by Doreen Martel

Created on: November 18, 2011   Last Updated: March 21, 2012

Florida foreclosures are handled through the judicial process in the Circuit Court. Lenders must file a complaint to begin the foreclosure process, which may take six months or more provided that a homeowner does not contest the foreclosure. Once the court has authorized a foreclosure sale, however, the process proceeds rather quickly.

Homeowner's defense

Because there have been so many problems with original mortgage documents, thanks in large part to the

robo-signing scandals, some homeowners may be able to stop the foreclosure process and avoid a deficiency judgment. While a homeowner should not depend on this to stop foreclosure (or a subsequent judgment) it is something to keep in mind.

Deficiency judgments

When a home is sold at a foreclosure sale for less than the amount of the loan outstanding, lenders may request the court grant them a deficiency judgment. However, this may not be requested for a minimum of 10 days after the foreclosure sale. Prior to this, the homeowner is able to file a request to ensure that the foreclosure sale price was a “fair price”.

Judicial discretion

In addition to the homeowner being able to contest the sale price, the process for a deficiency judgment may be left up to the courts. When the deficiency is agreed to, the lender must sue the property owner for the amount. In the event that the suit is granted, the original homeowner will have a judgment placed against them. In Florida, judgments have a 20 year statute of limitations, meaning that the homeowner will carry the judgment for a long period of time.

Purchase loans only

Another interesting aspect of the deficiency rules in Florida is that they apply only to purchase mortgages. This means that if the homeowner has refinanced their mortgage, the lender may not be able to sue for a deficiency judgment. This is explained in Florida Statutes 702.06.

Homeowners who have gone through the foreclosure process are often in difficult financial positions, or they would have been able to save their homes. While a deficiency judgment may initially seem like cruel and unusual treatment, the lender does have the right to recoup their investment in the property. Homeowners should also verify if the lender was able to collect from any personal mortgage insurance as they may be able to reduce (or eliminate) the deficiency judgment if the lender is made whole. When in doubt, it is a good idea to contact an attorney who specializes in foreclosure law to help protect a homeowner from a deficiency judgment.

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