Deficiency Judgments Increasing in Number

According to this piece written by Kris Hundley in the St. Pete Times, lenders are becoming more and more likely to seek a deficiency judgment after a foreclosure. There has been some thought that lenders have been uninterested in pursuing deficiency judgments. "Two years ago, a waiver of the deficiency was normal course, but it's been eroding ever since," said Richard Zaretsky, a lawyer in West Palm Beach. "Banks came to the conclusion they were throwing away the opportunity to collect funds." Banks are more sophisticated than that, and knew from the inception of the foreclosure boom that they had plenty of time to commence efforts to obtain deficiencies. I am actually surprised that the number of deficiencies cited (270 in Lee County in 2010, a five-fold increase from 2008) is not much higher, as drastically falling real estate prices have led to many residences worth less than the debt against them, with second mortgages likely to be undersecured. Many second mortgagees find themselves without any value in the collateral at all. Wherever collateral is worth less than the balances of loans, judgments on deficiencies will remain the norm.