Florida asset protection lawyer Jonthan Alper reports that more second-note holders are skipping the foreclosure process and going straight to court on the promissory note itself.
A colleague of Alper’s says, “In other words they are seeking what is tantamount to a deficiency decree and will not have to go through any procedure to domesticate it in the state where the assets are located.” Alper himself comments:
This tactic is prevalent in foreclosures of commercial loans against developers and builders. I would pursue the same tactic if I owned this second mortgage. I still rarely see deficiency claims from first mortgage lenders, but this report is another example of more aggressive collection by second mortgage lenders who receive nothing from foreclosure of “under water” Florida real estate.
I often tell my clients that, historically, first mortgage lenders on residential properties rarely pursue deficiency judgments, but history is no guide to what they will do next week, next month, or next year, since the financial environment is completely different now than it was during that “historical” span. The tactic described by Alper is not technically seeking a deficiency judgment; it’s worse, because it ignores the value of the property that secures the note.
(An aside note: Alper’s Florida Asset Protection Weblog is an excellent source of information on asset protection techniques in Florida and can be a useful primer for anyone who wants to know more about the topic.)
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