Florida Deficiency Judgments | Mortgage Foreclosure

In Miami-Dade County and Florida at large, a mortgage judgment outlines two important things: setting the amount a debtor owes a lender and orders a sale for the mortgaged property to apply proceeds that will pay down the debt.

When the sale proceeds are insufficient to satisfy a debt fully, the lender may attain a judgment against the borrower to make for this difference in what the legal system calls a deficiency judgment.

Mortgage foreclosure judgments do not reflect “money judgments” despite this legal action setting a dollar amount owed on a loan foreclosure. In reality, a foreclosure judgment demonstrates the first two steps to reduce unpaid loans on the total amount debtors owe.

When the first step (mortgage property sale) pays off the debt in full, the case will reach an abrupt end. However, a piece of property will often sell for less than the total loan amount, entitling lenders to take an additional step. This is where they can pursue a deficiency judgment to obtain the amount of money for the balance a lender still owes.

Read on to learn more information from our team at the Law Offices of Paul A. Humbert, P.L. on deficiency judgments in Miami and the Florida legal process behind them.

How Lenders Pursue Deficiency Judgments in Florida

Once a foreclosure sale occurs, lenders may engage in the pursuit of a deficiency judgment in the foreclosure case itself. However, they may also file an entirely separate lawsuit to remedy the deficiency.

Foreclosure in Florida is a judicial issue. This means that the bank or lender must go through the state court to foreclose. The court exhibits some flexibility regarding the deficiency amount, according to Fla. Stat. Ann. § 45.031(8). Nonetheless, the judgment typically cannot exceed the difference between the mortgage judgment amount and the home’s fair market value at the date of sale.

Deficiency claims may result in a battle between appraisal experts. The lender’s and borrower’s experts will likely disagree on the property’s actual value. The court will consider this analysis but remain unbound by any third-party property valuation. As long as substantial evidence supports a judge’s decision, appellate courts won’t second guess the deficiency judgment.

In pursuit of deficiency judgments, lenders must file a motion for deficiency. This document alleges their valuation of a property’s fair, market value on the sale date, in addition to the overall deficiency total.

Homeowners may defend the motions while contesting the lender’s valuation as well. When homeowners file a defense, courts must hold a separate hearing on a lender’s request for deficiency.

At this hearing, the lender must demonstrate evidence that the property’s value at the sale date was less than the loan’s full balance. This will require an expert witness, typically experienced in evaluating property, and an experience with deficiency judgments.

Legal Assistance

Deficiency judgment litigation became prevalent in Florida during the financial crisis of 2009. Many Florida homeowners found themselves “upside-down” on their home loans. This means that homeowners owed more on the loan than their property’s value

When economic times remain steady, a deficiency judgment is rare as banks and lenders remain more than willing to underwrite loans with value ratios to cover the difference should a foreclosure occur.

Nevertheless, as times get worse, Florida’s real estate values will often demonstrate a notable decline. This additionally means a significant increase in the number of debtors defaulting on their loans.

In these instances, creditors should seek a qualified, experienced firm to help them pursue deficiency judgments to best represent their rights and begin the process to reclaim the full amount owed on the debt.

Pursuit of Deficiency Judgments Miami | The Law Offices of Paul A. Humbert, P.L.

Our team from the Law Offices of Paul A. Humbert, P.L., has extensively litigated foreclosure deficiency judgment in both the pre and post-judgment phase throughout the state of Florida. 

This positions our attorneys to uniquely understand any associated challenges with deficiency judgment litigation and enables us to guide our clients forward to collecting on their unpaid debts.

We help creditors analyze property value by working with train experts to help creditors collect judgment debts in foreclosure situations. This includes deficiency judgments. 

To learn more about how a lawyer from our firm can help you with your case, contact our professional and dedicated team today!

1.  “What Is a Money Judgment? | Nolo.” https://www.nolo.com/legal-encyclopedia/what-is-money-judgment.html. Accessed 13 Jul. 2020.
2.  “The 2019 Florida Statutes – Statutes & Constitution :View ….” http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0702/0702.html. Accessed 13 Jul. 2020.
3.  “Florida Courts.” https://www.flcourts.org/. Accessed 13 Jul. 2020.
4.  “Chapter 45 Section 031 – 2019 Florida Statutes.” https://m.flsenate.gov/Statutes/45.031. Accessed 13 Jul. 2020.