Foreclosure is the end no property buyer wants. Yet, foreclosures are a regular, expected part of the real estate industry. Deficiency judgments are a regular part of foreclosures, but what is a deficiency judgment? A deficiency judgment is an avenue for the mortgage lender to recoup funds after a foreclosure sale from the original borrower.
Need help with foreclosure issues? Contact The Law Office of Carlos M. Amor, P.A. for a free consultation by phone, video, or in person. Attorney Carlos M. Amor has been fighting for Floridians for more than 15 years and is ready to meet with you and listen. Call 954-453-7200 today.
A foreclosure is a process that ends with the sale of a property whose mortgage loan is in default. In Florida, foreclosure is a judicial process, meaning the mortgage lender must go through the courts to initiate and execute it.
In many other states, judicial involvement is not a requirement. However, in Florida, the mortgage lender must officially sue the borrower and involve the courts throughout the foreclosure.
The ultimate goal of a foreclosure is to sell the property at issue. Since foreclosure sales in Florida are strictly regulated and overseen by the courts, lenders must ensure that they are in compliance with various rules and laws in order to be successful.
However, selling a house may not be the end of the story for the borrower or the mortgage lender. Sometimes, the proceeds of the sale are less than what was owed on the house. In cases such as these, the lender has the option of pursuing a deficiency judgment to recoup the difference.
Once a foreclosure sale has occurred and a balance on the loan still exists, lenders have up to one year to seek a deficiency judgment from the court. Two methods of accomplishing this exist.
The first involves pursuing a deficiency judgment based on the foreclosure lawsuit at hand. The lender can file the action under the foreclosure lawsuit. The second method involves filing an entirely new lawsuit to pursue the deficiency amount.
Once a lender has obtained a deficiency judgment, they may take various actions against the borrower, including:
Although these consequences are dire, borrowers facing foreclosure should know that there are various defenses against deficiency judgments. Additionally, there are numerous ways to protect oneself from such actions.
The Law Office of Carlos M. Amor, P.A. works relentlessly to protect the future and interests of our clients.
When a judge is hearing a case for a deficiency judgment, the defendant may present various defenses. In other words, just because a borrower is getting sued does not mean they will lose the suit.
Instead, the defendant’s attorney, after thoroughly reviewing the case, will develop and put forth various defenses, such as those detailed below.
The fair market value of a property figures heavily on whether there is remaining debt and how much. With an unfavorable or erroneous appraisal of a property, a borrower could find themselves facing serious financial liability from a deficiency judgment.
For example, if a house is appraised far above its market value, it will likely be sold for much less than the overblown appraisal price. The result will see the defendant responsible for a hefty difference between the sale price and the debt owed on the property. An experienced foreclosure defense attorney will fight hard to make sure that the correct property valuations are utilized.
Interest on money owed can represent a major chunk of a deficiency judgment. Unfortunately, interest can sometimes be calculated erroneously — to the detriment of the defendant. When this occurs, the plaintiff could be facing much higher financial liability than they should. An experienced attorney will meticulously review all financial records to ensure that their client is not overcharged interest.
As mentioned, lenders have up to a year to file a deficiency judgment lawsuit against a borrower. If the lender is off by even a day, the defendant’s attorney may move to have the case dismissed.
Standing is the authority to take legal action. In deficiency judgments, the party seeking the judgment must have standing. Sometimes mortgage loans and debt are sold to third parties, who may not have standing to sue the borrower. However, this does not prevent them from trying to enforce the judgment. If a plaintiff does not have standing, an experienced attorney will move to have the case dismissed.
Hiring an experienced real estate attorney is the optimal choice for those needing to protect themselves from a judicial judgment. Once an attorney is involved, the client can reasonably rely on their attorney to represent them competently. That said, borrowers in this process should strongly consider learning about their rights, even though an attorney is handling everything for them.
One important right all borrowers should be aware of is the right to completely or partially exempt certain assets from judicial judgments, such as:
These are but a few of the many exemptions that may be available to a borrower. Once an attorney reviews a client’s case, they will be able to identify the appropriate exemptions and seek to apply them.
The Law Office of Carlos M. Amor, P.A. is ready to stand with you during this tough time. With more than 15 years of successfully representing clients in foreclosure and deficiency actions in Florida, Attorney Carlos M. Amor is the optimal choice for representation. Your future matters here.
For a free consultation by phone, video, or in person, reach out to The Law Office of Carlos M. Amor, P.A. at 954-453-7200. Contact us to learn how we can help.