Sheriff's Sale in FL- ? for Professor

[englishharbours]

Hello Professor,

Our home is up for auction on 4/28. Our first and second mortgage was with Litton. We have tried loan mod, short sale, deed in lieu. Litton denied the modification request, we didn't make enough, short-sale a no go, and they denied the deed in lieu, as the second mortgage is with a different investor than the first mortgage.

I was able to get through to Litton today, and they advised me that at this point as there are no buyers, the sale will go through. When I tried to get Litton to tell me if there would be a deficiency judgement, he wouldn't answer directly, but did say that I could expect a 1099 for the difference even if the property were foreclosed. It was my understanding that in a foreclosure a 1099 is not issued, but a DJ may be expected...I am confused and would like to hear your opinion if possible. Thanks so much.

[The Professor]

I have said on a number of occasions that I hate Florida. The baseline discussion that needs to be had is why do some states provide substantial protection against post-foreclosure debt enforcement while others openly promote it under their laws.

My expectation is that you will face at least a lawsuit from the owner of the second loan, not based upon a deficiency judgment but based upon their loan after the foreclosure will be unsecured and you are not paying the debt in accordance with its terms. I believe that it would be in your best interests to talk to a bankruptcy attorney to better understand your options.

Daniel

[englishharbours]

I'm so sorry, I didn't mention that as per Litton's executive team, the second mortage, serviced by Litton but held by others, was written off. I wonder if they will still proceed with a possible suit....speaking with a BK attorney is definitely in our plans. Thank you.

[The Professor]

"Written off" does not equal "Won't sue."

Daniel