In order to obtain deficiency judgments in Florida, the law provides that a lender must file a motion for a deficiency judgment with the court after the foreclosure sale. The lender has five years in which to pursue the lawsuit. The court will hold an evidentiary hearing. The lender must prove that the property value on the date of the sale was less than the mortgage balance. The borrower is allowed to present their own property appraisal or use the county tax assessor's value to substantiate the property value. If it is determined that the property value was worth more than the mortgage balance, the lender will not be able to obtain a deficiency judgment against the borrower. Declining property values in Florida have created more opportunities for lenders to obtain deficiency judgments. If your lender has filed a deficiency judgment against you, it is recommended that you hire a foreclosure defense attorney immediately to defend you, and work out a settlement with your lender.
How to Avoid a Deficiency Judgment in Florida
Deficiency judgments in Florida can be avoided if you negotiate a resolution with your lender to avoid foreclosure such as a short sale or deed in lieu of foreclosure. Be sure to get confirmation in writing from your lender that they will not pursue a deficiency judgment against you. Other options to stop foreclosure include:
- Reinstatement. You pay all past-due amounts to bring your loan current including any fees and costs.
- Refinancing. You obtain a new mortgage with lower interest and a fixed term, and pay off your old mortgage.
- Forbearance. Short term agreement to get caught up on your past-due payments. After you are caught up, you continue paying your regular mortgage payments.
- Mortgage modification. Your lender modifies your existing mortgage by lowering the interest rate and extending the loan term so you can afford your mortgage payments.
- Selling your home. If you have equity, you can use the sale proceeds to pay off your mortgage.
- Filing bankruptcy. Used as a last resort. Your lender cannot file a deficiency judgment against you when you file bankruptcy.
Lenders don’t really like to sue their former customers because they may want to do business with you down the road. However, lenders may be more apt to seek deficiency judgments in Florida against developers or builders who have defaulted on their commercial loans or borrowers who have strategically decided to walk away from their properties even though they can afford to pay their mortgage payments.
Hire an Attorney
It is a good idea to hire a Florida foreclosure defense attorney if you are facing foreclosure or your lender has filed a deficiency judgment against you. A foreclosure defense attorney can explain the foreclosure laws to you, and recommend options to avoid a deficiency judgment. A foreclosure defense attorney can negotiate with your lender to settle a deficiency judgment against you.
