Waiver of deficiency critical for Miami homeowners facing foreclosure or short sale

The Miami Herald reports about a thriving private industry that is buying debt from banks and chasing homeowners for mortgage balances owed in the wake of a short sale or foreclosure.

This is another example of why it is critical to consult an experienced Miami foreclosure attorney for those seeking mortgage foreclosure help or for homeowners trying to stop a foreclosure sale in South Florida. Companies are waiting to go after homeowners who close short sales without a waiver of deficiency.
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The New York-based Deficiency Judgment Recovery Network is one such company. Formed in late 2009, the company reports it is attempting to collect from “hundreds, maybe thousands” of Florida homeowners who though completing a short sale would put their housing nightmare behind them. The company is either hired by lenders to collect deficiencies or buys the debt for pennies on the dollar. A deficiency is the difference between a homeowner’s mortgage balance and what a home brought through short sale or foreclosure.

“People are under the assumption that the banks are so busy modifying home loans that they don’t have the bandwidth or stomach to go after those who are walking away. That’s a bad assumption,” said Joshua Rand, whose company motto is “We turn shortfalls into windfalls.”

Before the downturn in the real estate market, such deficiencies were rare. Now, as many as half of homeowners owe more on their property than it’s worth in the current market — particularly in hard-hit states like California, Florida and Arizona.

As one industry watcher put it: “It’s going to be a blood bath.”

Florida courts handled 398,825 foreclosures last year — not including short-sales, which account for more than one-third of all real estate transactions in some areas of South Florida. By the end of this year, Realty Trac predicts a total of 3.5 million more foreclosures nationwide.

In Florida, lenders have up to five years to file a deficiency judgment and up to 20 years to collect.

If you need foreclosure help in the Miami area, contact Barakat, Jacobs & Associates for a confidential appointment to discuss your rights. Call (305) 350-5055.