Florida has one of the highest foreclosure rates of the U.S. Which is why the Obama administration is granting Florida special programs to deal with the unprecedented (well, at least since the Great Depression) rates of foreclosure. However, one of the best ways to protect yourself from foreclosure is to understand the foreclosure process in your state and know how to play the system to your advantage. This does not mean doing anything illegal, just using the law to your advantage. Let us look at the basics of Florida Foreclosure law and learn what to do to avoid losing your home to one.

Florida has a Judicial Foreclosure system. This means all foreclosures go through court; however foreclosure claims are not tried with a jury.  When a lender files a foreclosure case the court assesses the claim and specifies how the foreclosure will take place. The lender is responsible for advertising the foreclosure sale on newspapers, posting notices on the property and telling the borrower foreclosure proceedings have started.

In Florida the home owner (that is the borrower) can redeem the property by covering late payments and any reasonable foreclosure costs incurred in the process right up to foreclosure sale. After the foreclosure sale the court reviews the sale to make sure there was no foul play and a reasonable price was paid. This step takes around ten days after which (if there are no problems) the sale is confirmed.

Lenders in Florida can ask the court for a deficiency judgment if the foreclosure sale does not cover the mortgage balance. Let us explain. Imagine you lose your job and can no longer pay your mortgage. Your lender forecloses your home, sells it, and gets $100,000 for it. Unfortunately for the lender (and for you) you still owed $150,000 on your mortgage. This means the borrower has just lost $50,000. The lender can file a deficiency judgment to the court to get you to pay the $50,000 difference. According to law the lender has up to a year to do this. However, there is nothing stopping the lender to passing on a deficiency judgment to a third-party. This happens when the loan has a Private Mortgage Insurance which covers the lender’s risk when you default on your mortgage. Nevertheless, the PMI insurance company can sue you for the difference (deficiency judgment).

What is the way out? Be aggressive when trying to avoid foreclosure. Don’t just lie back and wait for the “inevitable”. Although it is true not as many as hoped are receiving government financial help; there are programs you can use. Some of these programs like Home Affordable Foreclosure Alternative help borrowers short sale or offer a deed-in-lieu of foreclosure. Although both of these alternatives have their risks a short sale can be prepared so that the lender agrees to forgive any pending debt.

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