Thursday, September 19, 2013
7 News Investigations: Hitting Home Again
If you lost your house or condo in foreclosure over the past few years, hopefully you are getting back on your feet, but if so, watch out. South Floridians are getting knocked down again as the lenders come after them again. They are looking for money, lots of it, as Patrick Fraser explains in his special report, "Hitting Home Again."
Benz Celestin: "Hell! One word, just one word to describe it. I'm sure that it happens to millions, millions of Americans, and it's still happening right now."
And in some cases, what's happening now is even worse.
Benz Celestin: "They still can come after you for the remaining balance."
Benz's nightmare began when the economy went in the tank. He and his wife could no longer afford their dream home, and in 2011 lost it in foreclosure.
Benz Celestin: "It was beautiful, it was beautiful. We had fun memories down there."
But they worked hard, financially got back on their feet, and bought a smaller home. Then two years later, with the future bright, this letter came in the mail.
Benz Celestin: "Stating they would go after me for $77,000, if I'm not mistaken, $77,000 and more."
It's called a deficiency judgment. In other words, let's say your owed the bank $200,000 when they foreclosed on your home. If the bank got $150,000 for the property when they sold it, you owe the difference, $50,000, called the deficiency.
Pablo Lopez: "Oh, it's horrible. Kids around, have family, and they are knocking on your door at any time of the night. Bad feeling."
Pablo Lopez and his wife lost their townhouse in foreclosure. After getting back on their feet, they got the letter demanding the deficiency judgment.
Pablo Lopez: "We just couldn't afford to pay back everything that the bank said we owed. We were just upside down on everything."
Pablo went to David Langley, a bankruptcy expert, to help him fight the deficiency judgment. Langley says he is seeing more and more people get the letters from the banks and collection agencies.
David W. Langley: "Things have changed. The banks will pursue deficiencies. If they do not want to spend the time and money to pursue a deficiency, they can sell the claim to a collection company."
We are starting to hear from more and more people who are getting hit with deficiency letters. The bottom line: If you lost a house or condo in foreclosure before July of this year, watch out. The lenders have five years to come after you, but they don't come after everyone. They pick and chose.
David W. Langley: "If they see good earning capacity, they see other assets of the real estate, they are more likely to pursue you. If you're a widow on Social Security, very unlikely you'll ever hear from anyone."
Benz Celestin: "Gut-wrenching, gut-wrenching, $77,000 for a small business person like me. I've been working for myself as a self-employed individual."
Benz's letter demanding $77,000 came from a Fort Lauderdale collection agency. Langley estimates they may have paid the bank $1,000 or $2,000 for it. His suggestion when you the receive letter is to try to make an offer.
David W. Langley: "[They] might be willing to settle for five or 10 percent, so that's an option I suggest people try."
Pablo wasn't able to do that, and so he turned to bankruptcy to wipe out the deficiency.
David W. Langley: "And a Chapter 7 bankruptcy claim will eliminate any deficiency claims."
There are complications with a bankruptcy to wipe out a deficiency. That's why Benz would love to be able to settle with the collection company, to eliminate the latest nightmare that many South Floridians may soon be facing, from his old foreclosure.
David W. Langley: "It's pretty tough, it's pretty tough for me to go through this again, or for any other family, for that matter, to go through this again. You already lost your property."
Benz didn't expect to get hit years after the foreclosure. Pablo didn't expect it, and right now there are thousands of South Floridians who don't expect it but soon may get hit.
Patrick Fraser, 7News.