When a mortgage lender forecloses on a home and the amount that is owed is more than the value of the home, the lender has the option to pursue a deficiency claim for the outstanding amount. This practice was not terribly common during the years of real estate profits because any time a foreclosure occurred, the lender could count on selling the property for at least the amount of money that was owed. Since property values have plummeted, lenders are finding themselves having to perform more foreclosures, and the properties they are taking back from borrowers are not worth as much as the loans those borrowers have defaulted on. Therefore, deficiency judgments are on the rise.
In Florida, a lender has the right to file a deficiency claim against a borrower up to one year after the date of foreclosure. When the foreclosed property is sold, they have another 5-year window to file a claim. With the value of Florida properties decreasing in recent years, lenders in the state are more likely to sue for deficiency claims against their borrowers. Lenders who are left with second mortgages are especially likely to file claims. The number of deficiency judgments filed by lenders on second mortgages has risen sharply since 2009.
If you’re worried about a deficiency judgment being won against you, talk to an attorney experienced in foreclosure law. Stephen K. Hatchey, a Florida foreclosure attorney, can guide you through the process. To receive a free consultation, contact our offices at 813-549-0096.