Newspaper article Sarasota Herald Tribune

Foreclosures and Resulting Deficiencies

Newspaper article Sarasota Herald Tribune

Foreclosures and Resulting Deficiencies

Article excerpt

As a practicing real estate attorney and CPA, Jo Ann Koontz is an expert on short sales and foreclosures. After working at Icard Merrill for five years and heading the Sarasota branch of Yesner & Boss, a St. Petersburg-based law firm, she started her own firm, Koontz & Associates, in 2011. Correspondent Chris Angermann spoke with her in her office on Main Street.

Q:What is the state of foreclosures these days?

A:Before the "robo-signing" situation brought things to a screeching halt, I probably had five foreclosures a week in my office. Then, we had a year of virtually no filings. Now we're back up to three or so a week.

We also see homeowners associations being more aggressive. They have a lien interest for their association dues, and they have a right to file a motion to force the first lender to keep the process moving. I've had several cases where HOAs have filed motions to essentially force the banks to proceed with their foreclosures. So the folks that were thinking, "Oh, we'll wait to do a short sale because it will take two years for a foreclosure" should think again. Things aren't moving at blinding-fast speeds, but they are moving.

Q:Let's talk about deficiency judgments. What are they?

A:A deficiency is the difference between the full amount a lender is owed and the amount he gets from a foreclosure sale. A deficiency judgment holds the owner responsible for that difference. It's a separate issue from the foreclosure, and the lender has five years to pursue it. Once a judge confirms that you owe the bank X number of dollars, the judgment is valid for 10 years and can be re- recorded for another 10 years. That's why you hear people say that deficiency judgments are valid for 20 years.

Unfortunately, by the time the judgment is obtained, it's too late to move into asset protection. You need to be very cautious that you don't, for instance, take money out of your CD account and give it to your kids, sister or mom. You don't want to run afoul of the fraudulent transfers act, because then you can be deemed to be defrauding a creditor, which is a criminal offense. There is a reason why there is no DIY TV show for that. …

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