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Deficiency judgments were rare in the 15 years since the last real estate slump, said Ben Hillard, a former investment banker who now is a real estate and corporate attorney at Hillard & Rogers in Largo, Florida.
“The banks have been too underwater with foreclosures to spend much time on deficiency judgments, but that’s beginning to change,” Hillard said in an interview. “This is going to be the next big crisis.”
The key (which is alluded to in the article) is to know your options and have a specialist help.
- Make sure the wording is correct and forgives you of the debt.
- Be happy if you get the 1099, that means the bank has “written off” your debt – in exchange of proper wording.
- Know your state laws – Georgia gives 30 days for banks to pursue a deficiency judgment.
- Know what type of loan you have on the home. Home Equity “LINES” are different than “LOANS” and are treated differently
- Know your situation – are you really in a great situation but carrying the mortgage note on this home is a drag? You could be a target as this next quote suggest.
The likeliest candidates for deficiency judgments are so- called rational defaults, said Larry Tolchinsky, a real estate attorney in Hallandale Beach, Florida. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk so far below their loan balance they have no hope of recouping the loss.
About 21 percent of American homeowners owe more on their mortgages than their properties are worth, according to Zillow.com, a Seattle-based real estate data firm.
“Walking away from a property comes with a cost, especially for people who otherwise have good credit,” Tolchinsky said in an interview. “The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you.”
If you want to explore your options, feel free to contact us. A short sale at least keeps you in charge as much as possible. A foreclosure is the bank “TAKING” the home and a deed-in-lieu is basically giving up, if there’s no negotiation for forgiveness.
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- Snellville Short Sale Home – 4299 Donerail Drive, 30039 SHORT SALE – APPROVED BUT BUYER WALKED! YOUR GAIN! HUGE...
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