Florida Mortgage Foreclosure Deficiency Judgments

Dycke O'Neal, Inc. has filed almost 200 actions for mortgage deficiency judgments in Miami-Dade County just in the past five months - since January, 2014.  Dycke O'Neal, Inc. is one creditor you do not want to meet.  Dycke O'Neal, Inc. is a company out of Texas that has bought up thousands of foreclosure judgments throughout Florida to sue foreclosed homeowners for  a "deficiency" judgment owed after their home is foreclosed.  Dycke O'Neal, Inc. is not just after a few dollars - in many cases it is suing for about $100,000.00 to $200,000.00.

What is a Mortgage Deficiency?

A "deficiency" judgment is a money judgment for the difference between the balance due on the mortgage and the sales price at the foreclosure sale or in some cases the fair market value of the foreclosed mortgaged property.

The pursuance of a deficiency judgment is the second part of a foreclosure case. In the first part of a foreclosure case, the lender only seeks a judgment determining the balance due on the mortgage and setting a foreclosure sale of the real estate.  The foreclosure judgment retains the jurisdiction for the court to enter a deficiency judgment after the foreclosure sale. In the recent decades, residential mortgage lenders virtually never pursued a deficiency judgment after a foreclosure sale.  But things have recently changed in a dramatic with the flood of cases filed by Dycke O'Neal, Inc.

Some Relief - New Florida Fair Foreclosure Act of 2013 

The new "Florida Fair Foreclosure Act," which was effective on June 7, 2013, provides some measure of relief to foreclosed home owners facing the threat of a deficiency judgment after a foreclosure sale.

The new act provides that for cases filed before July 1, 2013, a claim for a deficiency must be brought by the earlier of (1) five years after the action accrued or (2) by July 1, 2014. This means that the statute of limitations will bar many lenders on older foreclosure cases from filing a deficiency action on July 1, 2014.

For new actions filed on and after July 1, 2013,  a claim for a deficiency judgment after a foreclosure sale of a one to four family residential property, must be filed within one year from the day after (1) the certificate of title is issued (which is normally 10 days after the foreclosure sale) or (2) the mortgage lender accepts a deed-in-lieu of foreclosure. Note that this new one year statute of limitations does not apply to foreclosures of other than one to four family residential properties.

This new act also provides a limitation on the amount to be allowed as a deficiency as to regarding foreclosures of owner-occupied residential real estate. The amount to be awarded may not exceed the difference between the foreclosure judgment amount (or in the case of a short sale, the outstanding debt) and the fair market value of the property on the date of the foreclosure sale.

Jordan E. Bublick is a Miami Bankruptcy Lawyer with over 25 years of experience in filing Chapter 13 and Chapter 7 Bankruptcy Cases and Mortgage Modifications (305) 891-4055