Roy Oppenheim on Deficiency and Deficiency Judgements 101 in Florida
By Oppenheim Law on Deficiency Judgments, Florida Law, Foreclosure, Real Estate & Roy Oppenheim
Hi, this is Roy Oppenheim, foreclosure defense attorney and legal blogger. What we’re doing this evening is, we’re doing part two of our seminar on deficiencies and deficiency judgment 101. And I’d like to talk a little bit about our firm’s experience in representing literally hundreds and hundreds of clients in the area of foreclosure defense, as well as hundreds of clients now in the area of short sale. And ultimately, our objective always, always is to make sure that our clients are not going to be subjected to a deficiency judgment. And I can tell you right now, that as of the date of this seminar tonight, that no family that has come to us that previously was not in foreclosure and we then defended them in foreclosure, or even did a short sale, is currently subject themselves to a deficiency judgment.
First of all, a deficiency is really just a piece of paper, it’s really no different than this toilet paper. While a bank may get a deficiency, with that deficiency, there’s not much that they can do with it. They can maybe call you, try and harass you a little bit, but they can’t go into your bank account, or contact your employer and try and garnish your wages. Or in the alternative, try and seize your bank account. With a deficiency judgment, however, that opportunity does present itself, and we will talk about in subsequent seminars how you can try and shield yourself from that happening if, in fact, a bank gets a deficiency judgment against you.
But the first line of defense is to try and make sure that you do not get a deficiency judgment against you. So, if a bank does file a foreclosure, ultimately, they have approximately nine months in order to…nine months to try and convert that foreclosure, ultimately, after the foreclosure sale to a deficiency judgment. And there has to be a special hearing and at that hearing, you can certainly defend yourself, and we have done that. And one of the things you want to try and do, is at all costs, try and avoid a deficiency judgment.
Obviously, one of the things we do is we defend the foreclosure vigorously and many times, not all times, but certainly some of the times, those foreclosures are dismissed because the bank has been unable to sustain the foreclosure for legal reasons. Ultimately, sometimes one of the things we do if we feel that the case is not one that’s gonna be meritorious at the end, is we negotiate with the bank, and do what we characterize is what’s called a structured foreclosure. And in those situations, we work with the bank and agree in a settlement that the bank will get the property back in decent condition, in exchange for waiving their right to have a deficiency judgment entered against our client.
In some unique cases, we’re able to sometimes make sure that their credit scores are not harmed too badly, and in one or two unique cases, we’ve even been able to actually get the clients some additional funds prior to leaving the home, in exchange for settling the case and entering into a foreclosure with a waiver of deficiency. However, I would say the more likely scenario, ultimately, is going to be either a modification, if in fact income comes back to you and your family, and you’re capable of having a modification. And you decide you want to stay in the home, even though the home is significantly underwater, or the typical scenario right now, and the one that we find the banks find the most accommodating, is a short sale.
In a short sale, is where you agree to sell the property for less than the value of the bank’s mortgage, and the bank agrees to accept those funds. And then ultimately, there is a negotiation of what happens to the deficiency, and that is the amount of money that the bank still owed. In many, many cases where there has been sufficient hardship demonstrated, we have been able in many, many cases, probably as many as 75% or 80% of the cases, been able to get those deficiencies completely waived. In those cases where we haven’t had the deficiency completely waived, sometimes as a small payment of as much as 5% or 10%, and we basically buy off the deficiency for that sum of money.
Early on, there were cases in short sales where the banks were not prepared to waive the deficiency and thus, the deficiency would just hang out there post-short sale. But in very, very rare situations, if any, have any of the banks yet come back and attempted to pursue a deficiency judgment in a subsequent lawsuit post-short sale. There are some banks that are attempting to collect on these deficiencies, but we haven’t seen them hire lawyers, and file the filing fees, in order to file a deficiency judgment.
One of the things we do wanna talk about is what options you have if, in fact, a bank is pursuing a deficiency against you in a foreclosure. And besides the structured foreclosure and defending a foreclosure, ultimately, if we find that a bank is bearing down on you, one of the things we may recommend is that you speak to bankruptcy counsel in connection with a chapter seven or chapter 13. Now we are not bankruptcy counsel, but we have close relationships with bankruptcy attorneys, and sometimes, that is an option that we also pursue.
Enough said for this evening. We will be back and talk further about what to do if, in fact, the bank is pursuing a deficiency judgment against you, and you are choosing not to pursue a bankruptcy. Roy Oppenheim, “From the Trenches,” have a good evening. Thank you.