Money Judgment – When The Borrower Flees To Another State

This happens more often than one would guess.  Servicer obtains a money judgment against a borrower who promptly moves to another state.  The question then arises, what do I do to enforce my Indiana judgment in New York where the borrower now resides in comfort?  (Substitute any states you want in the equation and most often the answer will be the same.)

Knowing readily and accurately what papers are needed will allow servicers to attack this problem quickly, efficiently and economically.

Of course the initial servicer’s inquiry might be – we foreclose mortgages; when would we get money judgments?  Some circumstances answer the question:

• Deficiency judgment; where there was a shortfall through the foreclosure (the property was worth less than the debt) in most states a deficiency judgment can be obtained. That is a money judgment.
• If your junior mortgage is extinguished by a senior foreclosure, you can still sue on the monetary obligation – which results in a money judgment.
• The property is lost for taxes (which wipes out the mortgage) so suit on the note is the path to pursue.
• Insurance lapsed, the house burned down and the land alone isn’t worth much; sue on the note (and get a money judgment).
• The property is otherwise considerably devalued but the borrower has substantial assets; sue on the note.

These are but a few examples which make the point that servicers do get money judgments.  And when that coincides with the borrower exiting the jurisdiction, the servicer wants to know what to do with the judgment in the other state – the place where the borrower moved.  Here’s the answer, rather consistent throughout the nation because most states have adopted what is called the Uniform Enforcement of Judgments Act.

If the borrower appeared in or contested the action which gave rise to the money judgment, that judgment can be entered in the new state and then the usual judgment enforcement procedures follow.  To perform the ministerial task of entering the judgment in the new state, the servicer needs:

• An authenticated (sometimes called certified) copy of the judgment.
• To file the judgment within 90 days of the authentication; so don’t let it get stale.
• To submit with the judgment an affidavit (get it from your counsel who obtained the judgment) reciting the following:

1. The judgment was not obtained by default (or by confession of judgment); and
2. It remains unsatisfied in whole or in part; and
3. The amount remaining unpaid; and
4. That enforcement of the judgment has not been stayed; and
5. The name and last known address of the judgment debtor.

   This is really easy and servicers are now armed to move quickly to enter the judgment in a new state.

But, if the judgment was on default (the borrower did not appear or contest), then the judgment cannot simply be entered in the new state.  Rather, an action on the judgment must be begun.  This then becomes a matter of legal practice in the new state to be discussed with counsel there.  There may be accelerated procedures available, but it is still a lawsuit and certainly more burdensome than merely entering the judgment.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2017), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.