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What is the state of 'deficiency judgements' in the State of Florida?

In the Trenches with Roy Oppenheim, Oppenheim Law discusses the state of deficiency notice in the State of Florida. Do you have a deficiency judgment against you? The Florida legislature last year passed a law that shortens the amount of time that a bank can pursue a deficiency judgement against you after a foreclosure and maybe a short sale. Let’s take a look at the time barred to see where you stand and what your rights are. Protect yourself from getting your home taken away now.


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Controversy Surrounds Florida's 5-Year Foreclosure Statute of Limitations

Important update on Florida foreclosure laws that homeowners need to know. When does the 5-year statute of limitations law actually kick in? How is it measured? Do you know the difference between an ‘intent to accelarate’  vs. a ‘notice to accelerate’?

Do you know when the statute acually starts? This is tricky as banks are re-foreclosing on already foreclosed homes.

Don’t let them try to take your home away a second time. The timing and the difference between losing your home and keeping your home is critical. Watch Roy’s explanation?



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Foreclosures, short sales declining across South Florida

The following article was written By Paul Owers, Sun Sentinel and republished in the South Florida Law Blog with excerpts by Roy Oppenheim, homeowner defense attorney and legal blogger. Click here to read the original article.

South Florida Law Blog, Roy Oppenheim, Sun Sentinel

Foreclosures, short sales declining across South Florida

Declining foreclosures, short sales and unemployment rates 

Declining foreclosures, short sales and unemployment rates normalize housing industry in Palm Beach and Broward Counties while at the same time put more of a squeeze on already-burdened buyers.

“The bargain days are gone,” said John Tuccillo, chief economist for the Florida Realtors trade group. “That’s the bottom line in all of this.”

Palm Beach County posted 3,598 transactions involving a short sale or foreclosure last year, representing 23 percent of all single-family home sales, according to data from the Realtors Association of the Palm Beaches. That’s down from 29 percent in 2012.

In the condominium sector, 20 percent of sales involved a troubled mortgage in 2013, compared with 24 percent in 2012.

In Broward County, there 4,640 short sales and foreclosures last year, making up 31 percent of the market, according to the Greater Fort Lauderdale Realtors. In 2012, those properties made up 43 percent of all single-family sales.

Distressed sales have been slowly shrinking for the past three years. Statewide, nearly half of all property sales involved a short sale or foreclosure in 2009, near the height of the housing bust. The properties typically sold for below market value to ready and willing buyers.

Short sales and foreclosures

Short sales and foreclosures now are selling for list price and above. But rising home prices over the past year turned South Florida into a seller’s market.

“People used to think the word ‘foreclosure’ means a deal, and it doesn’t anymore,” said Dean Ehrlich, a broker in Broward and Palm Beach counties.

Thousands of homeowners who were “underwater” on their mortgages now have equity. They don’t have to let the homes fall into foreclosure or need permission from their lenders to sell for less than they owe on the mortgage.

“There’s less distress in the market, and those who are in distress have the escape hatch of equity,” said Daren Blomquist, a vice president of RealtyTrac Inc., an Irvine, Calif.-based foreclosure listing firm.

Federal lawmakers allowed the Mortgage Forgiveness Debt Relief Act to expire this year. That means the amount of debt forgiven in the short sale of a primary residence is considered income and taxable. An owner with $100,000 in debt wiped away could face taxes of $25,000 or more.

Roy Oppenheim

Another lawyer, Roy Oppenheim, said the decline in distressed sales is linked to the job market.

“The unemployment rate is down locally and nationally,” he said. “There’s more money for people to buy homes and for others to pay their mortgages. As values rise, the inclination is for people not to fall behind on their mortgages.”

The Realtor board defines a short sale as a property sold for less than the mortgage prior to the lender filing a lawsuit to repossess. A foreclosure sale is any home sold after the lawsuit was filed. The figures include only properties that were marketed on a multiple listing service.

While the improved market is good for sellers, it’s a challenge for buyers, who complain they don’t have enough choices.

Gina Mattila, a real estate agent in Palm Beach and Broward counties, said she’s finding far fewer short sales to list. When she does get one, the response is overwhelming.

“I put a couple of properties on the market over the weekend, and my phone was blowing up,” she said.

South Florida investor Mike Mondelli said foreclosures and short sales once were plentiful, but no more. He said novice investors are flooding the market, often overpaying and depleting the supply of homes.

“It’s definitely difficult to find the bargains that work,” Mondelli said. “The deals are few and far between, and you have to be a lot more savvy with the deals that are presented to you.”




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Update: The State of Florida Deficiency Judgments in 2014

The following article is written for the South Florida Law Blog by Oppenheim Law attorney Roy Oppenheim.

Deficiency judgements and short sales 2014

 Florida has remained in the top three of states with the highest foreclosure rate since the housing market collapsed in late 2007. Even scarier for distressed homeowners is the fact that Florida is a recourse state, permitting lenders to seek deficiency judgments for unsatisfied debts. A “deficiency” is the difference between the amount owed by the borrower and the foreclosure sales price.  This occurs when a home is foreclosed on and the total outstanding balance owed on the mortgage, or in some cases multiple mortgages, exceeds the sale price at the foreclosure. This is commonly referred to as being “underwater” or “upside down.”

In Florida, lenders also have the right to pursue a deficiency after a short sale. In those circumstances, the bank may go after the borrower for the amount the bank comes up short after the sale. A deficiency judgment may be avoided only if the borrower has negotiated prior to the short sale that the lender will waive any rights to a deficiency. If this has not occurred, the borrower is still vulnerable to a deficiency judgment.

The Florida Fair Foreclosure Act

On June 7, 2013, Governor Rick Scott signed HB 87, The Florida Fair Foreclosure Act into law.  The Act makes significant changes to how residential foreclosures and short sales must be conducted in Florida.

One of the most important changes to the process is the change in the Statute of Limitations for bringing actions for deficiency judgments. A Statute of Limitation creates a finite period of time within which a person may bring a lawsuit. If a lawsuit is brought outside of that time period, the suit may be dismissed, as the claim is forever barred. Before the Act was passed, the Statutes of Limitation allowed a party to bring an action for a deficiency judgment at any point up to five years from the date a certificate of sale was issued by the Clerk following a foreclosure sale. After its passing, that time limit has shrunk to one year for deficiencies created by foreclosure sales or deeds in lieu of foreclosure. However, this change is limited to actions commenced on or after July 1, 2013.

Upside for homeowners facing potential deficiency judgments Deficiency judgements and short sales

Although actions brought before that date are still subject to the old statute, there is an upside for homeowners facing potential deficiency judgments.  Any action put into motion before July 1, 2013 only remains valid until July 1, 2014.  For example, if the five-year time period will expire after July 1, 2014 under the old law, the new law shortens the lender’s right to pursue a deficiency judgment to July 1, 2014.

Revised statue of limitations

Oddly enough, the revised Statute of Limitation does not explicitly address short sales; however, it may be construed as included under that one-year threshold. There is room for interpretation and litigation as the Act specifically limits the amount the lender can recover in a deficiency judgment from a short sale.  In the case of an owner-occupied residential dwelling, the recoverable amount is limited to the difference between the remaining debt from the short sale and the fair market value of the property at the time of sale.  The new statute also limits attorneys fees and costs the lender can charge when collecting the deficiencies.



Homeowners Experience Déjà Vu of Injustice, as Mortgage Servicers Adopt Banks’ Abusive Practices

Once again, homeowners facing foreclosure are falling victim to abusive practices in the handling of their mortgage, but this time the overpromising and under delivering can be attributed to entities other than the banks – mortgage servicers.

As the name suggests, “mortgage servicers” are entities that handle and service mortgage loans.  A recent trend in the mortgage industry, is for banks to contract with mortgage servicers to collect payments, manage loan modifications, and handle foreclosures on loans which the bank originated. Mortgage servicers, such as Nationstar and Ocwen, have seen their influence in the mortgage-servicing market rise 3 percent in the last few years, as they now have more than 17 percent of the mortgage servicing market.

Déjà Vu of injustice

Along with this increase in business came mountains of paperwork and responsibility. As a result of the banks contracting the servicing of waves and waves of mortgage loans to mortgage servicers, the mortgage servicers bit off more than they could chew and have overpromised and underdelivered.

Complaints from homeowners have flooded the offices of federal and state regulators and firms like ours, Oppenheim Law. In fact, more than half of the 187,818 complaints filed with the Consumer Financial Protection Bureau involved mortgage problems, with a vast majority of them concerning activities conducted by servicers.

20860997_sMortgage servicers wrongdoings:

  • Billing of improper fees
  • Wrongly denying loan modifications
  • Failing to provide adequate customer service
  • Failing to process mortgage payments in a timely manner
  • Failing to honor trial modifications with prior servicers, and
  • Robo-signing of foreclosure documents without verifying information

These are just a few of the injustices that homeowners have experienced at the hands of mortgage servicers across the country.  Does this sound familiar? It should, because these are the same malfeasances that the nation’s largest banks committed against homeowners in its handling of millions of mortgages facing foreclosure.

New federal regulations were enacted on the heels of Ocwen Loan Servicing reaching a $2.1 billion settlement with the consumer bureau in December 2013. In January, the federal government issued a new set of rules, much like those put in place to better regulate banks after the 2012 $26 billion National Mortgage Settlement, attempting to govern mortgage servicers.

Adjust the business model

The hope is that these new regulations will hold non-bank entities, such as mortgage servicers, accountable for servicing and foreclosure abuses, thereby forcing the servicers to adjust their business model and technology to properly service the loans they undertake.

Roy Oppenheim, foreclosure and real estate defense attorney. Legal blogger and founder of the South Florida Law Blog.

Roy Oppenheim, foreclosure and real estate defense attorney. Legal blogger and founder of the South Florida Law Blog.


Oppenheim Law’s practice areas include real estate and defending homeowners and investors from foreclosure, arranging short-sales, loan modifications, commercial litigation, and business related matters. Roy is also the creator of the South Florida Law Blog,named the best business and technology blog by the Sun-Sentinel. Connect with Roy on Twitter, Facebook, LinkedIn and YouTube .


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