Posted on: 08th Aug, 2007 01:58pm
If your property is sold in a Florida judicial foreclosure and the sale price is less than the actual amount owed, you will be responsible for paying the deficiency. The lender can either forgive this deficient amount or come after you to recover it.
Can lenders get deficiency judgment Florida?
The lender can obtain a judgment against you to recover the deficiency. He has to file a separate motion/lawsuit for a deficiency once the foreclosure sale is complete. The court then holds a hearing to decide if a deficiency judgment can be allowed against you. At the hearing, the lender has to prove that the property value is indeed less than what you owe.
As a borrower, you have the right to oppose your lender's claim for judgment. You will have to prove that the property is worth more than the outstanding mortgage balance at the time of foreclosure. You can use an appraisal or the tax assessed value of the property to support your claim.
As a borrower, you have the right to oppose your lender's claim for judgment. You will have to prove that the property is worth more than the outstanding mortgage balance at the time of foreclosure. You can use an appraisal or the tax assessed value of the property to support your claim.
What happens after lenders get judgment?
Deficiency judgment Florida allows lenders to come after your wages, levy your bank accounts and put liens on your other properties. However, there are certain assets which are exempt from judgments. They include IRA, 401k, other retirement accounts, social security income, unemployment benefits, workers compensation, etc. Your lender has the right to collect on that judgment for 20 years. The interest will accrue every year till it is paid in full. Apart from this, the judgment will show up on your credit report for 7 years and will affect your credit scores adversely.
Are your wages exempt from garnishment?
If you are the head of the family and your net wages are less than $500 per week, you can protect your wages from garnishment. But if you've signed any document allowing the wage garnishment, the lender can come after your wages. In case you are not the head of the family, you can still protect certain part of your wages. Federal law limits the amount of money that can be garnished by your lender. He can take only 25% of your net wages or the amount in excess of 30 times the federal minimum wage per week, whichever is less.
Are homestead properties exempt from deficiency judgment Florida?
Homestead properties are not protected from judgments for mortgage liens. You can protect your home from creditors of unsecured debts under homestead protection. But lenders, who have financed purchase, repair, improvement, etc. of your home, hold a lien on your property. If you default on such secured loans, your home is not protected from judgments.
Does PMI help you cover the deficiency?
Private Mortgage Insurance (PMI) cannot protect you from deficiency judgments. It is meant to protect a lender against the losses from a mortgage default. A PMI is required if you make a down payment of less than 20% on your loan.
Is there a way to avoid deficiency judgments?
If you can stop foreclosure, you can avoid the judgment. In case you're having difficulty in making mortgage payments and a foreclosure is imminent, you can look for various loss mitigation options like loan modification, deed in lieu (DIL), etc. A loan modification can reduce your mortgage payments and help you save the home.
A deed in lieu does not help you retain the home. But it waives off the lender's right to collect the deficiency. This helps you avoid a judgment. However, you should not believe in verbal agreements. If the deficiency is forgiven, ask your lender to give it in writing before you proceed with the deed in lieu.
A deed in lieu does not help you retain the home. But it waives off the lender's right to collect the deficiency. This helps you avoid a judgment. However, you should not believe in verbal agreements. If the deficiency is forgiven, ask your lender to give it in writing before you proceed with the deed in lieu.
Hi I'm currently going through a foreclosure on two properties and would like to know how much time do the banks take to file a deficiency if they decide to do this? How will I know the sale price of the property at the court?
Any help would be greatly appreciated.
Any help would be greatly appreciated.
My husband was asked to purchase a condo by a Mortgage Broker, who would arrange the financing (he had great credit, but wouldn't normally qualify for this size of loan) make the down payment and make the monthly payments. The idea was that they would flip the condo in 2 months and split the profit 80-20. Two years later...the condo never sold and the market sank. Estimated value of the condo is @400K less than purchase price. The Mortgage guy couldn't keep making the payments and the condo is in foreclosure. When the bank files the deficiency judgement how will my husband, who is a small business owner and sole provider of our household, be affected? Since the mtg was given #1, illegally, and #2 secured with the property, can they force my husband to sell his business, or portions of his business to repay the deficiency?
what can the courts take to cover the defic. from a foreclosure.i live in a house that my aunt owns(still paying a mortg. on) and she and her husband are loosing their home to forclosure. should i worry about them taking this house to satisfy the judgment
If you are head of household which means you have dependents and you earn over 50% of income for your family you wages cannot be garnished in florida.
Hi Steve,
It depends on whose name is on the loan. If your husband's name is there, then there's every possibly that his assets can be used to make up for the deficiency judgment payment. Also, the lender may place a line on his assets.
I suggest that you stay away from such things or else you never know when you'll be in trouble with your finances.
Thanks.
It depends on whose name is on the loan. If your husband's name is there, then there's every possibly that his assets can be used to make up for the deficiency judgment payment. Also, the lender may place a line on his assets.
I suggest that you stay away from such things or else you never know when you'll be in trouble with your finances.
Thanks.
We must get rid of a property in an upscale community in FL. We are putting $40,000 into it yearly. We pruchased it 2 yrs ago, it was at that time a"Model" Coach Home. We have an Interest only loan at present. My husband is 71, I am 67, we are both still working. He has been a door to door salesman, selling to the Amish community for the past 50 years. Our property has been on the market for the last 15 months, we have reduced the selling price by $125,000, it is on the market for $450,000, we paid $575,000. If we keep this place we will eat up all of our retirement. What do you suggest? Do we need to be destitute before we can qualify for either a Deed in Lieu of Short Sale?
Welcome Miss Sue.
How much do you owe to the lender for the house that you are willing to sell? I cannot understand if you have already "paid $575,000" then why are you willing to do short sale? If you owe more to the lender than the sell price and the lender accepts it then it is called short sale. Please clarify why you are willing to sell.
How much do you owe to the lender for the house that you are willing to sell? I cannot understand if you have already "paid $575,000" then why are you willing to do short sale? If you owe more to the lender than the sell price and the lender accepts it then it is called short sale. Please clarify why you are willing to sell.
Sue talk to the lender now. Dont wait until it is too late.
Good Luck
Brian
Good Luck
Brian
I am retiring in florida at the end of the year and own a rental condo that now I owe more then I can sell it for. Noone is renting it and I am forced to sell since I won't be able to afford the mortgage payment and assoc dues, but it won't sell. If I let it foreclose will I have to pay the mortgage company or will they have to eat it?
Hi Adolph!
Welcome to Forums!
I completely understand your situation. The real estate prices are fluctuating as a result you are unable to sell it. There are two options - short sale or deed in lieu in which you will have to give away the property to the lender who will sell it in the market and try to recover the debts. But there are chances that the lender will never be able to recover the full debts. The deficient amount is generally forgiven by the lender in case of deed in lieu and charged in case of short sale. However, if it is forgiven, then you will have to pay taxes as it will be considered as an income.
If both these options are not available in your case, then you can go in for Chapter 13(bankruptcy). This will help you to reorganize your debts in such a way that you will be able to clear it within 3-5 years.
Feel free to ask if you have further queries.
Sussane
Welcome to Forums!
I completely understand your situation. The real estate prices are fluctuating as a result you are unable to sell it. There are two options - short sale or deed in lieu in which you will have to give away the property to the lender who will sell it in the market and try to recover the debts. But there are chances that the lender will never be able to recover the full debts. The deficient amount is generally forgiven by the lender in case of deed in lieu and charged in case of short sale. However, if it is forgiven, then you will have to pay taxes as it will be considered as an income.
If both these options are not available in your case, then you can go in for Chapter 13(bankruptcy). This will help you to reorganize your debts in such a way that you will be able to clear it within 3-5 years.
Feel free to ask if you have further queries.
Sussane
If my investment property forecloses can the court get my pension and/or 401k to repay the deficiency? :(
Hi Skipreel!
A 401k plan is federally protected by ERISA so lien cannot be placed on it.
Sussane
A 401k plan is federally protected by ERISA so lien cannot be placed on it.
Sussane
Can a judgement be placed on my military retirement, and Roth IRA if my 2 investment properties are foreclosed on?
Hi skipreel!
As far as I know, military retirements and Roth IRA's are protected by laws and judgment can't be placed on them. However, it can be different in certain states. For example in Ohio, there is a law which protect the IRA from garnishment, attachment, or sale in order to satisfy a judgment or order.
If you mention your state, I may help you in better way.
Thanks.
As far as I know, military retirements and Roth IRA's are protected by laws and judgment can't be placed on them. However, it can be different in certain states. For example in Ohio, there is a law which protect the IRA from garnishment, attachment, or sale in order to satisfy a judgment or order.
If you mention your state, I may help you in better way.
Thanks.
Hi jameshogg,
My state is Florida
My state is Florida