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.
To Mario,
The private mortgage insurance (PMI) is required if your lender gives you a loan of more than 80% of the sales price of the property. The PMI insures the lender against any loss on the remaining 20% of the sale price. Thus, the PMI company can sue you for the amount they will pay your lender in case you default on the loan. Since the PMI basically insures the 20% of the sale price, they will not sue you for anything more than that 20%.
The private mortgage insurance (PMI) is required if your lender gives you a loan of more than 80% of the sales price of the property. The PMI insures the lender against any loss on the remaining 20% of the sale price. Thus, the PMI company can sue you for the amount they will pay your lender in case you default on the loan. Since the PMI basically insures the 20% of the sale price, they will not sue you for anything more than that 20%.
I live in NY and own a lot in Florida which is in forclosure. The loan balance is 245K. I have a short sale offer for 50K. The lender wants me to pay an additional 100K up front to satisfy the loan. The lot is worth between 40-50K. What are my options.
Hi luwho,
There does not seem to be a lot of option for you. You can either short sell the property or request your lender to do a deed in lieu of foreclosure. In a short sale you will remain liable for the deficiency. However, if your request for the deed in lieu is accepted by the lender, the deficiency will be forgiven.
Even if you go for the short sale, I don't think you should pay them anything upfront. You can talk to the lender and set up some sort of a repayment plan to pay off the deficiency from the short sale.
There does not seem to be a lot of option for you. You can either short sell the property or request your lender to do a deed in lieu of foreclosure. In a short sale you will remain liable for the deficiency. However, if your request for the deed in lieu is accepted by the lender, the deficiency will be forgiven.
Even if you go for the short sale, I don't think you should pay them anything upfront. You can talk to the lender and set up some sort of a repayment plan to pay off the deficiency from the short sale.
My husband owns a second home in another city. Both our names are on the deed, but only his name is on the note. He is working on a third short sale attempt after 2 years of non payment. If he is foreclosed on and served with a judgement can they come after my assets that are in my name alone?
To Seller,
You do not have any liability to pay off the mortgage as your name does not appear on the mortgage note. Your credit will remain unaffected if the second home is foreclosed. The lender cannot come after your assets to recover the deficiency from the foreclosure sale of the home. However, as your name is on the property deed, you could be served legal notice for the foreclosure.
You do not have any liability to pay off the mortgage as your name does not appear on the mortgage note. Your credit will remain unaffected if the second home is foreclosed. The lender cannot come after your assets to recover the deficiency from the foreclosure sale of the home. However, as your name is on the property deed, you could be served legal notice for the foreclosure.
Thank you savior70. What are the repercussions of being served legal notice for the foreclosure?
Hi saior70. I guess I mean to say, what would be the point of serving me notice if they can not come after my assets?
Do banks have a deficiency department to handel all the people walking away from their homes just because the value of the home is not worth the loan amount.
romansgl,
Two parts to my question: (1) Do you happen to know what percentage of folks "walk away just because the value of their home is not worth the loan amount", as compared to those that no longer have the means to pay the mortgage, try to rent it, produce three potential buyers for short sales that have failed, and continue to keep trying two years later"? (2) Do you feel that the consequences of default should differ for the two groups?
Two parts to my question: (1) Do you happen to know what percentage of folks "walk away just because the value of their home is not worth the loan amount", as compared to those that no longer have the means to pay the mortgage, try to rent it, produce three potential buyers for short sales that have failed, and continue to keep trying two years later"? (2) Do you feel that the consequences of default should differ for the two groups?
I am not basing this on why the individual had to walk away I am questioning if someone has to walk away or just does, do the banks have a deficiency collection department to handel the workload of collecting on the jusdgement or is it more work, time and money that such a department would not exist.
Hi Florida Seller,
There are no negative repercussions of being served a legal notice for foreclosure, unless you are on the mortgage note. You may get the foreclosure notice just as you are a legal owner of the property. It is a part of the legal procedure that the lender has to follow if they pursue judicial foreclosure. But the legal notice will not have any adverse effect on your credit scores.
Hi romansgl,
Some large banks may have such "deficiency departments", but most of them do not have any such department. Majority of the banks do not have sufficient workforce to process so many foreclosures, which is one of the reasons why they take so much time to complete a foreclosure process.
At times, I come across posts in this forum where people claim that their homes have not been foreclosed even though they have stopped payments for the last 1 year or more. I believe the increase in the number of foreclosures in the recent years and the lack of adequate workforce are the reasons behind such delay in foreclosing the properties.
There are no negative repercussions of being served a legal notice for foreclosure, unless you are on the mortgage note. You may get the foreclosure notice just as you are a legal owner of the property. It is a part of the legal procedure that the lender has to follow if they pursue judicial foreclosure. But the legal notice will not have any adverse effect on your credit scores.
Hi romansgl,
Some large banks may have such "deficiency departments", but most of them do not have any such department. Majority of the banks do not have sufficient workforce to process so many foreclosures, which is one of the reasons why they take so much time to complete a foreclosure process.
At times, I come across posts in this forum where people claim that their homes have not been foreclosed even though they have stopped payments for the last 1 year or more. I believe the increase in the number of foreclosures in the recent years and the lack of adequate workforce are the reasons behind such delay in foreclosing the properties.
AFter the foreclosure sale is completed, is the a time limit by which the lender must make its motion for a deficiency judgment? A Statute of Lmitations? J
To Jay,
Are you in Florida? As far as I know lenders can seek deficiency judgment against you within 5 years from the date of foreclosure sale. Thus, if your lender intends to sue you for the deficiency, they will have to file a motion for the deficiency judgment within this specific time period.
Are you in Florida? As far as I know lenders can seek deficiency judgment against you within 5 years from the date of foreclosure sale. Thus, if your lender intends to sue you for the deficiency, they will have to file a motion for the deficiency judgment within this specific time period.
Can you still have a deficiency judgment if you short sale your home?
Can you still have a deficiency judgment if you short sale your home?