(c), (5). In Washington Federal v. Gentry, — P.3d —-, 2014 WL 627817 (Wash. App. Feb. 18, 2014), a case argued by Lane Powell, Division One of the Washington State Court of Appeals held that the lender’s right to seek a deficiency judgment against a guarantor exists even where the foreclosed deed of trust secures both the borrower’s loan and the guarantor’s guaranty.
For more information regarding this matter or loan enforcement strategies in light of the Gentry and First Citizens decisions, please contact Greg Fox at 206.223.7129, or by email at email@example.com; or Ryan McBride at 206.223.7962, or by email at firstname.lastname@example.org.
For all other inquiries, please contact the Financial Institutions Industry Team at Lane Powell: