Loans still due despite foreclosure

Here is a story, today, out of Ohio...but it is pertinent to our current problems in Florida:

Some central Ohioans are learning that their financial problems didn’t end when they lost their homes to foreclosure. They are hearing from banks months after losing the home that they are still on the hook for the unpaid loan balance.

According to several central Ohio lawyers, banks are quietly ramping up efforts to collect the debts. “In my experience, this is something new, something we haven’t seen before,” said Columbus lawyer Troy Doucet, who said three of his clients have been contacted by lenders seeking to collect the loan balance.

In the most recent case, a client received a letter saying she and her husband owed more than $45,000 almost two years after they lost their northern Ohio home to foreclosure.
“She’s shocked. She had moved to Columbus to start her life over and then got this,” Doucet said. “It’s like kicking them when they’re down.” Ohio law allows lenders to collect such debts up to two years after a foreclosure or up to 15 years after a property is sold in a short sale.

Banks employ what is called a deficiency judgment to collect the debt, requiring a defaulting borrower to pay the balance of a loan and any fees, minus what the bank recovers when it sells the home...

“I think this will be more and more of a trend, collecting deficiency balances, because the banks have taken such a hit during the foreclosure crisis,” said Adam Todd, a Columbus lawyer whose firm handles foreclosure cases.

Guy Cecala, chief executive and publisher of Inside Mortgage Finance, a Maryland-based trade publication, said government loan holders Fannie Mae and Freddie Mac traditionally haven’t pursued deficiency judgments because there wasn’t enough money to collect. But he also expects such collections to rise. “I expect this to pick up over time,” he said. “They’re under a huge amount of pressure to pay taxpayers back, and one of the tools at their disposal is to go after these debts.”
jweiker@dispatch.com

Loans still due despite foreclosure

With a properly and successfully negotiated short sale homeowners can get the lender(s) to include language in the short sale approvals that relieve the owner of the above referenced 'deficiency balance'.

Call me on my direct line if you'd like to learn more.

Thanks for reading...Steve Jackson, 561-602-1258