Why Losing Your Home is Not The End of Your Foreclosure Problems

Even with the national economy and housing market on the upswing, Florida continues to have one of the highest rates of foreclosure in the U.S.

To those in the unfortunate position of losing their home to foreclosure, there is another danger and it’s called the post-foreclosure deficiency judgment.

If a lender sells a home in a foreclosure sale for less than what a borrower owed, there is a deficiency. And in Florida, lenders can often come after borrowers for that deficiency.

Typically, when a lender forecloses on a property and is the primary lien-holder, the sale proceeds will first go to satisfy the primary mortgage. If there are secondary liens on the property, those junior lien-holders will be out of luck if there is nothing left over after the primary mortgage is paid. The primary lien-holder can seek a deficiency judgment and the junior lien-holders may also pursue a judgment against the borrower.

Florida is a judicial foreclosure state, and the court will determine the exact amount of a deficiency judgment. Unfortunately for distressed homeowners, the granting of a deficiency judgment is usually the rule rather than the exception.

However, if the property is a residential dwelling and was occupied by the owner, the judgment cannot be more than the difference between the judgment amount and the fair market value of the home on the day it was sold.

A lender has only one year to pursue a deficiency judgment against a homeowner; this time period used to be four years, but was changed to one year by the Florida legislature in 2013. Due to the volume of foreclosures in Florida, many lenders try to pursue deficiency judgments as a regular course of business to recoup as much of their investment as possible. This is why you need an experienced Florida real estate attorney on your side to help you fight a post-foreclosure deficiency judgment.

About Stefan McHardy: Stefan is a Florida licensed attorney, licensed real estate agent and foreclosure investment specialist.  He practices in the areas of real estate, foreclosure, business litigation, and contract law from his Pembroke Pines and Miami Beach offices.  He frequently consults on general real estate and investing matters and publishes articles on social media under the handle @listinglawyer.  You can find out more about Stefan at DSALegalGroup.com/stefan or by visiting StefanMcHardy.com