The unpaid mortgage debt associated with a residence is a deficiency. A bank can foreclose and force a judicial sale of a home if the mortgage borrower fails to pay the associated mortgage debt. The deficiency is the difference between the proceeds from the sale and the remaining mortgage loan balance. A deficiency can also result from a short sale, which is an alternative to foreclosure.
What are the Florida 'Rules' on Deficiencies?
The rules pertaining to deficiencies differ from state to state. A deficiency judgment is when the bank is granted a court order against the borrower to collect on the deficiency amount. In Florida, if the bank is successful in obtaining a deficiency judgment, it will be recorded in the public records and collectable for up to twenty years. Until the remaining debt is paid, the bank can garnish your wages, bank accounts, and even collect against your estate after you die.
However in other states, all a bank can do is foreclose on your house. Although your credit score will be lowered, in these states they can't come after you for the deficiency.
If you live in Florida or any state where assets can be seized, it's crucial to get ahead of the situation. So what should you do?
When to Hire a Foreclosure Defense Attorney?
To avoid the possibility of getting a deficiency judgment, before deciding to walk away from your home, hiring a good foreclosure defense attorney is necessary. Do not simply avoid the bank notices as they come. There are many settlement options available and the last thing you want is to be subjected to the indignity of being enslaved to a debt for up to twenty years after you lose your hom
What Happens if you have a Deficiency?
South Florida Law Blog's Roy Oppenheim believes if you are facing foreclosure a short-sale, is one such option. Loan modifications or structured foreclosures are other choices that can help you avoid a deficiency judgement. In the event your bank decides to obtain a deficiency judgment against you, Oppenheim says there are ways to protect yourself from the bank's attacks.
Deficiency Judgments and Bad Credit Scores
Many strategic default options carry the possibility of lowering your credit score, however, a bad credit score, while certainly not desirable, will have less of an impact on important life events than a deficiency judgment. The outcome we seek is to make sure that your important events, whether be it a wedding, having kids, or sending them off to college, are not impacted. Your life should not come to a screeching halt because of a potential deficiency judgment, and nearly all of Oppenheim Law's clients have been able to keep living their lives, provided they came to us early enough in the process.
If you have any specific questions on Florida deficiency judgments, feel free to leave a comment and we will do our best to link you into a future post.