Category: Foreclosures Tips

Deficiency Judgements – The Hidden Nightmare

When you go into foreclosure, and the home gets sold by the lender, often there is a difference between what the home gets sold for, and what you actually owed the lender. This is called a deficiency.

Often as part of the foreclosure proceedings, the lender is granted a “deficiency judgement” which basically says that the borrower still owes the difference between the loan and the auction sale price.

Many homeowners in a foreclosure miss this, especially if they are not properly represented by competent legal council.

Down the road this judgement can turn into a nightmare for the borrower. If the lender decides to pursue the judgement, as they have every right to do, then you could be responsible for your debt even though you thought it was all behind you.

This is what happened to Jose Santos Benavides.

Jose thought the ordeal of losing his home was over. The 42-year-old immigrant landscaper, is among the many homeowners being taken to court by their lenders, in his case 3-years after his house was taken in foreclosure.

Lenders Are Getting More Aggressive

Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to collect any leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years. And it’s all perfectly legal.

In the past, lenders never bothered to chase down a deficiency in the foreclosure. Home prices were rising and they generally got their money back sooner or later.

But with the mortgage and real estate crisis of the last few years, home prices are very low and many borrowers are underwater, and owe more than the home can be sold for. This makes pursuing a deficiency judgement that much more likely, and even necessary from the lenders point of view.

But again, this is not common knowledge to most homeowners facing foreclosure. They think that once the home has been foreclosed, they are done with it. They have no further obligation.

And if they were not well represented during the foreclosure by experienced legal council, the details of the foreclosure may not be in their favor. If the lender was able to receive a deficiency judgment, then again, they have every right to pursue a full pay back of the difference between the auction price and the loan.

If you may be facing this type of situation, please contact Barbara Brown’s law office. We want to help.

Foreclosures – Good News and Bad News

First the good news…

Foreclosures are down in Florida.

Compared to 2010, foreclosure filings in Florida are down about 62%. That adds up to 181,965 filings in 2011. That’s still a whole lot.

In Pinellas County, filings were down about 61%. Overall, Tampa Bay was down 63%.

And the lower number may not be a reflection of better economic conditions. It may just be that lenders are getting better at doing short sales… or just trying to get the bad loans off their books more quickly. So many of what would have been foreclosure filings have turned into short sales instead.

“I think more banks are getting used to the idea of getting the infrastructure in place to do short sales and avoid that longer process.”
Sean Smith
Economist, University of Central Florida

But here’s the bad news.

It’s taking much longer for a foreclosure to be completed.

It takes on average 806 days for a foreclosure to make it through Florida’s system. That’s well over 2 years before the homeowner and the lender have the problem resolved. That’s too long for everyone involved.

All the more reason to have a good foreclosure attorney on your side to make sure your situation is resolved as quickly as possible.

* much of this information was taken from The Tampa Times and RealtyTrac.