So the tide is coming in. Hundreds of South Florida residents are experiencing
a wave of new foreclosure deficiency judgments as banks seek to collect
on the unpaid mortgage debt from homes that were foreclosed on many years before.
A deficiency judgment refers to a mortgage lender's judgment against
the borrower for the difference between the outstanding balance of the
mortgage note, plus costs and attorneys fees, and the value of the property
This week alone, I have met with four individuals, who have had deficiency
lawsuits filed against them. It appears that these lawsuits will increase
as lenders resolve foreclosure backlogs and as they sell their deficiency
rights to third party investors and collection firms.
According to a recent article in the Sun-Sentinel, in a month-long period
beginning June 1, about 110 deficiency judgments were filed against Palm
Beach County homeowners by a Texas-based debt collection company called
Dyck O'Neal. The same firm filed more than 300 cases in Broward County
and nearly 200 in Miami-Dade County.
It was very uncommon for a lender to seek a deficiency judgment in previous
years. However, due to the declining market the number of new deficiency
cases is on the rise. Mortgage companies have begun to pursue deficiency
judgments more vigorously than ever before. There was recently a change
in Florida law that set a one-year deadline to file to collect an unpaid
debt. The previous deadline was five years.
If a mortgage lender pursues a deficiency judgment you should hire a seasoned
attorney to defend the deficiency. Our firm is experienced in using certain
defenses to defeat a deficiency claim and possibly negotiating an acceptable
settlement for much less than what the bank is claiming that you owe.