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timmyhickman · Joined: 24 Nov 2008 Posts: 1 2.12 Dollars($)

I have 4 rental properties that are all underwater. I have had 4 short sale offer fall through due to lack of funding. I've burned up all my liquid assets floating these properties and now think I might have to try my luck with foreclosure.

Does anyone know if BofA and Nat'l city are getting deficiency judgments and are people able to negotiate with the debit collectors?

smithsussane · Posted: Mon Nov 24, 2008 10:25 pm Post subject:

Hi timmyhickman!

Welcome to forums!

As far as I know, the deficiency judgment does not vary from one bank to another. It varies according to state laws. You can also try the option of bankruptcy. I know, it will be hard for you to accept it but Chapter 13 bankruptcy helps in re-organizing the debts. The lender will give you a alternative payment plan through which you will be able to pay off the debts within 3-5 years. Though initially your credit score will be badly affected but as soon as you start paying off the debts, your credit will start improving.

Feel free to ask if you have further queries.

Sussane

Guest

I know the laws very well. The big question I can't get an answer to is are the banks actually following through on gaining def. judgements through the courts when they are allowed to do so. And then if they do... whos doing the collecting and is that negotiable..

jerry · Posted: Wed Nov 26, 2008 3:11 am Post subject:

Hi timmyh,

If a state allows the lender to collect the deficiency, they will definitely do it. With the present market situation, a lot of properties are going into foreclosures and short sale. So in order to recover their debts, the lender will claim deficiency if he has that option. It is the lender who will collect the deficiency from you. As far as negotiations are concerned, it may vary from lender to lender.

Thanks,

Jerry

Guest

i live in the state of florida. do you know if the fl law allows deficiency judgements. Laughing

adonis · Posted: Mon Dec 15, 2008 12:19 am Post subject:

Welcome johniiii,

Yes, Florida is a deficiency judgment state. The lender can sue the borrower for the deficient amount.

Guest

What current law reference would I review to study the options providing stop of deficiency laws and is Florida one of the state that this stop is applicable to?

adonis · Posted: Sat Dec 20, 2008 12:06 am Post subject:

Welcome kawasaki,

In Florida, deficiency judgments are allowed. The lender can ask the borrower to pay off the deficient amount resulting from the sale of the property.

However, there is a period of time after the sale where in the court can review the sale in order to ensure that a fair price has been paid. During this period, parties are allowed to object to the sale on the grounds that proper procedures were not followed or there existed consent between the bidders. This period is usually 10 days, after which the Certificate of Sale is filed and title passes, if the sale is confirmed. If the sale is not confirmed, then, another sale is ordered.

Guest

If two people are on the deficiency judgment, can the lender legally absolve one person from it if they come to an agreement on the money to be paid?

adonis · Posted: Thu Jan 15, 2009 11:34 pm Post subject:

Hey jonsey,

If the lender has foreclosed or short sold the property which was in the name of two borrowers and then has asked for the deficient amount, then both of them are responsible to pay it. But if the borrowers decide that one would pay the deficient amount, then I don't think the lender will have any problem. But it will be solely the lender's discretion whether he will accept it or not.

Guest

if it is a short sale...there is no deficiency judgement...there would be a shortfall owed to the lender...which they could have you sign a promissary note for or maybe 1099 you for the difference. If it is a foreclosure....there could be a deficiency judgement.

Guest

Are the laws different in New York than in Florida? Doesnt the "mortgage forgiveness act" ensure that you cant be taxed on the forgiven amount from the lender? If thats the case, whats the 1099 for?

Posted: Wed Jan 21, 2009 12:30 am Post subject:

If a lender issues you a 1099 form, that means your mortgage dues has been forgiven but you will have to pay taxes on the forgiven amount. With the mortgage forgiveness act, the borrowers will not have to pay the taxes on the forgiven amount.

Guest

So, am to understand that if the property was short saled (in NY) and the lender forgave the difference, then the seller would NOT have to pay income taxes on the amount forgiven?? Also, there was a second lender on the property that required a deficiency agreement be signed because they received very little money from the sale. The two parties arent together, so one has negotiated with the lender and is trying to have their name absolved from the agreement. The amount of $ agreed on is not enough to absolve both parties. So the one party with the limited amount of money is still waiting for the approval from the second lender. Have you ever heard of such a thing???

adonis · Posted: Wed Jan 21, 2009 11:40 pm Post subject:

Hi jonsey,

In case of a short sale, the deficient amount resulting from the sale of the property is to be paid by the borrower to the lender. So the borrower does not have to pay the taxes on that amount. As far as the second lender is concerned, he will still have the right to demand the second mortgage from you though the property is foreclosed and you will be liable to pay him off.

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Deficiency Judgement