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.
Hi fireman,
If the lender has already started foreclosure proceedings against the property, he would probably not accept a deed in lieu of foreclosure. However, she can still talk to the lender and see if he would allow her to do the deed in lieu. In case the lender pursues a judicial foreclosure, it will take some time for him to take over the ownership of the property. The entire foreclosure process is likely to take around 90-120 days. So, she can expect to stay in the property till the time foreclosure process is complete and the house is auctioned off.
If there remains a huge deficiency from the foreclosure sale of the home, the lender can obtain a deficiency judgment against her. However, the lender will not be able to go after her assets in another country. Those assets will remain safe from liens.
If the lender has already started foreclosure proceedings against the property, he would probably not accept a deed in lieu of foreclosure. However, she can still talk to the lender and see if he would allow her to do the deed in lieu. In case the lender pursues a judicial foreclosure, it will take some time for him to take over the ownership of the property. The entire foreclosure process is likely to take around 90-120 days. So, she can expect to stay in the property till the time foreclosure process is complete and the house is auctioned off.
If there remains a huge deficiency from the foreclosure sale of the home, the lender can obtain a deficiency judgment against her. However, the lender will not be able to go after her assets in another country. Those assets will remain safe from liens.
is it better to walk away and leave the mess for everyone else
Hi Robin,
If you want to vacate the property and move to somewhere else, you should talk to the lender and try to a deed in lieu of foreclosure on the property. It is much better than just walking away from the property avoiding your obligations. If you walk away, chances are that the lender would come after you for any deficiency from the foreclosure sale of the home. Instead, if you do a deed in lieu, the lender would not come after you for the deficiency.
If you want to vacate the property and move to somewhere else, you should talk to the lender and try to a deed in lieu of foreclosure on the property. It is much better than just walking away from the property avoiding your obligations. If you walk away, chances are that the lender would come after you for any deficiency from the foreclosure sale of the home. Instead, if you do a deed in lieu, the lender would not come after you for the deficiency.
Dear,Jessica in 2009 I short sell my family house in Florida.In january I received 1099C form.My credit report showing all the deliquencies on my mortgage.One of the credit agencies reported the short sale as 120 days late and foreclosure process started, the other two as a paid and closed.My questions are after the bank except the short sale ,release the title and send me the 1099C can the bank still demand for their money and is their any way we can negotiate with the bank to eliminate the derogatives from our report?Respectfully.
Can the heirs of a property in Florida that was foreclosed be sued by the lender for a deficiency judgment? The heir also received very little money, less than one thousand dollars, from the estate and if they can be sued what is their liability? Does the heir not living in the state of Florida make any difference?
Hi Mia,
The bank will not come after you to collect the deficiency. They have sent you the 1099C Form because they have forgiven the remainder of the debt. This debt amount will be considered as your income and you will have to pay taxes on this amount. But if the property was your primary residence, you will not be required to pay tax for this discharged debt. As far as the negotiations are concerned, since the property has been short sold and the remaining debt has been forgiven, I doubt if you will be able to remove the derogatory items from your credit report.
Hi HeirOfFlorida,
The heirs are in no way responsible for the debts taken by the previous owner of the property. Thus, if there remains any deficiency from the foreclosure sale of the property, the lender cannot come after the heirs. However, the lender can come after other assets held in the previous owners estate, but they cannot sue any of the heirs for the deficiency.
Thanks,
Jerry
The bank will not come after you to collect the deficiency. They have sent you the 1099C Form because they have forgiven the remainder of the debt. This debt amount will be considered as your income and you will have to pay taxes on this amount. But if the property was your primary residence, you will not be required to pay tax for this discharged debt. As far as the negotiations are concerned, since the property has been short sold and the remaining debt has been forgiven, I doubt if you will be able to remove the derogatory items from your credit report.
Hi HeirOfFlorida,
The heirs are in no way responsible for the debts taken by the previous owner of the property. Thus, if there remains any deficiency from the foreclosure sale of the property, the lender cannot come after the heirs. However, the lender can come after other assets held in the previous owners estate, but they cannot sue any of the heirs for the deficiency.
Thanks,
Jerry
If the property is in florida that is being foreclosed on, and we opt for a deed in lieu,but lender does not want to guarantee they will not pursue a deficiency judgement, even if I live out of state .. do I qualify if my wife stays home and i make 100% of the income for the head of household deficiency judgement exemption? is there really such a thing?
we are 100k upside down on this house..
we are 100k upside down on this house..
To negequity,
Deficiency judgments are allowed in the state of Florida. So, your lender can come after you if there remains any deficiency from the foreclosure or short sale. However, if the property was used as your primary residence and if you are the head of the family, your lender can garnish not more than 25% of your net wages as per the Federal laws. If you are the head of the family and your net wages are less than $500 per week, you can save your wages from garnishment.
Deficiency judgments are allowed in the state of Florida. So, your lender can come after you if there remains any deficiency from the foreclosure or short sale. However, if the property was used as your primary residence and if you are the head of the family, your lender can garnish not more than 25% of your net wages as per the Federal laws. If you are the head of the family and your net wages are less than $500 per week, you can save your wages from garnishment.
I did not receive any letter stating that I have a deficiency judgement or that the lender has filed a lawsuit from the Lender or Court. My credit report states 'Account Closed' for the mortgage. Does this mean it is final and I'm clear?
Can the Lender file a deficiency judgement now or in the future? I received the certificate of sale on May, 2009.
Can the Lender file a deficiency judgement now or in the future? I received the certificate of sale on May, 2009.
Hi zforeclosure,
If the lender has reported the mortgage account to the credit bureaus as "closed account", it is unlikely that they will come after you for any deficiency. It seems that the lender has been able to recover majority of the mortgage balance from the sale of the home. If there has been some deficiency, the lender seems to have forgiven that. Chances are that the lender may send you a 1099C form for cancellation of the remaining mortgage balance.
If the lender has reported the mortgage account to the credit bureaus as "closed account", it is unlikely that they will come after you for any deficiency. It seems that the lender has been able to recover majority of the mortgage balance from the sale of the home. If there has been some deficiency, the lender seems to have forgiven that. Chances are that the lender may send you a 1099C form for cancellation of the remaining mortgage balance.
I am ready to close on a short sale. On one of requirement in the letter stated that "This transaction is not to be considered a resolution of the account, satisfaction of the debt or payments in full unless required by law". Do the bank usually go after you for the difference in a short sale? I thought a short sale was made for the bank to forgive the difference you owed.
To Ken,
In a short sale lenders generally do come after the borrowers to collect the deficiency. They can even obtain a judgment against you to garnish your wages or come after your bank accounts. On the contrary, in a deed in lieu of foreclosure, the lenders do not usually come after the borrower for the deficiency. However, in some case lenders are seen coming after borrowers even after a deed in lieu.
In a short sale lenders generally do come after the borrowers to collect the deficiency. They can even obtain a judgment against you to garnish your wages or come after your bank accounts. On the contrary, in a deed in lieu of foreclosure, the lenders do not usually come after the borrower for the deficiency. However, in some case lenders are seen coming after borrowers even after a deed in lieu.
I have a very good friend who is in default on his mortgage. He works for government and is in the DROP program. His pension accruals are going into a pension account. Could a lender get to that money. He is terrfied of losing his retirement funds. WOuld such payments be considered retirement assets and therefore protected?
Hi scotty,
The lender will not be able to take money out of his pension account. Retirement funds are protected against garnishment. Has he tried loan modification? It can help him reduce the mortgage payments and stay current on his mortgage. Even if he has to let his property go into foreclosure, his retirement funds should be safe from garnishment.
The lender will not be able to take money out of his pension account. Retirement funds are protected against garnishment. Has he tried loan modification? It can help him reduce the mortgage payments and stay current on his mortgage. Even if he has to let his property go into foreclosure, his retirement funds should be safe from garnishment.
do PMI companies have the right to sue for more than the 20% that they may be entitled to?