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If you default on the note, the lender has the right to foreclose on the property. If this occurs, the lender will sell the property at public auction to the highest bidder. If there is a deficiency in the amount due from you and the amount collected, the lender can seek a deficiency judgment.
In Florida, a foreclosure does not automatically result in a deficient judgment. The mortgage lender has to file a motion for a deficiency after the foreclosure sale, and the court holds a separate hearing on the lender's request for deficiency liability.
The mortgage lender has to show the court evidence that the property's value was less than the note balance. The borrower has the opportunity to present his own evidence that the property value was equal to or exceeded property value. If the property was worth more than note balance on sale date the court will not give the mortgage lender a deficiency judgment against the borrower. During the real estate boom deficiency judgments were uncommon because increasing real estate values brought home values above note balances of defaulting mortgages. In the current real estate recession, we may see more lenders pursue deficiency judgments against borrowers who they believe are collectible.
If the lender can justify that a deficiency is appropriate, the lender can garnish you for the difference.
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