Real Estate Law FAQ

1. What is the mortgage foreclosure procedure?

In Florida, the mortgage foreclosure procedure is judicial in nature and begins when the lender files a notice of Lis Pendens after the borrower has become delinquent on their payments as required by the terms of the mortgage. If the borrower fails to respond to the lawsuit or cannot repay the balance due, the court will enter judgment in favor of the lender and issue a notice of sale. The notice must contain a contact person, legal description of the property, the case number, date, time and place of sale, and the terms of sale. The auction will then typically take place thirty (30) days after the judgment on the courthouse steps. The purchaser will receive a Certificate of Sale after paying the amount due in full.

2. Does Florida have a right of redemption?

Yes. Under Florida law, a borrower has up until the day of sale to exercise their right of redemption. In order to properly exercise that right, the borrower must pay the entire amount owed. Once the Certificate of Sale is issued to the new buyer, the previous borrower’s right of redemption expires.

3. After the foreclosure sale, what happens if I still owe money to my lender?

Mortgages are a type of loan that are very personal in nature. At the time of signing your mortgage documents you signed a promissory note. Should your encumbered home sell for less than you owe to your lender, the lender is entitled to go after you personally for a Deficiency Judgment in order to satisfy the entire debt. The recent trend has been that lenders do not go after borrowers for the deficiency judgment, however, there appears to be an indication that some lenders may begin to pursue deficiency judgments on foreclosed borrowers.

4. What is a loan modification?

A loan modification is a renegotiation of your mortgage terms with your lender. Terms like interest rate, principal amount, monthly payment, and amount of payments can all be brought up in a loan modification. Banks are finally starting to respond to the demands of borrowers, and are even granting principle reductions as part of a loan modification in some instances.

5. What are the tax and credit consequences of a loan modification?

Unlike a short sale which can have a negative impact on both your credit rating and tax history, engaging in a loan modification typically does not. Credit consequences will depend on how the bank reports the modification. We would advise you to speak to a tax professional to get a better understanding of your tax consequences under a loan modification.

6. How can I be sure that my foreclosure modification company is legitimate?

First off, you should avoid companies that request a large up-front fee for their services.. Likewise, try and avoid dealing with companies that make unconditional guarantees about their ability to save your home or reduce interest rates. If you have any doubt regarding your anticipated choice in foreclosure defense company, call the Florida Attorney General Hotline at 1-866-966-7226.

7. What should I do if my foreclosure modification company directs me to stop paying my mortgage?

Although there are certain, very limited circumstances where you might be able to cease making mortgage payments, which you would absolutely want to discuss with a licensed Florida attorney, it is generally not a prudent idea to abandon your obligations under your loan agreement with your lender. Be wary of a company that instructs you to do so.

8. Can a licensed mortgage broker charge me an up-front application fee?

According to the Office of Financial Regulation, loan modifications do not fall under the scope of their regulatory authority. What this means is that mortgage brokers are regulated by Florida Statute 501.1377. The statute prohibits brokers from charging an up-front fee in any form. The fees must be billed after services are rendered.

9. What is a short sale and how does it work?

A short sale occurs when the fair market value of a mortgaged property is less than the mortgage owed on it, and the lender then approves a sale that is less than which is owed so as to minimize their losses on the property. The deficiency in the amount owed on the mortgage must still be paid; but lenders may be willing to negotiate the obligations with regards to the deficiency judgment.

10. What information does the lender require from the borrower?

Lenders will usually require pay stubs, bank statements for the preceding two months, a hardship letter, and tax returns for the preceding two years.