Those Who "Walk Away" in Foreclosure May Face Lawsuits Later On

As a Realtor in Florida with a Certified Distressed Property Expert (CDPE) designation, and given the current state of the real estate market, I get asked questions about foreclosure. A general theme centers around-- why not just walk away? One reason is the potential for unexpected lawsuits that may sneak up on you years after the process is complete.

When done in the proper manner and under certain circumstances, a "short sale" may indeed relieve the former homeowner from debt owed from a shortfall in the sale proceeds and the amount owed. However, there are instances when a foreclosure or a "short sale" may lead to lawsuits.

Experts believe lenders will file a tidal wave of lawsuits against homeowners in the coming years as a way to recoup losses when home sales and foreclosures do not result in enough proceeds to pay the mortgage in full.

In Florida, lenders have up to five years from the date of sale to file "deficiency judgments" and up to 20 years to collect monies owed from mortgage notes that have gone unsatisfied.

Distressed homeowners should consider a "short sale" even if they are in the process of a foreclosure. Real estate sales agents with the knowledge can handle the whole process for the distressed homeowner, from listing the home to negotiating with the bank to forgive mortgate debt.

Many lenders will not pursue deficiency judgements and provide full release of liability when homeowners pursue a "short sale" in good faith and default on their mortgage because of legitimate hardship, such as job loss or other unforeseen hardships.

In order to avoid the possiblity of having wages garnished or claims made against borrowers' assets, one should consult with a professional who can help.

When using a real estate professional, the sales agent's fees will most likely be paid for by the lender. Many times part of the "short sale" process is to have the property listed with a real estate sales agent. So finding the right real estate professional might make the uneasy task of a "short sale" more convenient and less costly than other alternatives.

Please feel free to contact me about potential "short sales" in the South Florida area.

Michael Friedman
Realtor, CDPE
Lang Realty
561-989-2100