We are beginning to have people come into our law office here in Houston, with large judgments against them for deficiencies remaining after foreclosure sales. We had two in one week. One of them was from Florida, which I understand.

In many states including Florida, foreclosures must be conducted "judicially" or through a court. So you have to first be sued, a judgment taken against you for the full amount of the debt, then they sell the house, and apply the proceeds of sale to the judgment balance. You still owe the rest, plus all the associated attorney fees and costs.

After the mortgage crisis, one gentleman came in and had a judgment of almost $200,000 against him. I don't think this will be uncommon, since Florida in particular was hit so hard.

It's different in Texas, we have "non-judicial" foreclosures, at least where there is a "purchase money" mortgage that is being foreclosed upon. It's much quicker and cheaper to use "non-judicial" foreclosure than suing the defaulting homeowner. In Texas, you can be foreclosed upon in as little as 21 days (plus a 20 day notice of acceleration period if the property is your principle residence).

It's still possible to have a deficiency after a Texas foreclosure, but it is not as common. Also, under Texas law a creditor only has two years to sue for a foreclosure deficiency, and there are other consumer protections. So that limits the number of them that bring suit. Texas Property Code, Sec. 51.003.

Home equity loans and home equity lines of credit here in Texas must get a court order prior to foreclosing on you, but those kinds of loans in Texas are "non-recourse" which means that you can't be sued for a deficiency following a foreclosure.

If you are facing a foreclosure, if you've already had a foreclosure and are being sued for a deficiency, or even if you already have a deficiency judgment against you, and you live in the Houston, Texas area or surrounding counties call our office at 713-772-8037 and make an appointment with one of our attorneys to discuss what can be done in your situation.

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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