Deficiency Judgement

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Short sales not immune to debt collectors

Short sales not immune to debt collectors

DinSFLA here…take note on this “Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.”

This being said any of these fool third-party collection agencies that DO NOT do their due diligence will be in a world wind of a surprise! Now not only are they buying of fraud they will have a hard time getting repaid on fraud!

They are going to try to suck the living day lights out of us…Do NOT let your guard down.

ORLANDO, Fla. – July 6, 2010 – With more than half of the Central Florida’s homeowners owing more for their homes than the properties are worth, the question for some has become: How do I get out of this?

Of all the existing-home sales reported by Realtors in the core Orlando market in May, 23 percent were short sales. They are called “short” sales because the sales price come up “short” of, or less than, the amount owed on the mortgage.

What these homeowners, whose loans are “underwater,” may not realize is that they could successfully complete a short sale of their house but then face a lawsuit from their lender for not paying off the entire loan, a shortfall known as a “deficiency.”

At particular risk of being hit with such a debt judgment are owners of second homes and investment properties, homeowners who haven’t faced any kind of financial hardship, and owners who have a second mortgage.

“That’s going to be a huge problem moving forward in the next few years,” said Orlando lawyer Matt Englett, who specializes in home foreclosures. “These people who use Realtors to advise them on the transactions can end up facing deficiencies, and the deficiency notes will go to third-party collections agencies, and they will start suing and progressively pursuing those people.”

Homeowners have several options if they wish to avoid getting calls and lawsuits from debt collectors.

In a mortgage document called the “payoff letter,” a lender may include a blanket provision stating that it reserves the right to sue the seller at any time for unpaid mortgage debt. At the very least, Englett said, sellers need to make sure they do not give lenders that right.

Some lenders, particularly smaller ones, have been willing to state just the opposite — that they will not pursue any mortgage debt from the seller, he added.

Simply asking the lenders to cooperate by removing any wording about collections isn’t enough, Englett said. The seller is usually faced with building a case that details errors and omissions made by the lender in its mortgage documents, to gain leverage and force the lender to forgive the debt.

A new option that emerged in June is a federal program that calls on banks to forgive some of the mortgage debt of certain, qualified short-sale sellers. To qualify, sellers must:

Meet the criteria of the federal government’s Home Affordable Modification Program.

Have the house as their primary residence.

Face a financial hardship, and their mortgage payment must be more than 31 percent of their gross income.

The new program makes short sales a good option for homeowners facing a financial hardship, though it’s not meant for homeowners who can afford their mortgage but want to walk away from an upside-down loan, said Frank Rubino, vice president of the Chase Homeownership Center in Orlando.

“It’s not right. It’s not moral. It’s not the right thing to do,” Rubino said. “Why should customers look to the bank to substantiate a loss for the house they bought? … If they bought the house and sold it for $100,000 more than they paid, they wouldn’t share those profits with the bank.”

The decision of whether to pursue a former homeowner for outstanding debt varies from mortgage servicer to mortgage servicer, Rubino said, and can hinge on such things as whether the customer mismanaged his or her finances, Rubino said.

Sellers with a second mortgage face particular challenges if they try to walk away from a short sale without any remaining debt.

Jennifer Davis, a real estate agent for Lifestyles Home Sales Inc. of St. Cloud, said she recently almost lost a sale because of outstanding debt the seller owed on the house. Fortunately, she said, the buyer wanted the house badly enough to cover the outstanding note.

Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.

In cases where the seller has a second mortgage or can’t qualify for the federal programs, Davis said, she usually directs them to a real estate lawyer and a tax adviser.

Copyright © 2010, The Orlando Sentinel, Fla., Mary Shanklin, Knight Ridder/Tribune Business News. Distributed by McClatchy-Tribune Information Services.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Bank Owned, deficiency judgement, deficiency judgment, foreclosure, foreclosure fraud, foreclosures, mortgage modification, walk away1 Comment

MOTION FOR DEFICIENCY JUDGMENT – FORECLOSURE CONSEQUENCES

MOTION FOR DEFICIENCY JUDGMENT – FORECLOSURE CONSEQUENCES

Thank you Richard Zaretsky, Esq., for putting this out for us to review!

This is rare but one can never be too certain…

Today I received a call from one of my blog readers asking me for help with a pleading he received months ago, that is now being scheduled for a hearing in August.  This is a prime example of why Strategic Defaults or just walking away from a property can be so dangerous.  The pleading is a Motion for Deficiency Judgment from a foreclosure judgment and sale that occurred but was (like most other foreclosure sales) acquired by the lender for a nominal bid.  I and many others have been writing about this forgotten liability of borrowers.

Now here is an example of just what we said would happen, happening:

Motion for Deficiency page 1

Motion for Deficiency page 2

How the deficiency judgment hearing proof is presented to the court is discussed in my previous article on Foreclosure Deficiency Judgments and my original Back to Basics article.  The essence is that a deficiency judgment to be issued must go through a hearing where the lender submits proof (evidence) of the value of the property. The borrower has the right to refute the values. Getting to the number works like this:

To figure get the balance of the monies the bank must go back to court to ask the court to award it a “Deficiency Judgment”.  The amount is what is in question and the amount is measured using various rules.  Let’s assume the bank bid $100.  The court is not going to say that the house was worth $100 and $324,900 is still owed.  For our assumption we will say that the property is worth $200,000 and the foreclosure judgment is for $325,000.  That means the court will ask for an appraisal of the property as of the day of the foreclosure sale and the judge will likely give it that value.  So it will be the appraisal value less the judgment amount which will equal the Deficiency Judgment.  If the appraisal is $250,000, the Deficiency Judgment would be $75,000.   Now if there was real bidding at the foreclosure sale the judge could consider that bidding and instead adopt the selling price under the competitive bidding process that occurred at the foreclosure sale.  Then the Deficiency Judgment would be the difference from the foreclosure judgment and the winning bid amount. If the competitive bid was $240,000, then the Deficiency Judgment would be $85,000.

Back to the real life person with his August hearing – we suggested that before he retain us to negotiate with the lender on the deficiency amount and terms as a possible settlement without going to court, he try it himself.  We also suggested he speak with a bankruptcy attorney as there may be some planning opportunities available for him before the judgment is entered – if the negotiations don’t work.

Remember, a money judgment – that is what a Deficiency Judgment is – gives the judgment holder broad powers to collect the money, including garnishment and attachment of assets (like bank accounts).  Fraudulent Transfer Acts in the various states will block or take back transfers made to “hide” money from creditors.  See the article at CNN Money.

Copyright 2010 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.comFLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW – We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in deficiency judgement, deficiency judgment, foreclosure, foreclosures, lawsuit0 Comments

Fannie wants to penalize. My “ARSE”…I have the solution!

Fannie wants to penalize. My “ARSE”…I have the solution!

By DinSFLA 6/30/2010

When Fannie Mae announced that she was going to start to penalize people who walk away from underwater mortgages it created a fire storm of angry individuals.

She said it would step up efforts to pursue deficiency judgment—seeking to recoup the difference between the loan balance and the net proceeds of the foreclosure sale—against so-called “strategic” defaulters in states where such suits are allowed. Fannie also will lengthen to seven years, from five, the amount of time borrowers who go through a foreclosure must wait before getting a new loan.

So here is my solution, grab a pen and write this down:

  • Homes have lost not a little but an enormous amount of it’s value up to 70% in some areas.
  • In my opinion it is going to take more than 7 years to see any hope in Real Estate stabilization.
  • Who wants to buy today when we read about possibly 8 million shadow foreclosures that will ultimately bring down the market further to dust?
  • We the tax payers are the owners so who the hell asked us if this is appropriate? Were any of us invited to this meeting and discuss this? Did we have a say in this like we never do? DISCLOSURES?
  • What about the possible millions that were denied a modification from no fault of their own? Oh but the Obama Administration admitted this too…too…too…late 🙁 Who will be responsible for those who were improperly foreclosed on?
  • With the taxes and insurance sky rocketing, it only makes sense to rent for a while.
  • Deficiency Judgment? Do you realize what this little pot you stir will cause?? Hmmm think about it.
  • Credit who wants credit? We don’t even know where our own money is being used.
  • Who do we have to contact to foreclose on Your “arse” Fannie??? After all you are owned by us… Do not bite the hand that feeds you!

You see the threat really has no impact.

Trust is earned my friends and we have absolutely none at the moment.

The evil thing here is that instead of going after the true Run A Ways “the banks” who stole the cash you go after the ones who feed you and behind our back you feed them???

Image source: The Simpsons “Angry Mob”

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in deficiency judgement, deficiency judgment, fannie mae, foreclosure, foreclosure fraud, foreclosures, mortgage modification, non disclosure, shadow foreclosures, walk away1 Comment


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