Legal Question in Real Estate Law in Florida

Re: Foreclosure effects

Where in Florida is the property?

Re: Foreclosure effects

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A foreclosure will seriously damage your credit score and will greatly affect your ability to purchase another residence for many years to come. Lenders believe that if you fail to pay one mortgage, it is likely that you may do so again.

Lenders can legally seek a defiency judgment which represents the difference between the amount of the Final Judgment and the amount they either bid or is paid at the foreclosure auction. Many do not seek to enforce the deficiency but that may change due to the plethora of foreclosures in the market today.

Two possible alternatives to consider include speaking with the bank to see if they will accept a deed in lieu of foreclosure or alternatively, a short sale. You should speak with a qualified Florida real estate attorney to discuss your options.

Scott R. Jay, Esq.

Re: Foreclosure effects

Foreclosure laws are governed by the laws of each state; thus, what the lender will do in Florida is different from what that same lender could do in California. I do not know how foreclosures are processed in Florida, only in California and California has more protection than other states. In California, what the lender could do depends upon whether your loan is "purchase money" or non-recourse; if so, the lender could only take back the property and the debt would be considered "paid", but you would still have ruined credit. If the loans were refinance loans or were created after you had purchased the property, then the lender could file suit for judicial foreclosure and get a deficiency judgment(for the difference between the value of the house they take back and the amount owed on the loan) which could be satisfied against any asset you own anywhere in the U.S. and also against your wages, etc. This could also happen even where the loans are purchase money, if there were any false statements at the time of the making of the loan, such as inflating your income or where you stated you were going to occupy the house when it was going to be investment, etc. With respect to the IRS, in any foreclosure, the IRS will treat the foeclosure as a "sale" at the amount owed at the time of foreclosure; thus, if you ended up owing $500,000.00, it doesn't matter what the home is worth for income tax purposes, as you would pay taxes as though you had sold the house for $500,000.00 even though it was foreclosed upon. Will the lender just "forgive" the debt? This is laughable; they are in the business to maximize their profits not run a charity.