FORECLOSURE VS. SHORT SALE

FLORIDA homeowners should be aware of unique rules in the state that make the benefits of a short sale typically out weigh the ease of walking away in a foreclosure. Short sales are a better solution then a foreclosure in Florida.  All states have there own laws and in Florida lenders can file a deficiency judgment against the borrower. While some states ban lenders from collecting the remainder owed on a  loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone. Lenders in Florida have generally written off the first loan and not gone after a deficiency judgment because of all the bail out money they received from the tax payers. But now they are going after borrowers on second loans and lines of credit.

In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim. If a bank refuses to waive the deficiency in a short sale, they still would have to go back to court to seek a judgment . It’s an extra step for the lender.