Foreclosure in Miami>Question Details

Gentry Lee, Other/Just Looking in Miami, FL

When the bank does buy back the home, what is the procedure following the purchase? What happens if there is money owed? and how long before you have

Asked by Gentry Lee, Miami, FL Mon Jul 19, 2010

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In many regions throughout the country, real estate law states that a licensed agent may represent either party in any transaction, and in some cases both parties or neither party. In addition, full disclosure of dual agency qualifies the agent for compensation on either side of the transaction...

...confused yet?

Countless closings have been adjourned by clients who were unaware of the compensation due to the real estate agents, simply because the agent didn't take the time to thoroughly explain the many types of agency at work in any real estate transaction. Call or email me and I'd be happy to explore the many ways in which I can assist you in your purchase.


Miguel Soria

Office: 305-251-2127
0 votes Thank Flag Link Mon Jul 19, 2010
Thank you for your question about the foreclosure procedure. The Foreclosure process starts when a homeowner cannot pay the mortgage and ends when the home is resold.

The three stages of Foreclosure are: Pre-Foreclosure, Auction, and REO/Bank Owned.

Pre-Foreclosure is the time period a homeowner has to repay the delinquent amount of the mortgage.

If a homeowner does not pay the mortgage the home is auctioned.

If the bids do not meet the reserve the lien holder (bank) reclaims the property and it becomes a Bank Owned REO.

The home owner move out is usually negotiated with them by the bank or lien holder.
0 votes Thank Flag Link Mon Jul 19, 2010
Normally what happens is this.

First, the mortgage holder files paperwork with the court in an attempt to recover the value of what they are owed. If that does not happen, it will be called to the bench and the judge will issue a judgement for what is owed plus court cost and the cost of the bank to recover the value. If the homeowner does not come up with that amount of money, the court will order the house to auction to recover the value.

In an auction, anyone can bid on it but typically, the first bid is the amount of money that is owed in the judgement. If no one overbids that amount (and in this economy, no one does) the house reverts to the bank. Once that happens, the owner has a "redemption period," typically 60 days to satisfy the judgement. If that does not happen, the bank can then put the property up for sale. They will either assign it to a broker or list it through their own REO Dept. and it will be offered for sale just like any other property.

When the bank sells it, if the sale price is less than the amount of the original judgement, the bank can then go back to court to try to recover the difference and ask the judge to issue a "difficiency judgement." If that is granted, the owner will carry that liability for 20 years. The bank has the right to place leins on the owner's property and wages to recover the money. The banks, to this point, have not be very aggresive in pursueing defficiency judgements but the mechanism is there.

In a short sale, any difference between what the owner owes and what the house sells for, is considered income by the IRS and will be reflected on a 1099 Misc. Income form and will be taxed as income. There is a mechanism to ask the IRS to forgive the tax, sometimes they do, sometimes they don't.

This is a really difficult situation and one of the reasons our economy is in such a tough position

If you are in this position, it is best to consult a good real estate attorney. He might be able to make a better deal for you.

If I can help you, please let me know.
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0 votes Thank Flag Link Mon Jul 19, 2010
Hello Gentry,
Before the bank foreclosure on the property, there is a judgment sale date in the process if the property does not sale, the bank acquire the property via Certificate of Sale/Title, the bank may go after the borrower's to collect the unpaid balance plus foreclosure costs by issuing a deficiency judgment with the county court or something they sale the unpaid balance to a collection agency which goes after the borrowers for collection.
SHORT SALE is a good way to avoid all this most of the times the bank satisfy the mortgage and report to the IRS the looses to them (bank) and credit to you, which then you need to see with your accountant to write-off that.
Personally all short sale that I have done for the borrower's the bank always satisfy the mortgage and report to the IRS the looses to them (bank) and credit the borrower's
Seek attorneys advise if you need too.
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0 votes Thank Flag Link Mon Jul 19, 2010
Its called an "Deficiency Judgement". Ideally, the homeowner will short sell instead of allowing a foreclosure. However, if a homeowner allows a foreclosure to take place, the money owed is called a "deficiency" A bank can seek a court judgement for the diffidence and pressure a seller for repayment., even force them into bankruptcy. If a homeowner does not plan on owning a home for at least 7 years, then this situation can be dealt with. In my opinion, that is a very shortsighted approach however.
0 votes Thank Flag Link Mon Jul 19, 2010
Hi Gentry,

In Florida we are a "deficiency judgement" state so the lender can come after you for their total loss including court costs, legal fees, late fees, etc. Some lenders will sell it to a collection agency.

If it's not too late, call a Realtor asap to try to get a short sale done.

All the best,
0 votes Thank Flag Link Mon Jul 19, 2010
If you have been foreclosed, the bank will sell the property for whatever the market will pay. You are responsible for the unpaid mortgage balance plus whatever costs they incurred to do the foreclosure. The bank has (I think) 5 years to collect those moneys from you. I have not heard of a bank suing to collect, but this is still pretty new, and even given the start of this back in 2007, there's still time. If you are in foreclosure, you are far better to do a short sale, as the house generally sells for more than at foreclosure, plus a good negotiator can often get the bank to forgive the balance on the note.
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0 votes Thank Flag Link Mon Jul 19, 2010
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