Your home was foreclosed on and subsequently went to auction, but it sold for less than you owed your lender. Now, what? In states like Florida, this situation could cause you to be faced with a claim for a deficiency judgement.
What Is a Deficiency Judgement?
Unfortunately for both lenders and borrowers, foreclosure auctions don’t always produce the funds needed to cover what’s owed on mortgages. When this happens, a lender may seek a deficiency judgement for the remaining balance by filing suit on the mortgager. If the judgement is granted by the courts, the loan company has the right to garnish the debtor’s wages and even freeze his account until the full amount is repaid.
Even though Florida and many other states allow for deficiency judgements, there are some restrictions on them. For instance, in Florida, this judgement is only an option for judicial foreclosures, and it’s up to the courts to decide how much the lender can go after the borrower for. The laws for deficiency judgements vary for each state, and due to the time and money needed to seek one out, they aren’t always pursued. However, suing for deficiency is becoming more and more common.
Avoiding These Judgements
The best way to avoid a deficiency judgement is to avoid the foreclosure altogether by arranging an alternative solution with the loan servicer. Such alternatives might include:
- A short sale, where the servicer allows the home to be sold for less than what is owed.
- A deed in lieu of foreclosure, when the home is signed over to the lender and the borrower is released from his mortgage.
- A loan modification, which involves the mortgage financier modifying the terms of the loan to make monthly payments more affordable.
Defending Deficiency Judgment Claims
If a deficiency claim is made against you, there are many viable defense that can be asserted to defeat the claim and or reduce the amount of the deficiency judgment. A Miami foreclosure attorney will know the defenses available to you and can protect your rights. If you’ve begun to fall behind on your mortgage payments of if a deficiency claim is made against you, call (link to contact) the team at Graham Legal today for a free consultation.