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What are lender’s remedies after foreclosure or short sale?

by Dorota Trzeciecka on August 15th, 2011

If you are in foreclosure and your property is under water, you are probably wondering what is going to happen to the unpaid balance on your mortgage after foreclosure or short sale.   The lender is not likely to forgive the unpaid balance.   It does not mean that it never happens; it just means that balance forgiveness is very rare.   What is more likely to happen is for the lender to go back to the court where your foreclosure action was originally filed, and to pursue deficiency judgment against you personally.  This is a judgment for the difference between the balance of your mortgage and the foreclosure sale price.

Once the creditor obtains the judgment, it may then attempt to collect on the judgment.   The creditor has the right to examine you, orally or in writing, find out what your assets are, and request documents from you containing your financial information.   The creditor may then

  1. record a judgment lien against any real or personal property you own, and you cannot sell or refinance that property without first satisfying that judgment lien;
  2. garnish your wages, if you are employed;
  3. garnish your bank account;  or
  4. assign the judgment, and let someone else collect on it, or sell the judgment  for a fraction of the amount, and let someone else bear a cost of collecting on the judgment.

These remedies apply to any judgment awarding money to a party to a legal action, not just to foreclosure action.

Florida law does, however, provide protection to debtors for so-called exempt property, that is property that is outside of the creditors’ reach.

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