An experienced foreclosure attorney knows that Orlando homeowners in foreclosure face a deficiency judgment that can plague their finances for up to twenty years. Many homeowners who face foreclosure don’t yet feel ready to consult with a foreclosure lawyer. These homeowners may suffer unnecessarily from the “underwater home” crisis that is a plague to the Orlando community.
In a mortgage foreclosure deficiency lawsuit, the bank sues the homeowner for the amount due on the mortgage loan after the foreclosure ends. A new Florida law relating to deadlines for mortgage foreclosure deficiency judgments brings good news to Florida homeowners who have lost their home in foreclosure in recent years. A mortgage foreclosure deficiency judgment is a major threat to a home owner’s financial well-being, even forcing a homeowner into bankruptcy. Under Florida law, the deficiency judgment is the difference between the total mortgage debt and the fair market value of the house when it is sold. Even after the homeowner loses their house in foreclosure, they still owe the bank for the balance of the mortgage loan debt, if the value of the house was not enough to pay off the debt. For many “underwater” homeowners in Florida, this difference can be significant.
A very nice Orlando couple who were convinced they needed to file a chapter 7 bankruptcy came to my office today for a consultation. Initially, it seemed that they had good reason to believe that filing a chapter 7 bankruptcy would be a good idea.
Their home had been in foreclosure for sometime. A judgment of foreclosure had been entered, and in just a few weeks, it was to be sold. Like so many Orlando homeowners, the house was substantially underwater, meaning that they owed more on the mortgage debt than the house was worth.
Until now, an Orlando chapter 7 bankruptcy has not done much to help a homeowner with an unsecured, or “underwater,” second mortgage on their property. (These mortgages are also commonly known as HELOCS, or Home Equity Lines of Credit.) In an Orlando chapter 7 bankruptcy, the courts have refused to remove a second mortgage lien, even though the chapter 7 bankruptcy eliminates all mortgage debts. Even after the chapter 7 bankruptcy is over, and the homeowner is granted a discharge of all debts, including mortgage debt, the mortgage liens remain on the property until the lender is repaid. (First mortgage liens can never be removed in a chapter 7 bankruptcy).
Hiring an Orlando mortgage foreclosure defense attorney may be the smartest decision some Orlando homeowners make this year. Last week, the Orlando Sentinel reported that mortgage foreclosure filings increased in September by a whopping 42%, after banks flooded the courts with an additional 3,209 mortgage foreclosure lawsuits. The only good news to this statistic is that the number of filings is down from September 2010. That was when the number of foreclosure lawsuits in Orlando peaked just before mortgage defense attorneys exposed banks in the “robo-signing” scandal that forced many lenders to suspend their efforts on seizing homes. Now, the foreclosure mills are back with a fury. In addition to the increased number of Orlando mortgage foreclosure filings, a similar increase in number of initial default notices sent to Orlando homeowners suggests that this is the begnning of a new wave of mortgage foreclosure in Orlando.