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Banks seeking to collect from families as they get back on their feet

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It’s no secret that banks can file for a deficiency judgment once the foreclosure suit is over. They do this to collect on the difference between what the home sold for at auction and the amount owed by the homeowner. However, these claims weren’t being filed with much fervor, likely because the lenders felt that the mortgagees with outstanding debt didn’t have any assets to collect against. With the changing economic landscape banks are seeking to collect from families as they get back on their feet.

A debt collection company called Dyck O’Neal, is looking to change the way in which deficiency judgements are handled. In the month of June alone they filed over 600 deficiency judgement claims within Palm Beach, Broward and Miami-Dade County.

There are a couple of theories that may explain the sudden interest in deficiency judgment collection. The first is the recent change in the law that only permits banks to file for deficiency judgments up to one year post foreclosure. Before lenders had a 5-year window, but with the new smaller time frame,  the change likely contributed to the recent upswing. This could account for the sudden need to quickly file the deficiency judgements.

Another theory is that the lenders are taking advantage of the recovering economy.

Deficiency judgments are no longer being taken lightly, many of the lawsuits are looking to recover over $100,000 from former homeowners.  Some of these homeowners are just starting to get back on their feet and can’t afford to owe such a substantial amount. Banks can be granted the right to garnish wages, place liens, or claim rights to investment properties, this can make it very difficult for previous homeowners who wish to recover.

If you have been served with a deficiency judgment, or have any questions, please contact our office immediately to speak with a Miami foreclosure defense attorney.

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