Frequently Asked Questions

What does foreclosure mean?

Black’s Law Dictionary, Seventh Edition, defines foreclosure as a legal proceeding to terminate a mortgagor’s interest in property, instituted by the lender (the mortgagee) either to gain title or to force a sale in order to satisfy the unpaid debt secured by the property. Under Florida law, a foreclosure suit is a lawsuit that is both legal and equitable in nature. A foreclosure suit is legal in that it is similar to a breach of contract case where the lender seeks to determine the amount of damages under a breached promissory note and mortgage contract. This is where a defendant can raise issues like the amount of debt should be reduced by alternate sources of recovery – like mortgage insurance and credit default swaps. Additionally, we often see cases where the lender has encouraged or instructed the borrower to stop making payments in order to qualify for loan modification or other foreclosure alternative. A foreclosure suit is equitable because a judge will eventually determine if the lender is entitled to foreclose on your unique real property to satisfy all or a portion of the debt.

In layman’s terms, a Florida foreclosure suit seeks to fix the amount of the debt, to the penny, then to sell the property to pay all or a portion of the debt.

What is a foreclosure suit?

A foreclosure suit is a real lawsuit.

A foreclosure suit begins when the lender files a lawsuit in the county in which the property is located.  The time to respond to a foreclosure suit begins when you are served with a summons and a copy of the complaint.  However, if the lender is unable to find you to serve you with a summons and a copy of the complaint, the lender’s attorney, after diligence search, may publish a notice of the suit in a local newspaper.

If you do not file a response to the suit within the time provided in the summons, [at least 20-days in Florida] the lender’s attorney may ask for a default.  Once a default is entered, it can be very difficult to challenge the suit.

What is foreclosure defense?

In Florida, foreclosure defense is simply defending a foreclosure lawsuit. In large part, foreclosure defense is making sure that the lender follows the law, that the borrower gets credit for any offsets they may be entitled to, and, under the facts of each case, whether the lender is entitled to foreclose at all. Offsets may include amounts that the lender will or has recovered from other sources, or may include amounts/damages that the lender caused itself to suffer by failing to mitigate its alleged damages or by instructing you to stop making your payments in order to qualify for loan modification or other foreclosure alternative. Defending a foreclosure suit will provide an opportunity to defend your rights and gain legal leverage towards achieving your litigation goals.

More specifically, there are typically two responses to a foreclosure complaint. The first, if applicable, is a motion to dismiss, which is filed if the lender has not met the legal standards for a properly-drawn complaint. We have seen cases where filing and prosecuting a motion to

dismiss has gained sufficient leverage to achieve our client’s litigation goals. If, or when, the lender meets the minimum legal standards for a valid complaint (as determined by the judge), then an Answer and Affirmative Defenses to the specific allegations of the foreclosure complaint should be filed. An Answer simply states whether the defendant admits, denies or is without knowledge concerning the allegations of the complaint. An Affirmative Defense is one that admits the cause of action asserted, but avoids all or a portion of the liability by alleging excuse, justification or other matter negating liability. Trawick’s, 2006 Edition.In other words, an affirmative defense may admit that you otherwise owe ”XYZ amount” under a promissory note, but that such amount must be reduced by the amount of damages the lender caused itself to suffer by taking ABC actions like instructing you not to pay in order to qualify for a modification. An affirmative defense puts the other side on notice of what the party intends to prove at trial. Walker v. Walker, 254 So.2d 832 (Fla. 1 DCA 1971).

Cases are often won or lost based on the affirmative defenses, procedural issues, or the lender’s failure to adequately respond to discovery.. Well-structured affirmative defenses also set up the discovery, or the scope of discovery that may be conducted. Good foreclosure defense often involves in-depth discovery, including interrogatories (questions the lender must answer under oath), requests for production of documents, requests for admissions, or depositions (questions that must be answered under oath before a court reporter). A large portion of our cases are resolved as a result of a favorable ruling regarding a discovery matter.

There are many strategies and sub-strategies involved with defending a foreclosure suit – too many to list here. However, suffice it to say that foreclosure defense is best undertaken with a lawyer knowledgeable and experienced in this area of the law.

What are defenses to a foreclosure suit?

Lender Breached First

"[H]ad the Plaintiff not failed and refused to accept the Defendant’s payments, the Plaintiff would not have any damages.  Stated another way, but for the Plaintiff’s failure to accept the Defendant’s payments prior to acceleration of the loan, the Plaintiff would not have any damages." - Excerpt from Ben's Affirmative Defenses

Unclean Hands

"The clean hands doctrine states that Plaintiff cannot seek equitable relief where Plaintiff has violated an equitable principle such a good faith.  Black’s Law Dictionary, 7th Ed. 1999.  Stated another way, you must do equity to be entitled to equitable relief.  Price v. Horton, 83 So. 670 (Fla. 1920); Cross v. FNMA, 359 So.2d 464 (Fla. 4th DCA 1978); Family Bank v. Able Realty of America Corp., 702 So.2d 1322 (Fla. 4th DCA 1997).  Good faith is further defined as (1) honesty, (2) faithfulness to one’s duty or obligation, (3) observing reasonable commercial standards of fair dealing, or (4) absence of intent to defraud or absence of intent to seek unconscionable advantage.  Black’s Law Dictionary, 7th Ed. 1999.  “Bad faith may be overt, or may consist of inaction”.  Restatement (Second) of Contracts §205(d) (1981).  Further examples of bad faith are “evasion of the spirit of the bargain” … “abuse of a power to specify terms” … and “interference with or failure to cooperate in the other party’s performance”.  Restatement (Second) of Contracts §205(d) (1981)." - - Excerpt from Ben's Affirmative Defenses


"Where the Plaintiff instructed the Defendant to cease making payments, the Plaintiff’s actual damages must be limited to the difference between the net present value of the regular payments, and the net present value of the payments that the Plaintiff would have received had the Plaintiff modified the loan to market terms." - Excerpt from Ben's Affirmative Defenses

See more defenses to foreclosure suits by here: Defenses to Foreclosure

How do I know if I have been "served" with a foreclosure suit?

Generally, you are “served” when you or someone who lives under your roof who is 15-years-old or older is handed the lawsuit (with a Lis Pendens) by a process server. While there are other means of service, this is the most common and all questions concerning service of process should be addressed with your lawyer.

What is a lis pendens?

A lis pendens is a notice that is filed in the official / public records of the county in which the property is located.  The lis pendens puts everyone on notice that a lawsuit has been filed that somehow concerns a particular piece of property.

Lis Pendens is Latin for “suit pending”. It is usually located at or near the top of the stack of documents one is served with as part of the foreclosure complaint package of documents. In laymen’s terms, if you’ve been served with a lis pendens, this means that your lender has initiated the foreclosure suit process with the court. The summons should state whether you have 20 or 30 days to file a response to the lawsuit with the clerk of court or risk being defaulted. Filing a timely response is critical. Not responding likely forfeits your right to challenege the lender’s conduct, or to raise potential offsets to the amounts alleged to be owed. Following a default, you risk not being notified of the continued proceedings and risk deficiency judgment; being held responsible for the balance of the loan not covered by the foreclosure sale proceeds.

How can I tell if my house is in foreclosure?

The first indication that a foreclosure suit has been filed is that your mailbox fills up with lawyer advertisements. While I say this partly in jest, many of our clients report receiving 20+ advertisements from lawyers seeking to defend a foreclosure suit that has been filed. All kidding aside, one also knows that a foreclosure suit has been initiated when they get served with the summons / foreclosure complaint. You can also determine whether or not the lender has filed a lawsuit by searching the court records in the county in which the property is located. We recommend speaking with a number of lawyers to determine which lawyer can best handle your case.

Do I need a lawyer to represent me in a foreclosure suit?

Yes!  Even if you are a Florida lawyer, you still, likely need a lawyer.  A lawyer that represents himself has a fool for a client.

What is the foreclosure process and timeline in Florida?

A foreclosure suit could take as little as three months in Florida if no defendant contests the suit.  However, an uncontested foreclosure suit, due in part to the volume of such suits clogging Florida’s courthouses, typically takes five (5) months.  If any of the defendants file responses and contest the foreclosure suit, it could take significantly longer.

A foreclosure suit, just like any other civil lawsuit, follows the rules of civil procedure. It begins with the filing of a complaint, lis pendens, and the issuances of a summons. After the complaint and summons is served on the defendant(s), the defendant(s) has/have 20-days to respond to the complaint. If the defendant(s) fail(s) to timely respond to the complaint, they could be defaulted. The effect of a default is that the party admits all well-pled allegations – essentially, the party gives up the right to challenge the lawsuit. Following a default, the lender is typically in complete control of the pace and outcome of the lawsuit.

Assuming there is no default, next comes the discovery period, which could last for years or could be waived if the parties do not seek to engage in discovery. Following discovery, the lender frequently seeks summary judgment or trial.

How long will it take to resolve a foreclosure suit?

The short answer is: it depends. Foreclosure resolution can take anywhere from 6 months to 5 years depending on your decision to hire a good attorney to defend the lawsuit, the strategy and defenses employed, and a host of other factors. On average, our office has historically seen the process take 1.5 to 3 years from the time the lawsuit is filed to the time it is resolved. While defending a lawsuit solely to get additional time is not a legitimate litigation goal, it is a natural side effect of litigating to achieve your desired resolution of the foreclosure lawsuit.

The time it takes to foreclose could also be greatly impacted by the lender’s willingness to resolve the matter. If the Lender agrees to modify the loan or agrees early-on to refrain from pursuing a deficiency, then a case may only last six or eight months. However, under current market conditions, the lenders don’t seem to be in any hurry to foreclose.

What are the alternatives to foreclosure?

A few of the alternatives to foreclosure are reinstatement, loan modification, short sale and deed-in-lieu of foreclosure. It may be more appropriate to say resolutions to a delinquent loan instead of alternatives to foreclosure. A reinstatement, loan modification, short sale or deed-in-lieu can occur during the course of a foreclosure suit. A foreclosure suit, or really, defending a foreclosure suit, can help you gain leverage to achieve a foreclosure alternative. One cannot look at foreclosure as being mutually exclusive with other ways to resolve a delinquent loan. Additionally, if the goal is to avoid a deficiency, then an agreed final judgment of foreclosure in exchange for deficiency waiver may be a great resolution.

Upside down in a residential investment property? No Equity?

This is a condition were you owe the lender more than what your property is currently worth.  Your position IS negotiable.

Do I need to be delinquent for the lender to work with me?

The short answer is yes.

However, some lenders do work with borrowers who are not delinquent.

Additionally, some government-sponsored programs require borrowers to be current on their payments.

It is also important to understand the implications of failing to make payments under a promissory note.  Failing to make payments is breaching a contract to make such payments.  It will likely have significant negative consequences to a borrower’s credit rating.

How do I stop a foreclosure in Florida?

The only way to stop or to slow a foreclosure suit in Florida is to aggressively defend the lawsuit. More specifically, a foreclosure suit does not “stop” or “end” until the lender dismisses the lawsuit, a judge dismisses the lawsuit, or the suit is concluded by the rendering of a final judgment, and the time for appeal has elapsed and the property sold at a foreclosure sale. In other words, a foreclosure suit ends when the parties reach an agreement resolving the case, or the matter is won or lost. In short, if you are asking the question, “How do I stop a foreclosure lawsuit in Florida?”, the best answer is to go see a good foreclosure defense attorney, and together you should develop some realistic litigation goals. You should develop several layers of strategy and some backup plans.

Does bankruptcy stop foreclosure?

The short answer is that bankruptcy merely delays a foreclosure. However, bankruptcy may be a good resolution depending on the type of bankruptcy filed and whether you are attempting to keep the property or abandon the property.

If bankruptcy is a viable option, then it boils down to the timing.. If bankruptcy is inevitable, it may be better to defend the foreclosure suit or wait out the foreclosure suit prior to filing bankruptcy. Your exemptions [the amount of assets you get to keep] are much greater if you don’t own a home at the time of filing for bankruptcy.

If however, being upside-down in a piece of real estate is the only major financial issue, then it is typically better to try to get out from under the upside property through short sale, or other foreclosure defense-driven resolution. One drawback to doing a short sale is that the lender requires disclosure of your assets and income. While the lender does not need to know how much money you have or how much money you make in order to determine if the price offered by a potential purchaser is a good price, the lender asks such information in order to determine if you are the type of person they would chase for a deficiency. Many of our clients do not wish to make such a financial disclosure to the lender and cannot risk filing bankruptcy because they would lose the bulk of their non-retirement assets by filing bankruptcy. Our office does not do bankruptcy and generally assists those persons who are not good candidates for bankruptcy – people who have assets, or assets and income. However, we know good bankruptcy lawyers that we could recommend upon request.

Does a short sale stop foreclosure?

In general, a pending short sale will not stop the progress of an ongoing foreclosure lawsuit. However, the lender may hold off filing a foreclosure lawsuit or hold off on a pending foreclosure sale after a final judgment is entered while the lender evaluates a promising short sale purchase and sale contract. We see many people say, “I can ignore the foreclosure suit because I am doing a short sale.” This is unwise. By ignoring a lawsuit, you will likely lose whatever rights you had and lose legal leverage. The entire goal of a short sale is to sell the property and get out from under the property without having to pay a deficiency balance. Short sales frequently fall through and the cost of hiring a lawyer is often quite small relative to the amount that the alleged debt exceeds the property’s present value. Additionally, sometimes the lender will ask you to bring cash to closing to help offset the lender’s alleged losses. With an aggressive defense, the lender’s attorneys are much more likely to recommend closing without the borrower bringing cash to the table.

What are my rights during foreclosure?

On a practical level, the house or property is yours until the lender actually sells the property at a foreclosure sale and the court clerk enters the certificate of title – assuming no appeal is taken. Many people move out shortly after they stop making payments or upon being served with the lawsuit. In reality, banks or lenders would prefer that houses remain occupied because that makes it more likely that some level of minimum maintenance and upkeep is being undertaken.

As for legal rights, a foreclosure suit is just like any other lawsuit. You are entitled to defend the suit in court. Just like any other lawsuit, the Florida Rules of Civil Procedure provide legal criteria that a lender must follow in order to foreclose on your property. The Rules of Civil Procedure, combined with a good strategy, can result in significant legal leverage. The Rules of Civil Procedure permit you to conduct discovery into the lender’s evidence and possible offsets or reductions to the lender’s alleged damages. Offsets may include amounts that the lender will or has recovered from other sources, or may include amounts damages that the lender caused itself to suffer by failing to mitigate its damages or by instructing you to stop making your payments in order to qualify for loan modification or other foreclosure alternative.

Your rights in a foreclosure suit also depend upon the lender’s documentation, the actions that the lender took prior to and after filing the lawsuit, and other factors. Each case is different. Speaking to a good attorney is critical.

Under most circumstances, defending a foreclosure lawsuit is a no-brainer. The benefits far outweigh the costs – especially where the typical foreclosure suit is over hundreds of thousands of dollars and defending the suit frequently results in leverage and time.

How will foreclosure affect my credit?

Most of the damage to a borrower’s credit is done when the foreclosure suit is filed, however, if the suit is resolved prior to a foreclosure sale, the damage to ones credit is diminished.  Credit repair could also be a negotiation point in a resolution with a lender.

The credit impact of foreclosure is twofold. First is the impact to your credit score itself. The bulk of the credit score damage is likely done prior to the filing of a foreclosure suit. The score number is driven largely by the number of months the loan is delinquent – and the largest credit score declines are rendered in the beginning. In other words, missing that first mortgage payment is likely the biggest hit to the score number itself. For example, missing the first payment may be a 50 or 100 point hit to your credit score. Missing the second mortgage payment may be an additional 40 to 70 point hit to the credit score, then a 30 to 40 point hit for the third missed payment and by the time a lawsuit is filed possibly 5 or 6 months have gone by and your score is very low. These are just estimates – each person’s credit situation is different. The point is that the bulk of the credit damage, score-wise, is done immediately following a default. The lesson here is to take care of any credit needs prior to missing that first payment.

The Second credit impact of a foreclosure is the number of years it will take following the resolution of a foreclosure suit for a lender to be willing to give you a loan on another property. The amount of time can vary significantly from the lender to lender. Some lenders may not lend until five (5) years have elapsed from the date of the foreclosure sale or the resolution of the foreclosure case. Other lenders may be willing to make a loan a year following the resolution of a foreclosure suit where the foreclosing lender agreed to refrain from pursuing a deficiency. Keep in mind that unless the lender specifically agrees not to pursue a deficiency, the lender could chase you for a deficiency in Florida up to 1-year from the foreclosure sale date.

Another consideration is the manner in which a delinquent loan or foreclosure suit was resolved and whether the lender agreed to refrain from pursuing a deficiency as part of that resolution. A lender may say that it will lend to someone 2-years following a short sale, and 3-years following a final judgment of foreclosure if the lender agreed to refrain from pursuing a deficiency as part of the resolution of the loan. Therefore, the manner in which a delinquent loan is resolved bears a significant impact on future credit worthiness concerning getting another home loan.

While every lender develops its own lending standards, many lenders follow Fannie Mae or Freddie Mac guidelines because they want to have the opportunity to sell the loan to Fannie Mae or Freddie Mac. As lending standards change frequently, it is best to consult with a mortgage broker concerning present standards and whether lending standards are stable, or are changing towards being more or less stringent.

The bottom line is that you should assume that your credit will suffer significantly upon missing that first payment and you should take care of any credit needs that you have prior to defaulting. You should assume that your credit will be a casualty of getting out from under an upside-down loan or a modification attempt.

Will I be able to get a loan after foreclosure?

See: How will foreclosure affect my credit – The Second credit impact (Above).

What is a loan deficiency?

A loan deficiency or deficiency is the amount by which the loan amount exceeds the value of the property.

What is a deficiency judgment?

A deficiency judgment is what a lender may seek following a foreclosure sale where the property is sold for less than the amount of debt owed on the property.

For example, where a lender is owed $300,000.00 on a piece of property, forecloses on that property and sells the property for $200,000.00, the lender may seek a money judgment in the amount of $100,000.00.

Once a lender has a money judgment, they could garnish wages, garnish bank accounts, or attach assets to satisfy the judgment.

In Florida, a judgment could remain on record and in your credit report  for up to 20-years, or longer.

A deficiency judgment could also by sought years after a short sale has been completed.

Many people mistakenly believe that a lender’s agreement to accept the proceeds from a short sale, lets the borrower off the hook for any the deficiency.

However, this is typically not the case.  Most lenders do not waive their right to purse a deficiency or later suit on the promissory note itself.

In fact, when a lender asks for updated personal financial information in order to determine whether or not to approve a short sale, such a request by the lender is merely a fishing expedition to gauge whether or not to pursue a deficiency judgment.

In this market, many of the institutional lenders are simply selling the opportunities to pursue deficiency judgments to collection companies.  When a lender sells the opportunity to pursue a deficiency judgment to a third party, such a third party purchaser will likely pay the lender much more for the opportunity to collect on a deficiency judgment where the lender also provides a recent financial statement from the hapless borrower.  IN SUCH MATTERS, OBVIOUSLY, IT IS IMPORTANT TO HAVE AN ATTORNEY.

Want to avoid a deficiency judgment?

After the foreclosure has taken place, the borrower has very little leverage to prevent a deficiency judgment.

The time to try to avoid a deficiency judgment, is prior to and during the foreclosure case.

A foreclosure suit is a real lawsuit.  You need a real estate attorney, preferably an attorney with both real estate and banking experience.

Many borrowers are misinformed and make the mistake of not responding to the foreclosure suit after being served.

You must respond.  A well-planned response may provide the leverage you need to avoid a deficiency judgment.  Again, it is important to have an experienced attorney on your side.

What is a 1099?

A 1099 is an Internal Revenue Service (“IRS”) form number concerning debt forgiveness.

As a general rule, in the eyes of the IRS, debt forgiveness equals income. Therefore, if the lender does in fact agree to refrain from pursuing a deficiency judgment on a loan secured by something other than a borrower’s primary residence, whatever amount the lender forgives will likely be counted as income.

For example, where a lender forgives $100,000.00 in debt, the borrower would owe taxes on the additional $100,000 in income.

Does the lender have to issue a 1099?

Yes, but with a key exception.  A 1099 is not required to be issued concerning the settlement of a disputed debt. Consult an experienced attorney.

Short Sale
What is a short sale?

A short sale is a sale of the property that collateralizes a debt that is sold for less than the amount of the debt with the approval of the lender or bank.

Such approval is often conditional.

The lender or bank often responds to the proposed short sale with an approval letter.

The approval letter is often imprecise and typically leaves the door wide open for the lender to later seek a deficiency judgment or sue based on the promissory note.


Loan Modification
What is a loan modification or loan mod?

A loan modification is where the lender or bank agrees to modify the terms of a promissory note.

A lender or bank may modify a loan by reducing the interest rate, increasing the term of the loan, reducing the principal balance, or a combination thereof.

Read more about loan modifications here.

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