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How to Avoid a Foreclosure Hangover: Deficiency Judgment

Deficiency judgments are potent, expensive and on the rise according to

experts quoted in a recent foreclosure defense Wall Street Journal article!

If Oppenheim Law had a warning label it might read:

Deficiency judgments can be hazardous to your financial health. For best results hire a foreclosure defense attorney.

Deficiency judgments are today’s toxic wake up call.

Many Florida homeowners lost homes in the past year when they lost income and stopped paying their mortgage. In typical foreclosure cases, the bank takes the home back and sells it, meanwhile Florida homeowners think its over and life goes on. This is really the calm before the storm…

In likely scenarios, if the bank sells the house for less than what is owed, the bank can sue the homeowner for the balance.

The result is a foreclosure hangover! The remedy is more than Alka Seltzer and B12 can cure.

Foreclosure defense attorney Roy Oppenheim walks us through the scenarios of how to avoid a foreclosure hangover, also known as a deficiency judgment.

“What you should try to do at all cost is avoid a deficiency judgment,” said Oppenheim in a recent video interview.

According to a recent foreclosure story in the Wall Street Journal, 41 states and the District of Columbia permit lenders to sue borrowers for mortgage debt still left after a foreclosure sale. The economics of today’s battered housing market mean that lenders are doing so more and more.

Foreclosed homes seldom fetch enough to cover the outstanding loan amount, both because buyers financed so much of the purchase price—up to 100% of it during the housing boom—and because today’s Florida foreclosures take place following a four-year decline in values.

Ways to Avoid a Florida Foreclosure Hangover by Roy Oppenheim

Deficiency and Deficiency Judgement 101 from Oppenheim Law on Vimeo.

If a bank files a foreclosure they have approximately nine months to convert a foreclosure to a deficiency judgment, Oppenheim warns. So what are your options?

1. Deed in Lieu or Structured Foreclosure – In this scenario, attorneys work with the bank and come to a settlement where the bank gets the property in decent condition and in exchange the bank waives the right for filing a deficiency judgment against you. Sometimes credit scores can even be protected…

2. Florida Loan Modification – This is many times a more likely scenario if you want to stay in the home.

3. Florida Short Sale – Oppenheim says banks find short sales most accommodating in many cases. A short sale is when you agree to sell the property for less than the bank’s mortgage and the bank agrees to accept the offer. A deficiency can be negotiated and is often waived or reduced and negotiated.

4. Bankruptcy – What options do you have if a bank is pursuing a deficiency in a foreclosure, another option is seeking a bankruptcy attorney, says Oppenheim.

Florida is one on the states where lenders can pursue deficiency judgments and loan deficiencies are yanking borrowers back to a nightmare they thought was over…meet the foreclosure hangover.

 

Tags: deficiency judgment, Florida, Florida Deficiency Judgement, Foreclosure Hangover, Wall Street Journal

5 responses to “How to Avoid a Foreclosure Hangover: Deficiency Judgment”

  1. […] South Florida Law Blog Filed Under: Foreclosure Law News, Foreclosure News Tagged With: Florida, foreclosure, fraud, […]

  2. Vcurtis says:

    I live in Volusia county and have been following your blog for many months which I find very informative.

    I have a WAMU/Chase loan on my primary and have made no payments for 14 months.  Shipira/Fishman received my documents from Chase in April 2011 but they have not filed a complaint/summons to date.

    I intend to fight the foreclosure as Chase has not fully responded to my QWR of 11/2009 and a forensic loan audit conducted by a LEGIT firm reflects 18 errors in my loan documents.

    Do you represent clients in Volusia county?  If so, what is the estimated cost?  If not, do you make referrals in my area?

    My preference is a cash settlement w/Chase instead of the short sale process.  My house is a 4/3/3, 3/4 acre lot on the Champions golf course at LPGA, Daytona Beach.  With the winter season probably would have lookers 4-5 days a week and would prefer not to deal with people roaming through the house.

  3. Nervous says:

    As to your comment “If a bank files a foreclosure they have approximately nine months to convert a foreclosure to a deficiency judgment”, is that all the time they are allowed according to law to convert it to a deficiency judgment, or do they have 5 years to pursue one?

  4. […] list for some South Florida homeowners. With so many Florida homes underwater and toxic with foreclosure hangovers, finding the silver lining is a challenge. However, fitting your home with green technology can […]

  5. daniel Bowling says:

    I would like to inquire as to the following, as a florida property owner, with my householded residence in foreclosure, in the process of a short sale. Will i Be ok as long as the bank doesnt file deficiency judgement within 9 months of foreclosure or the short sale? Moreover, will this be contingent on a hearing being set and a judge orders it, which is nearly impossible with the back up our court systems currently has? I am worried becuase my apartment i bought for $220k is now worth $100k and im short selling it for $95k. I have my ENTIRE life savings of $40,000 in an IRA (retirement acct) and am worried i can loose it? please advise?