January 31, 2019

A guide to understanding deficiency judgments in Florida and how to avoid one.

Did you know that if your Florida home forecloses, the lender can still pursue you for their losses with a deficiency judgement? 

What is a deficiency judgement?

If you owed $300,000 on your Florida mortgage, and it foreclosed and sold for $250,000…the missing $50,000 would be the deficiency. Florida laws allow the lender to sue you for their $50,000 loss, be granted a judgement and then collect.  

If you are facing foreclosure in Florida, your best bet to avoid a deficiency judgment is with a short sale.

In a  short sale, you (with your short sale agents assistance) will have the opportunity to negotiate how the loan is settled and to get this deficiency balance forgiven.

The short sale approval letter must specifically spell out that the lender is waiving their right to try collect the deficiency. When the approval is reached, if the terms are not to your approval, you will have the ability to renegotiate these terms. As your short sale agent, I always seek to have the short sale approved at terms most beneficial to you - which would be to settle the account in full and have the balance forgiven.

Is this ALWAYS possible? No - not always. There are some very rare situations in which the lender(s) will not waive their right to pursue a deficiency and then it will be your decision whether to go through with the short sale or not.

A short sale is not a perfect solution 100% of the time, but it is almost always the most beneficial one. A short sale negotiated by an experienced agent is your best chance of settling your mortgage debt on your terms, preventing a foreclosure and having the deficiency balance forgiven.

I can't recommend Minna enough for a short sale! She eased my mind during the entire process and followed through 100% from day 1 to the closing. She and Jaime handled everything flawlessly. I am so grateful to Minna and Jaime for all that they did to help us through this process.


Minna Reid

Minna Reid is a Broker Associate at Florida Homes Realty & Mortgage, serving northeast Florida. With a specialty in selling property with complex legal and financial challenges, including short sales and tax lien complications, she has the expertise to get you through your most complicated real estate transactions smoothly, from listing your property to closing the sale!

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