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Former Owners of Miami Bank Owned Homes Advised to Cut Deals

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By : John Cutts    99 or more times read
Former owners of Miami bank owned homes are advised to cut deals with their lenders about deficiency judgments so they can live in peace and not worry constantly in the years to come about being pursued for huge debts.

A Miami homeowner in extreme financial difficulty negotiated with his lender American Home Mortgage Servicing last fall to sell his mortgaged house for about $170,000 less than his outstanding balance. With proofs of his difficulties, he was able to get an agreement from American Home that it will not pursue him for the deficiency.

In Florida, banks have 5 years from the date of short sale or foreclosure home list sale to file a deficiency case and get a deficiency judgment. They are also given 20 years to make their collection and are given the ability to make claims on the assets of borrowers, such as wages.

Before the foreclosure crisis, few banks filed deficiency cases to collect from former owners of Miami bank owned homes, as the deficiencies then were not much and it did not make financial sense for banks to spend legal fees just to collect a few thousand dollars.

But now that more people are strategically defaulting and voluntarily putting their homes into bank foreclosure lists despite having other sources of income, banks are now taking notice. Lenders are now starting to warn homeowners they will be liable for vandalizing their distressed homes or for deliberately stopping payments on their home loans despite having the resources to pay.

In the first four months of this year, the number of bank owned homes in Florida reached a total of 31,309 units, accounting for 15.5 percent of the 201,924 foreclosure actions total filed during the period. Based on foreclosures by state in April, Florida ranked fourth, up from third in March.

With still high numbers of Miami bank owned homes, it is expected that banks are looking into ways to cut down their losses, including running after deficiencies.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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