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Lenders in Florida and around the country may be taking homeowners to court over foreclosures that occurred years ago. It is stories like the one of a 42-year-old Salvadoran immigrant homeowner that lost his home that he had made a $15,000 down payment on and a year of payments towards during the recession in 2008 that are becoming more common. After being foreclosed on, he believed that everything was clear. However, this was not so. He has now learned that he still owes $115,000 even after the foreclosure, an amount that is still accruing interest.

Many former homeowners are finding themselves being taken to court by lenders who are hoping to recoup the costs of the homes that they foreclosed upon. These lenders are using debt collectors and attorneys to pursue the homeowners for leftover debt, legal fees and interest charges. Many former homeowners were not aware that they would be held responsible for the deficiency balance of their homes. A deficiency balance occurs when the bank sells the foreclosed home at less than the price that the homeowners originally purchased the home at.

Lenders are defending their choices by saying that they are targeting former homeowners who did have the ability to pay their loans but decided not to for reasons other than financial inability. These are called strategic defaulters. They are also saying that they are attempting to discourage homeowners from defaulting on their loans in the future. However, deficiency balances can be overwhelming to many homeowners. In the case of the 42-year-old immigrant, he was forced to declare bankruptcy.

In Florida, the statute of limitations on deficiency judgments is five years. This means that lenders have five years to file a judgment against someone who owes a deficiency balance on a foreclosed property. Those who have been foreclosed upon and are worried that they may be held accountable for a deficiency balance may want to consult with a foreclosure attorney about their options.

Source: Washington Post, “Lenders seek court actions against homeowners years after foreclosure“, Kimbriell Kelly, June 15, 2013