When you default on your mortgage and your lender forecloses on your property, they will sell the property and use the proceeds from the sale to pay off the remainder of your loan plus fees and penalties. But what happens when the foreclosure sale doesn’t net enough money to cover the outstanding balance on your loan? This is known as a “deficiency” and in Florida, lenders and creditors can file a lawsuit for a “Deficiency Judgment,” which is them suing you for the remaining outstanding balance.
What’s frightening for borrowers is that sometimes the deficiency isn’t even pursued by the lender themselves, but by a third-party company who has bought the rights to pursue the deficiency for their profit. So what can you do when facing one of these lawsuits?
Common Defenses to a Motion for Deficiency
Defending against one of these suits motions can be extremely difficult for borrowers, especially those who don’t know their rights or how to protect themselves from predatory lenders. Defenses to foreclosure are generally barred by a doctrine known as res judicata, which essentially means that because a previous court adjudicated on the matter, you can’t bring it back before them, which rules out a number of other defenses or challenges you could use.
Typically, your best option is to argue the value of your property. In order to seek a deficiency judgement, the bank must first get an appraisal on the property and then prove the judgement and have the sale approved by the courts. There are many rules that must be followed in this process which are sometimes not followed as closely as they should be.
One of your best arguments isn’t necessarily a cheap one, but could prove effective. You can hire an expert to determine what the value of your property should have been on the date of the foreclosure sale and show that the actual cost of the sale was far below what it should have been, thus making your deficiency unnecessary.
It’s important to note that deficiencies are common, but each case is different. There are different possible arguments and angles that a Brevard County bankruptcy attorney can pursue on your behalf in order to protect you.For more information about deficiency lawsuits or to retain the assistance of an experienced lawyer, call The Buchalter Law Group today at (321) 320-6088.