The Texas Deficiency Statute permits the debtor, in a lawsuit brought by the Bank to collect a deficiency after nonjudicial foreclosure, to obtain a credit against the deficiency equal generally to the difference between the fair market value of the property on the date of foreclosure sale and the amount bid by the Bank at the sale. The Bank should have a current appraisal of the property in the file to assist the Bank in establishing the fair market value of the property, particularly if the note is a recourse note or is guarantied, and the Bank intends to pursue a deficiency. The Bank preferably should retain an appraiser whose credentials have been scrutinized with respect to how they will stand up in a jury setting.
Written instructions to the appraiser should be prepared by the Bank which direct the appraiser to take into account the indicia of fair market value set forth in the Deficiency Statute. National banks are already under a regulatory mandate to send written instructions to the appraiser requiring discounting of the cash flows generated by the property, in the event that the appraiser determines that the holding period for the property exceeds twelve months. [12 C.F.R. § 7.3025.] Those same regulations also require national banks to have annual appraisals from independent, qualified appraisers of “fair value” as to each parcel of foreclosed property. See Chapter 4 “Appraisals and Evaluations.”
“Fair value” is the cash price that might reasonably be anticipated in a current sale under all conditions requisite to a fair sale, with a buyer and a seller each acting prudently, knowledgeably and at n necessity to buy or sell, with a mandatory discounting of cash flows, if the appraiser determines that it is unlikely that a sale could be completed within twelve (12) months.