In an increasing foreclosure trend, a number of homeowners are being taken to court by their lenders years after their houses were lost to foreclosure. Lenders are filing motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years. It’s all part of a legal process known as a “deficiency judgment,” which is allowed in 40 of 50 states- including Florida.
It works like this: A property with a $500,000 mortgage might be worth only $300,000 following the housing crisis. The $200,000 difference, or what’s commonly referred to as the “underwater amount,” is known to lenders as a deficiency balance. Among the lenders pursuing the judgments are Fannie Mae and Freddie Mac. Officials at those agencies said the judgments are necessary to recoup money lost in the housing market crisis.
Deficiency judgments are financially devastating to the foreclosed home buyer and also come with income tax consequences. Freddie Mac seems to be targeting “strategic defaulters,” which the agency defines as “someone who had the means but chose to go into default, that there were no extenuating circumstances that affected their ability to pay. If you’re choosing not to pay off your mortgage, but you’re paying other bills, this would be considered strategic default.”
Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the website, www.miamibankruptcy.com.