What is a deficiency judgment?

A deficiency judgment is a type of legal decision made by a court in Florida that allows property owners to seek money from former homeowners for any mortgage balance left unpaid after a foreclosure process. This judgment can allow lenders to sue the former homeowner to recover the deficiency amount from the sale of the property. The amount of money sought in the deficiency judgment is calculated by subtracting the amount that was paid for the property at the foreclosure sale from the total amount of the mortgage due. In Florida, lenders can make a deficiency judgment if they choose to, but they must file a lawsuit in court and prove to the judge that the former homeowner had the ability to pay the remaining balance but chose not to. The former homeowner has the right to respond to the lawsuit and contest the claim. If the court finds that the former homeowner did not have the means to settle the mortgage balance, the deficiency judgment will be denied. Some states, like Florida, put a limit on how much the lender can sue for in a deficiency judgment. The lender can only get the difference between the loan balance and the fair market value of the property. This means that the lender cannot sue for more than the amount that was unpaid on the mortgage, even if the amount claimed in the deficiency judgment is more than what the homeowner owes.

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