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Should I defend the foreclosure if I am underwater?


I have spoken with many homeowners facing foreclosure who wonder – “Should I defend the foreclosure if I am underwater?  Why bother to deal with the foreclosure lawsuit?”  Great question.

What is the Risk of Foreclosure if You Are Underwater

When the bank goes to foreclose on a property, their goal is to try to sell the property in order to satisfy the loan balance.  But what about if you owe more money than the property’s market value is worth?  This is particularly a problem because in the process of falling behind, the bank adds in interest, penalties and legal fees.

If the property value isn’t sufficient to satisfy the loan balance, then the bank can go after you for that difference, which we call the deficiency.

How long does a Lender have to go after the balance.

Unfortunately, the law is a little ambiguous on how long a lender has to go after the balance.  Florida Statute 95.11 provides that a lender has 1 year after the foreclosure sale.   But Florida cases interpreting this law has made what was once clear, a little less than clear because the deficiency action can be filed separately from the foreclosure case.

What are my Options

The law rewards those who show up.  If a consumer does not participate in a foreclosure case at all, there is a pretty good bet that the lender is going to win by deficiency.

By engaging in the case, particularly with the aid of an experienced attorney, there be a variety of possible options depending on the goals of the consumer and the facts of their situation.  Some examples can include:

  • Loan Modification;
  • A settlement in the case to give the house up, in exchange for a waiver of the balance and a defined move-out timeline;
  • A plan to catch up the balance, sometimes through bankruptcy;
  • Getting the foreclosure case dismissed;
  • Or other options.

If you want to understand your options to defend the foreclosure if you are underwater, contact us today to speak with an experienced attorney.

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