Florida Deficiency Lawsuits Against Florida Homeowners Who Walked Away From Their Mortgages: Are You About to be Sued for the Deficiency Balance Left on Your Florida Mortgage? (Answer Likely is Yes)
Posted By Larry Tolchinsky on October 27, 2011
Florida has been in tough economic times for a long while now, and lots of Florida homeowners, stressed and frustrated, have chosen to move on — walking away from their homes and their mortgages. This may have seemed like a smart idea at the time, or maybe the only idea at the time, but here’s the thing. The other shoe is about to drop on Florida home owners who walked away from their mortgages.
Many Florida homeowners who cannot afford to pay their mortgage payments, or who are making mortgage payments on homes that are now worth less than the mortgage note, are walking away. Just leaving the house for the bank to have, packing up their belongings, and starting a new chapter in their lives. Probably (most likely) without getting any legal advice before they walked away.
Deficiency Lawsuits Are Coming
Here’s the problem with walking away from the house: if the value of the home doesn’t cover the amount on the loan, then there is a “deficiency.” Deduct the value of the home from the mortgage balance, and what is left?
That’s the number that is the problem. Banks, of course, haven’t been suing to collect this money — well, most of the big banks haven’t. (Smaller banks and credit unions here in Florida, that’s another story.) The big banks have had all sorts of robo-signing and foreclosure fraud issues to face. They’ve been busy.
So, new companies are stepping up to fill this void. Some are calling them “vultures” and apparently, these companies don’t care one iota about the nickname. They’re in the business of making money, and they are finding the banks with all these deficiency issues all to ready to talk business.
The vulture companies are buying the defaulted mortgages from the banks.
The banks get some cash now rather than later. The banks don’t have to sue anyone. The banks don’t get any additional bad press for going after Florida homeowners right after they’ve been in the news for filing bad paper and other robosigning bad acts. It’s a good deal for the banks.
Meanwhile, the vulture companies have a pretty easy procedure to follow — deficiency lawsuits are not complicated legally — and all they have to do is file a lawsuit against the homeowner and collect some cash. They just have to find the home owner, who has moved – probably to a rent house not too far from the mortgaged home. They obtain a judgment and then do all the things that debt collectors are notorious for doing — pushing for payment, including possibly trying to garnish wages.
The result: more deficiency judgments.
According to the Wall Street Journal (using Lender Processing Services data) since 2007 Florida leads the country both in the number of foreclosures and in the number of deficiency lawsuits by over 9%. In the same article, the comptroller of Palm Beach County told the reporter that she is waiting for a “massive wave” of deficiency lawsuits to be filed by these vulture firms.
What You Can Do To Get Ready
There is a legal deadline (the “statute of limitations”) on these lawsuits being filed, but it is not the best course of action to lay low and hope the vultures or the banks miss the deadline. Instead, for the Florida homeowner who has walked the mortgage, the better course is to prepare a legal defense now – to get ready before the notice of a lawsuit being filed arrives. There are legal defenses to that deficiency lawsuit, and an experienced foreclosure defense lawyer can help you discover which ones may apply to your situation.
Just because a vulture sues doesn’t mean the vulture wins.
From our website:
A deficiency judgment is a judgment ordered by the court granting a bank the authority to collect the amount of money that is still owed by the borrower on a mortgage after the property is sold at a foreclosure auction. Since Florida has the second highest foreclosure rate in the United States, Florida homeowners will be impacted more than most by this issue.
We all know that one affect the recession has had on some Florida residents is that is has reduced property values to a level below many mortgage balances. That reduction in value is the deficiency that banks seek to collect.
We also know that the foreclosure mess is being made worse by the acts of banks and their attorneys. The result of these acts is the rise of valid defenses to many foreclosure cases. These defenses benefit the homeowner by offering them an opportunity to, among other things, to possibly negotiate the waiver of a deficiency judgment. Therefore, if you have been served with a foreclosure lawsuit or are in the middle of a foreclosure, don’t just walk away from your home. You need to discuss your circumstances with an experienced real estate lawyer. An experienced real estate lawyer should be able to offer you valuable advice on your rights relating to deficiency judgments. Larry Tolchinsky’s 17 years as a real estate lawyer has the experience to provide you with that advice.
What sets Larry apart from other real estate lawyers defending deficiency cases is his level of experience and knowledge. Larry examines the foreclosure documents to determine whether they provide the lender with the right to obtain a deficiency judgment. Each investigation requires an understanding of timely filing and recording requirements which could potentially bar the lender from obtaining a deficiency judgment. He knows the formalities that a lender must follow to reserve jurisdiction to obtain a deficiency judgment and the potential waiver of those rights if the foreclosure was uncontested.
The recent discovery that fraudulent documents were being filed in foreclosure cases has provided former homeowners an opportunity to defend themselves against lender’s attempt to pursue a deficiency judgment against them. Now it may be possible to re-open old foreclosure cases and to set aside foreclosure judgments. By doing so, a lender may, among other things, lose their right to pursue a deficiency judgment against the former homeowner. So, even if you have already lost your home, we still may be able to help you.