Sued for a Debt on a House You No Longer Own: When Insult is added to Injury


If home is where the heart is, then it is not a stretch of the imagination to see why losing your home at a foreclosure sale can be particularly heartbreaking. Despite the heartbreak, once the home is sold at the foreclosure sale, that is the end of this chapter of your life, right? Unfortunately, that is not always the case. To add insult to injury, you may still be liable for a debt on a home you no longer own. How can this be? In purchasing the home, you signed two very important documents: a note and the mortgage. The mortgage allows the lender to sell the property in the event that you do not pay. The note, on the other hand, allows the mortgage lender to pursue you personally for any outstanding amounts.

There are two common scenarios in which this becomes particularly important:

  1. Cases in which the property sold for less than is owed on the first mortgage: In the event the first mortgage lender forecloses and sells the property for less than the amount owed, there is a possibility that the first mortgagee may pursue you for the difference between the amount owed and the sale amount for the property. This difference is called the deficiency. In this scenario, the mortgagee may pursue you for the deficiency using the terms of the note. In Florida, the mortgagee has a limited timeframe of one year in which to pursue a deficiency under the note.[1] This one year period begins to run from the day after the clerk of court issues the certificate.
  2. Cases where the property was sold for enough to cover the first mortgage, but not subsequent mortgages: Where there are more than one mortgages on the property, and the foreclosure sale proceeds are only enough to pay the first mortgagee in full, the second (or any other subsequent) mortgagees may also pursue you for the outstanding balance under the note.

In either of these scenarios, the absolute worst thing that you can do is ignore the lawsuit and do nothing. Doing nothing does not make the lawsuit go away. Instead, it increases the likelihood that the mortgagee will seek and obtain a default judgment against you. Your best bet for dealing with these lawsuits is to obtain aggressive legal representation with extensive experience in dealing with various areas of law related to consumer finance.

For more information about foreclosures, please visit our website here.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems. We have saved over 1,800 homes from foreclosure, eliminated $100,000,000 in mortgage principal and consumer debt, and have collected millions of dollars on behalf of our clients due to bank, loan servicer, and debt collector violations, negligence and fraud. Contact us for a free consultation to see how we may be able to help you.

[1] Fla. Stat 95.11 5(h)