One of the most recent surveys conducted by Trulia and RealtyTrac indicates that over 40% of homeowners state they would consider abandoning their “underwater” home. The survey conducted in May is the 5th survey of consumer attitudes since 2008; although it is the first time that questions dealing with “underwater” mortgages were included.
Default Borrower Beware
While all states differ, under Florida Law, lenders have five years after the date of sale or auction of a property to file a deficiency judgment and up to 20 years to collect.
“It will be a dramatic problem because the borrowers will not know it’s coming,” said Frank Alexander, a law professor at Emory University in Atlanta
Real estate and legal analysts predict that lender suits against borrowers walking away will be more prevalent in the coming months as foreclosures continue to mount.
Why do I mention this ? Simply, because Florida has one of the highest increases in percentages of homes with negative equity.
If you find yourself in this position
You need to be aware of the potential pitfalls. Borrowers that find themselves in this position should work a release with their lender to avoid any “gotcha” down the road.
Additional information can be found here.
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Holy Cow! “under Florida Law, lenders have five years after the date of sale or auction of a property to file a deficiency judgment and up to 20 years to collect.” What a great blog post and good information. I did a little research for GA law, it looks it is allowed but the lender must file for a deficiency within thirty (30) days of the foreclosure sale or the claim for a deficiency is barred. I will have to keep looking into this.
Bryan,
Thank You. I do hope the information will be beneficial to someone that might find themselves in that position.
Wow, you’re right, as your previous post notes, you do need to think twice before you turn over the keys. Great post.
Tom,
Certainly something to think about given the length of time.