Banks Pursuing Deficiency Judgments Years After Foreclosures Are Over
Many Florida homeowners got caught holding the bag on overpriced homes when the housing market crashed in late 2007. Millions of those homeowners faced down the foreclosure process with most being forced out of their homes and in to the rental market. After going through the foreclosure process, homeowners expect to have wiped their hands of the house and hope to put the experience behind then.
However, some Floridians are finding that there is another tough pill to swallow. The banks are now suing them for deficiency judgments. The deficiency is any amount that is still owed to the bank after the sale of the house to a third party. The banks look to the amount of the promissory note and deduct the sale price of the home after foreclosure. The balance is known as the deficiency amount. In the state of Florida, the banks have a statutory right to pursue homeowners for these amounts.
In the state of Florida the banks currently have a five (5) year statute of limitations in which to bring an action for a deficiency judgment. The reasons for the delay vary, but are sometimes explained by the time in which it takes to sell a foreclosed house on the open market. Whatever the reason for the delay, the effects on the homeowner are crushing.
Florida homeowners can take steps to avoid these judgments, however. The worst thing a homeowner can do is sit back and do nothing while the house is foreclosed. Rather, the homeowner can choose to be proactive and mitigate their loss. Generally, the banks are fairly willing to exchange a waiver of deficiency for some form of settlement with the bank. Whether it be a deed in lieu of foreclosure, a short sale, or a consent judgment with a deficiency waiver, homeowners can take steps to protect themselves from future liability. Call the office today to discuss your options.