Miami and South Florida … A Warning About Foreclosure Deficiency Judgments

Good foreclosure defense lawyers in South Florida are warning clients about deficiency judgments. Whether you live in Ft. Lauderdale, Pinecrest, Miami Beach, Coconut Grove or Coral Gables, homeowners considering a strategic default should be mindful. The real danger in a foreclosure is that Miami Judges are granting deficiency judgments.

When a home is underwater or upside-down, a foreclosure sale price is far less than the loan balance. In Florida, lenders can apply to the Court for a deficiency judgment after a foreclosure up to five years later. The judgment amount is the difference between the loan and the market value of the home on the day it sold at a foreclosure auction.
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Judgments are good for 20 years. Judgment holders can force people into court every year to disclose their finances. They can seize bank accounts, assets, garnish wages, even the family dog (its considered property under Florida law). ,

Quietly, many investors are buying up these deficiency judgments at pennies on the dollar. These investors tend to be very aggressive and look to recover a higher rate of return than the larger institution. They are willing to put the effort in,” said Jeff Baum, formerly with SunTrust Bank’s unit handling residential mortgage-backed securities.

Once a deficiency judgment is awarded, it is often sold to debt collectors. A bank will walk away rather than spend money to collect a debt that will force the borrower into bankruptcy. Many lenders are saying “So, why not sell it for 25 cents on the dollar?”

The best way a homeowner or borrower can protect themselves is hire strong foreclosure defense counsel to negotiate a waiver of the deficiency judgment.

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