What is the process to and the consequences of foreclosure?

In Florida, it is easy for the lender to foreclose and then to get a deficiency judgment against you for the entire shortfall, to which it is allowed to continue adding interest, costs, realtors' commissions, etc. Florida has the second highest foreclosure rate in the US, Florida mortgages are heavily upside down, and Florida law makes the process of pursuing deficiency judgment quite simple. This means that the odds are very high that the lender will not realize enough through foreclosure to pay itself back in full for the amount owed, and therefore it will still show a substantial balance due from the borrower. If your property is worth more than you owe the lender, odds are good that deficiency judgment will not be a problem. This means there is "equity" in the property, and if so, there is a good possibility that some other bidder will outbid your lender, which will result in your lender getting all of its money. However, due to the large numbers of mortgages in Florida now that are upside down, the odds are that this will not happen, and that therefore the lender will wind up owning your property. If the lender is the successful bidder, it then can continues to add costs, advances and expenses to the debt until the property is disposed of. Once the lender becomes the owner of the property, there are a couple of different possible scenarios. One is that the lender can wait until it resells your house, and then go back to the foreclosure judge and present all the numbers: what you owed when the foreclosure sale was held, how much additional has accrued in interest, costs, advances for taxes, insurance, realtors' commissions, maintaining the property, etc. It gives all those amounts to the court, as well as the (undoubtedly very low) price it received, and asks that the court enter judgment for the difference, which the court will do. Another option the lender has is to apply for deficiency judgment at any time after it becomes the owner of the property, and to provide the court with an appraisal of the CURRENT value of the property to show the shortfall, add the additional costs, interest, advances, etc that it has expended or reasonably expects to expend until it is rid of the property, and ask for judgment. Some people have been advised by attorneys and realtors not to be concerned about the risk of deficiency judgment, that lenders do not pursue them. With all due respect, THAT IS INCORRECT. They can, and they DO. I have clients who came t me after allowing foreclosures to go th rough uncontested, and now face deficiency judgment claims. It is already happening, and I assure you that there will be a great deal more of this happening in Florida. Deficiency judgment did not used to happen, because until very recently, people were not upside down on their mortgages, so there was not much chance there would be a deficiency and there were few foreclosures. However, that is all different now. People bought or refinanced when the market was high, and now that it has dropped, many are seriously upside down, and if they are foreclosed on, there is usually a shortfall. The process of foreclosure will involve negative credit reporting. Some people conclude that they will accept that to be rid of the mortgage and the property, but don’t realize that the matter does not end there, and that they are at real risk to have a big judgment against them for the shortfall, which will follow them for many years, and which can often result in wage garnishment, seizure of bank accounts, vehicles and other assets. Careful analysis by a knowledgeable foreclosure defense attorney is necessary, to determine your risk, whether you currently have any negotiating leverage, or how it might be possible to plan an escape route. We are working on this problem for a number of clients, and will be happy to evaluate your situation and to discuss the possibilities with you. The worst possible thing you can do is nothing.