If I go into foreclosure, will the bank come after me for a deficiency judgment?
It's not bad enough that you might lose your house
. After you're forced out, after the bank sells your home to a stranger, after someone else moves in to what you used to call home...
The nightmare's not over.
One day, you too might get a knock on the door from yet another
process server, telling you the bank has sued you again
, but this time, it's for a deficiency judgment - the difference between what you owed on your old home and what the bank may have sold it for.
How can they sue me twice?
Florida law allows a foreclosure
plaintiff to recover the "deficiency" - the difference between the fair market value
of your home and the amount you owed on it. Unless you had a specific agreement with the bank and they agreed to waive any shortfall, you're a potential target for a deficiency claim.
The next big foreclosure crisis: deficiency judgment claims
If you think this foreclosure crisis is bad, wait until the deficiency judgment crisis hits. Banks can legally wait years after the foreclosure to surprise you with a deficiency claim, so the families who are just now losing their homes will be potential targets for years to come. The ones who haven't lost their homes yet but soon will - they'll be targets even longer. And foreclosures are still on the rise, meaning the number of potential deficiency judgment claims we'll see in coming years is also on the rise.
How can I stop a deficiency judgment suit?
Just like any other lawsuit, a deficiency judgment claim requires the plaintiff to provide all the evidence necessary to prove its case. Just like any other lawsuit, it can be defended if you've got the right facts. But you won't know unless you try.
But wait! My bank agreed to a short sale!
Unless your bank agreed in writing to waive the deficiency, guess what? You're on the hook for any unpaid balance on the original debt. Don't short-sell a home unless you get a written waiver of deficiency.