Articles Posted in Short Sales

We have noticed here in the Tampa Bay, Florida legal community that written deficiency waivers of the unpaid loan balances for first mortgages are getting harder to come by. A recent St. Petersburg, Florida Times article focuses in on the potential landmine: “People have no idea of all the trouble that is coming” says Margery Golant, a lawyer in Broward County who sees deficiency defense cases on the rise. Florida is known as a recourse state and the lenders have a right to obtain a personal judgment for the remaining unpaid balance. They then can seek to collect that debt by garnishing wages or bank accounts or placing a lien on other property that the debtor owns.

This is true of short sales regardless of lender. It is also true of deed in lieu or other voluntary return of the property through a consent judgment in rem (which means against the property only). Even Freddie Mac has aggressively pursued new reduced promissory notes in short sales.

What does this mean? We think it means someone will come knocking to collect that debt eventually. It might be five years down the road (prior to the expiration of the statute of limitations), but if the lender obtains a deficiency judgment, like any judgment it can be collected for 10 years and renewed for a second 10 year period. In the State of Florida, a judgment creditor has 20 years to try and collect an unpaid judgment.