Deficiency Judgments: The lender can still collect after a judicial foreclosure sale.


The foreclosure rate in Florida is higher than the national average, according to RealtyTrac.[1] Foreclose on real property in Florida requires a judicial proceeding which generally involves the following:


  • The borrower defaults under the terms of the note or mortgage.

  • The lender sends the borrower an acceleration letter.

  • The Lender serves the Summons and Complaint on the borrower.

  • The borrower files a timely response within the required time period.

  • If the borrower fails to file a timely response, then a default may be entered against the borrower.

  • The lender files a Motion for Summary Judgment. If the court grants this motion, then the court will enter judgment and set a date for the foreclosure sale.

  • If the Motion for Summary Judgment is denied, then the matter may proceed to trial.

  • If the lender is successful at trial, then the court will enter judgment and set a date for the foreclosure sale.

  • The real property is sold to the highest bidder at the foreclosure sale.


Once the real property is sold at the foreclosure sale, the borrower may still owe the lender money. If this is the case, the lender may seek a deficiency judgment against the borrower.


What is a deficiency judgment? After the foreclosure sale, the lender will ask the court to enter a deficiency judgment if the proceeds from the foreclosure sale were insufficient to pay off the amount owed to the lender.  A deficiency is the difference between the fair market value of the real property sold at the foreclosure sale less the amount owed to the lender, based on the final judgment.  For example: The lender obtains a final judgment of foreclosure in the amount of $300,000.  The property has a fair market value of $150,000 at the time of the foreclosure sale. The lender can subsequently obtain a deficiency judgment for $150,000 against the borrower. 


If the lender successfully obtains a deficiency judgment against you, then it may be able to garnish your wages or place liens on your assets.  However, there may be legal defenses, including the defense of statute of limitations, available to you.  For example, in Florida, the statute of limitations on an action to enforce a deficiency claim was five years. The new law in Florida reduces the statute of limitations to one year in certain cases.  This means that the lender must file with the court to obtain the judgment within one year from the day after the certificate is issued by the clerk of court or the day after the borrower accepts a deed in lieu of foreclosure.


Should you deal with the lender on your own?  Probably not. If you receive a letter from the lender concerning a deficiency, are involved in a deficiency proceeding, or if your home is in foreclosure, give Durham Legal Group a call today for a free consultation, at 407-956-2900, to discuss your legal options.


Lorraine M Durham PA

[1]RealtyTrac is a real estate information company and online exchange for foreclosed real property in the United States.