What is a Deficiency Balance Waiver?

What is a Deficiency Balance Waiver?

Is your home going into foreclosure? You are not alone. According to Statista, in 2020, 1.16% of housing units went into foreclosure. Our Florida foreclosure defense lawyers can help you if you trying to short-sale your home. We handle deficiency balance waiver negotiations for people who need a lawyer to help them with this process of foreclosure. Please keep on reading to learn more about how we can help you.

Do I Need a Lawyer?

If you need help making an agreement with the bank saying that they are not going to try to collect the balance that you owe on your home, then you likely need a lawyer to help you negotiate a deficiency balance waiver.

A deficiency exists when there is money that you still owe to your mortgage lender after your house is sold. A short sale is when you still the home for less than what you owe on it. That is where the deficiency exists. This is almost always the case when you are in foreclosure. Most people have a deficiency when they have to sell their homes. The concern here is regarding the amount of money that is the difference between the price that the house sold and the amount that is owed on the house.

In some cases, your mortgage lender can agree to waive this deficiency. However, this is not something that happens every time there is a deficiency.

Will I Have to Pay This Deficiency?

Just because you short sale, does not mean that you are going to automatically not owe the balance. This is why you need a foreclosure lawyer to help you with your deficiency balance waiver. If you do not obtain this waiver, then your lender can and will try to collect this deficiency from you. In order to protect yourself, you need to obtain a waiver, which we can help you with.

Some mortgage lenders will put it in writing that they are not going to collect deficiencies if they do not have any intention of collecting them. Sometimes they will do this unprovoked to avoid you taking legal action against them. If this is a contested foreclosure, then your mortgage lender is going to be looking for a deficiency balance waiver. With this waiver, they can avoid a legal battle that they do not want to be in.

Are There Consequences?

There are some people who will go through this process and then never have to think about that debt again. However, things have changed since the Mortgage Forgiveness Debt Relief Act of 2007. You might have to show this balance of deficiency that was waived as a source of income on your taxes.

Without a deficiency balance waiver, your debtor can pursue the money from you. Or, if the mortgage lender does not pursue your debt, they could send you a tax form to claim on your income taxes.

Call Our Florida Foreclosure Defense Lawyers

If you need help with your foreclosure and you want help negotiating with the mortgage lender for a deficiency balance waiver, please give us a call right away. We want to help you during this often-unsettling time. Call us to set up a free consultation today.


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