It’s all seems like yesterday’s news. The housing bubble led to the foreclosure crisis; then the foreclosure crisis led to millions of foreclosed properties; then the millions of foreclosed properties led to decreased property values and empty homes. We have heard it so many times, we are sick of it. However, just when you thought you knew it all, the banks have thrown a curve ball at borrowers.
As foreclosures became common place in society, most American’s turned a blind eye to the process and blew the whole thing off. Many simply took the position that they could walk away from a distressed property and let the bank take it back. Their thought was that if the bank took the property back, then they had wiped their hands of the whole mess. However, some of those individuals are now forced to re-think that position.
In Florida, banks are entitled to pursue borrowers for a deficiency judgment. The deficiency is the difference between the amounts owed on the note versus the amount recovered from the sale of the property.
In distressed properties, these sums can be thousands of dollars, and in some cases even hundreds of thousands of dollars. For many years, the larger banks seemed to turn a blind eye to their right to pursue for the deficiency. However, we are starting to see that change, and quickly.
In 2013, the Florida legislature passed the “Speedy Foreclosure Bill.” One of the provisions of the law was to reduce the time frame to file for a deficiency judgment from five years, to one. The result is banks are forced to act faster to pursue a deficiency judgment. While this may sound like a good option for borrowers, in practice, the result is an act first and examine later attitude from the banks. The bank will bring the action and then determine if it viable, rather than sit back wait, and possibly forget about it.
Another determinative factor in the recent uptick in deficiency judgments has been an increase in the economy.
As Americans have rebounded from the recession and foreclosed home owners have begun to re-build, they suddenly have assets again. Many previously foreclosed homeowners have found new jobs, enjoy steady income streams, an in some cases even own new properties. These are all attractive factors to a bank looking to recover some of the money they lost on a foreclosed property.
As a direct result of these factors, we are seeing more banks file actions to obtain a deficiency judgment. In Broward County alone there were 300 such cases filed by Texas debt collector Dyck O’neal last month. According to several sources, there are more on the way; and actions coming to Tampa Bay.
So what can Borrowers do to fight against this nightmare?
First, if you still own a distressed property, contact us today to discuss how to obtain a deficiency waiver. If your property was already foreclosed, review the bank’s documents to determine if a waiver of the deficiency is buried somewhere in the documents. If there was not a waiver of deficiency and you are facing an action for deficiency, then you should attempt to negotiate with the bank to settle the debt for good. The final option is to do nothing and then wait to fight a garnishment proceeding.
Each case is different, and the best outcome depends on many variables. At the DeWitt law firm, we can explain your options to give you the best course of action. Call us today to discuss your options.