Deficiency Judgments: Waiting for the Deluge

A completed foreclosure may well not be the end of the legal process for the homeowner. In Florida the lender has 5 years to seek a deficiency judgment. For example, if the home at the time of foreclosure is worth $100,000, but the mortgage balance is $180,000, the homeowner can be sued for $80,000.

There have been very few deficiency cases so far, but it is expected that lenders will eventually pursue these claims. These claims might be sold to debt buyers, similar to the sale of delinquent credit card accounts.

As a Fort Lauderdale bankruptcy attorney, I have seen the greater prevalence of suits by second mortgage holders including equity lines on the promissory note. The lenders are not bothering trying to foreclose since they would have to take over the first mortgage. Many clients have been forced into bankruptcy by these claims.

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