Mortgage Foreclosure and What You Can Do About It


Will The Lender Be Able To Come After My Assets By Means Of A Deficiency Judgment?


The Deficiency Judgment
Once the lender is the high bidder at the foreclosure sale, and owns the property, the lender will list the property for sale. Because the property is upside down, the price it sells for will be less than the amount of the judgment. This creates a loss, or “deficiency” as it is called in our Florida Statutes.

The amount of the “deficiency” is, under Florida law, the difference between the judgment amount and the fair market value of the property.

For example if the judgment amount is $300,000.00, the fair market value of the property is $210,000.00, and the lender sells it for $200,000.00, there is a deficiency of $90,000.00.

Taking Your Assets
The deficiency judgment gives the lender the right to collect money from your general assets. A deficiency judgment holder has the right to “attach” “levy” or “garnish” your assets in order to get the money that is owed under the judgment. The judgment holder can garnish your bank accounts and wages. The judgment holder can force you to surrender your assets, including real estate, automobiles, stocks, and business interests you own.

What is the likelihood of a Deficiency Judgment
So far, few lenders have exercised their right to pursue a deficiency judgment. Lenders currently have their hands full with the sheer volume of foreclosures. It can be assumed that many lenders have not yet decided what their policy will be with regard to deficiency judgments.

There are some good reasons why lenders may not pursue deficiency judgments. The lender has already receives a significant part of its money when it sells the property. Most homeowners would have few assets left after losing their home, would not be worth pursuing. To get a deficiency judgment, the lender must return to court in a separate proceeding, and incur additional attorneys fees and court costs. Lenders may consider it bad public policy to file additional legal actions against thousands of homeowners who are already hurting from the loss of their home, and whatever money they invested in it.

Some lenders may decide on a case by case basis whether to pursue a deficiency judgment. In other words, the lender may make a determination as to what assets the former property owners, and pursue the “haves” and leave the “have nots” alone. The risk of a deficiency judgment has harsher potential consequences for people with significant assets.

Florida Asset Protections
There are many asset protections built into Florida law, which has given Florida a reputation as a “debtor’s paradise”.

Under Florida’ s homestead law a principal residence is protected from money judgments. If you are a head of household, your wages are protected under Florida law. Retirement accounts, annuities and pensions are also protected assets in Florida.


If you have any questions about Mortgage Foreclosures in Florida, contact us today.

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