There is a real danger lurking around homeowners all over the country, and this malicious entity often leads to mortgage foreclosure and deficiency judgments. Is it a new bank? A new government program hiding behind the facade of a homeowner assistance program? Perhaps even a loan modification organization that caters to homeowners in distress …
No, the real danger to homeowners who need to sell a home is apathy. It occurs after a homeowner has been attempting to sell a home at a price higher than the market will bear but before they are able to close on a short sale that would save the property from going to foreclosure.
This apathy, this feeling that it simply does not matter anymore, often motivates homeowners into abandoning the home and letting the bank foreclose. It often seems like the easiest thing to do. And since some banks are slow at processing foreclosures, it could mean living in your house for several months before you’re required to move out.
A deficiency is the difference between what you owe at the time of foreclosure, and the dollars the bank gets after selling the house and deducting all the fees and costs. That includes attorney fees, asset management fees, maintenance and utility costs, repair costs, and selling costs.
Banks can decide to sue for a deficiency judgment at a time most convenient to their agenda, so often it does not occur immediately after the foreclosure sale. And while the subject may not come up during the foreclosure, it doesn’t mean you’re off the hook. They may wait to sue until it appears that you’re back on your feet and have the ability to pay.
Here in Florida, banks can wait up to 5 years before filing suit for the deficiency. And then, once they have a judgment, they can pursue you for collection for 20 years. That’s way too long to have a huge debt hanging over your head!
The only means to avoid a deficiency judgment are through bankruptcy or effective negotiation with your lenders like we do during a short sale.
Not All Short Sale REALTORS® Are Alike
Unfortunately, avoiding a deficiency judgment isn’t an automatic result of a short sale. Unless your listing agent is a seasoned veteran of the short sale process or works with an attorney who has handled short sales with all the different lenders, you might still find yourself liable. And unless your real estate agent knows how to find the “small print” in the bank’s paperwork to be sure your liability has been released, you could be in for a nasty surprise years after you think that episode in your life is over and done with. Can you imagine still dealing with this home loan 25 years from now?
Thus, eliminating the possibility of a deficiency judgment is one of the most important tasks I perform for my clients. I have a full-time employee/agent dedicated to assisting me to help people get out of the jamb that their home loan has caused, and we are ready to help you determine your best course of action. I strongly encourage you to read my 86 page e-Book titled “Should I Short Sale My Home?” It is filled with information that many homeowners have found to be enlightening.
If you’re thinking of a short sale, just drop me a note and we can schedule a time to review your own personal situation. Everybody’s is different, and we’ll use our experience to help you make a decision best for you and your family. I’ll be happy to explain the entire process and answer your questions.