If your home has recently been sold in a foreclosure sales but you still owe money to your mortgage lender, this is called a deficiency judgement. Under Florida law, you are still required to pay your full mortgage amount. According to NOLO in a foreclosure sale, it is not uncommon for the debt the borrower owes to exceed the purchase price of the home. For example if you owe $350 thousand on your home and it sells in a foreclosure sale for $250 thousand, you owe a deficiency of $100 thousand. If the lender receives a deficiency judgement from the courts, they can levee the borrowers bank account or garnish their wages until the debt is paid.
In Florida, the lender has to go to court in order to obtain a deficiency judgement. The court has discretion as to how much to award in a deficiency judgement. If you owe $100 thousand after a foreclosure, the judge might not order you to pay the whole amount depending on the situation. The court will often award a lesser amount if the property is residential and owner occupied.
In some cases, lenders may decide not to pursue a deficiency judgement after foreclosure. According to Robert S. Webster, lenders are more likely to pursue deficiency judgements against clients with a large amount of assets. Before deciding whether or not to pursue a deficiency judgement, most lenders will review your original loan application and any new financial updates.
If you’re facing a deficiency judgement, contact us. We can review your specific situation and determine the best course of action for you.
