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How Does Foreclosure Affect a Lender in Florida?

foreclosure defense

Florida, as a recourse state, has the option for a mortgage lender to take legal action in a foreclosure if money obtained is not enough to pay all money owed. If you still owe your mortgage lender money after the foreclosure of your home in Florida, the lender can usually get a judgement for the deficiency – and you will most likely need advice from a foreclosure defense attorney. In this way, a deficiency judgement allows the lender to receive the balance owed against the borrower.

The recent economic recession means that many home owners find themselves in a situation where properties are valued at far less than their mortgage debt balances. A foreclosure process was put in place – and Florida has left this process to the judicial branch.

The process of foreclosure for a property stipulates that the lender, often the bank, must file a lawsuit in court.

What is a deficiency judgement?

A deficiency judgement is a personal judgment for the difference between a home’s sales price at the foreclosure sale and the remaining loan balance after applying the proceeds from the foreclosure sale to the amount owed. The housing market values dropped substantially in Florida in several past years, causing deficiency judgments to result after a foreclosure sale. The result of this is borrowers having heavy deficiency judgements added to what they owe in litigation. A deficiency judgement can manifest in garnished wages (unless head of the household in Florida), levied bank accounts and seizure of personal property.

The best way to handle a deficiency judgement is to involve a lawyer from the beginning of a foreclosure. Negotiating is at the start of most foreclosure settlements eliminates a large risk of deficiency judgment.

What is Florida Foreclosure defense?

Foreclosure in Florida does not automatically mean that a deficiency judgement will be obtained. The lender has the choice to pursue deficiency as part of the foreclosure, or as a separate lawsuit. If a lender chooses to attain one in Florida, they need to proceed within one year after the date of the foreclosure sale. Deficiency judgements can be valid for up to 20 years, or until they are resolved or satisfied. Lenders do have the option to request an order allowing them to place a lien against any assets that are not protected by the homestead law.

In the end, the judge has the final say on the total deficiency amount, considering both the fair market value of the home and the borrower’s capacity to pay. This does not eliminate the need for a lawyer, it is vital to have a professional on your team to make sure that you can fairly counter the lawyers of the lenders.

Florida does not have any anti-deficiency laws, but it does have methods for fighting a foreclosure or mandatory payment for a deficiency judgement. It is best to get professional guidance and counsel from a lawyer who is familiar with Florida’s foreclosure defense and deficiency judgement. Unassisted, deficiency judgements can have a massive impact on your finances.

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Gary I. Handin, P.A.

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