Deficiency Judgments and Motion for Deficiencies are being sought by the banks on a more frequent basis
Commonly referred to as a “Motion for Deficiency Judgment” banks have the ability to target both commercial and residential mortgage loans for post-judgment collection, even after the foreclosure case has been over and the home or property has been sold. With property values, and personal financial success, increasing over the past few years, more and more banks are seeing an upside to foreclosing on property, selling the property, and going after the borrowers for the difference between the judgment and the value of the property on the date of the foreclosure sale.
Many borrowers are quite surprised to learn this. Many are even more surprised to find out that they may never receive notice of a pending Motion for Deficiency if the court, or lender, does not have their most current address. A motion for deficiency is brought either in the foreclosure action where judgment was entered or in a separate action pursuant to Fla. Stat. 702.06. Many companies typically buy the rights to pursue a deficiency, including Dyck-O’Neal, Inc.
What Defenses are available for a Motion for Deficiency
This is the most common question I am asked by individuals facing a deficiency judgment. One that I have attempted to answer many times, like here, here, and here. Mostly, in any deficiency action, I am limited in terms of what I can bring to the court’s attention. All the defenses to foreclosure are generally barred by a doctrine known as res judicata. This means that the issues relating to standing – whether a party is entitled to bring a foreclosure suit – have been determined by the entry of judgment. Further, amounts due and owing are generally unchallengeable. Paragraph 22, a common defense to foreclosure, is out. So this begs the question – what can a borrower challenge?
If a new suit is being filed, and the motion for deficiency is in the form of a complaint, more defenses may be available, but typically the only challenge is to the value of the property as of the date of the foreclosure sale. In order to seek a deficiency, the bank must prove judgment and sale of the property. The bank will require an appraisal in most instances to set the value as of the date of the foreclosure sale. These appraisals are bound by a multitude of rules and best practices that may not have been followed.
Generally, you will have to hire an expert to find what the value of the property was on the date of the foreclosure sale. This can be very expensive but can give your case against a deficiency the highest amount of credibility with a judge.
Seeking an amount due and owing post judgement is not like a typical foreclosure lawsuit. There are new defenses and new challenges that are different for each case. If you have been served with a new lawsuit or learned of a pending motion in your old foreclosure case, it is important to meet with an attorney. Ask them how many cases they have handled dealing with deficiencies. How many cases have they gotten dismissed? Will they explore settlement?
If you have just learned of a motion for deficiency judgment or have been served in a new law suit, feel free to reach out to my office at 813.502.6768 or via e-mail.