For several years I have warned colleagues and friends about the potential nightmare of homeowners being pursued for the “deficiency” or short-fall in their mortgage loan. Homeowners need to understand that the “Mortgage” is the security interest giving the lender the right to foreclose on your home (the collateral/security) and the “Promissory Note” is in essence your personal guarantee to pay the lender what is due them under the terms of the note (principal, interest, late fees, legal fees, etc). I HIGHLY recommend that anybody finding themselves entertaining a foreclosure and/or short sale seek advice of an attorney and tax specialist. Please contact me if you need a referral!

Following is a reprint of a great article discussing just this topic:

NEW YORK (CNNMoney.com) — As terrible as it is to lose your house to foreclosure, at least it’s a relief to put your biggest financial headache behind you, right?

Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.

It can even happen to people who got their bank to approve them selling their home for less than it is worth. Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.

“My understanding was that the deficiency was negotiated away,” she said. “Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it.”

Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called “liar loans” where they didn’t have to verify their income.

Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances — like unemployment or a job transfer — can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

“After the banks foreclose, it’s very common now to have large deficiencies with houses not worth the balances owed,” said Don Lampe, a North Carolina real estate attorney.

Lenders mostly declined comment. Although Corey’s lender, BB&T did indicate it was pursuing more deficiency judgments.

“They follow the rise and fall of foreclosures,” said the spokeswoman, who would not discuss Corey’s account.
Can they come after you?
Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.

“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”

In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.

Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.

Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.

But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.

“People shouldn’t have a false sense of security that a deficiency judgment may not be later sought,” Zaretsky said.
He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.

“The parties who bought those notes wouldn’t have paid money for them unless they had the intention of acting,” Zaretsky said.

Ticking time bomb
What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn’t have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.

It wasn’t until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.

“I told them, ‘Hey, you guys released the title,’” he said. “As far as I know, I’m off the hook.”

He wasn’t. Releasing title does not necessarily end the debt. It’s complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.

“He had no idea what he was doing,” said Zaretsky. “All the lender had to do was go to court to convert the confession into a deficiency judgment.”

Lenders are also very inconsistent. One of Zaretsky’s short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.

Strategic defaults
Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

“Banks are pulling credit reports to see if it’s a strategic default,” he said. “If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you.”

If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.

“We don’t favor any short-sale contracts that leave any deficiency that can be pursued,” he said.

Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.

http://money.cnn.com/2010/02/03/real_estate/foreclosure_deficiency_judgement/index.htm?hpt=Sbin

Curt Roese recently became one of the select group of professional builders, remodelers, and other industry professionals nationwide who have earned the Certified Green Professional (CGP) designation, identifying him as someone with knowledge of the best strategies for incorporating green building principles into homes.

The CGP program is administered by the National Association of Home Builders (NAHB) University of Housing.

In three days of course work, the CGP curriculum incorporates a variety of information tailored to green building and business practices. The CGP curriculum incorporates training by leading building industry practitioners and academics on a range of topics, including strategies for incorporating green-building principles into homes using cost-effective methods of construction, and how green homes provide buyers with lower maintenance and good indoor air quality. Techniques are also discussed for competitively differentiating your home products with increased indoor environmental quality as well as energy and resource efficiency.

CGP program graduates are required to maintain their designation by completing 12 hours of continuing education every 3 years a portion of which pertain to green building activities.

Effective for the period December 1 to April 30, 2010:

First Time Buyer – Amount of Credit -Up to $8,000 ($4,000 married filing separate) – 10% of the purchase price with a cap of $8,000

First Time Buyer – Eligibility – May not have had an interest in a principal residence for 3 years prior to purchase

Current Homeowner – Amount of Credit – Up to $6,500 ($3,250 married filing separate) – 10% of the purchase price with a cap of $6,500

Current Homeowner – Eligibility – Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

Termination of Credit – Purchases after April 30, 2010

Binding Contract Rule – So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010

Income Limits – Single ($125,000) Married ($225,000) Phase out (additional $20,000)

Limitation on Cost of Home – $800,000

These reflect the changes enacted in November 2009 and are subject to changes/modifications.

Curt Roese, Orlando, Florida, has earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance and short sales. This is invaluable expertise to offer at a time when the area is ravaged by “distressed” homes in the foreclosure process.

Short sales allow the cash-strapped seller to repay the mortgage at the price that the home sells for, even though it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.

In the Orlando area, there are thousands of homes in danger of foreclosing. It is happening in all price ranges. Local experts say that even high-priced homes are not immune.

“This CDPE designation has been invaluable as I work with sellers and lenders on complicated short sales,” said Roese. “It is so rewarding to be able to help sellers save their homes from foreclosure.”

Alex Charfen, founder of the Distressed Property Institute in Boca Raton, Fla., said that Realtors® such as Curt Roese with the CDPE designation have valuable training in short sales that can offer the homeowner much better alternatives to foreclosure, which virtually destroys the credit rating. These experts also may better understand market conditions and can help sellers through the emotional experience, he said.

The Distressed Property Institute opened in January 2008 and provides training on-site and online. The CDPE is the premier designation for Realtors helping homeowners in distress and handling short sales.

“Our goal is to educate as many people as possible so we can help as many homeowners as possible,” Charfen said.

For more information about Curt Roese, please visit www.CurtRoese.com or email croese@roeserealty.com.

Curt Roese  has been awarded the National Association of REALTORS®’ (NAR’s) Green Designation, the only green real estate professional designation recognized by NAR.

Curt achieved this prestigious designation after completing 18 hours of course work designed specifically for REALTORS®. The courses were created in collaboration with a multidisciplinary team of industry experts from across the country; ensuring designees gain comprehensive knowledge of green homes and buildings and issues of sustainability in relation to real estate.

More specifically, Curt was trained in understanding what makes a property green, helping clients evaluate the cost/benefits of green building features and practices, distinguishing between industry rating and classification systems, listing and marketing green homes and buildings, discussing the financial grants and incentives available to homeowners, and helping consumers see a property’s green potential.

“As energy costs rise along with concern for the environment, homeowners are looking for innovative ways to save money and live responsibly,” said Dick Gaylord, NAR’s immediate past president. NAR’s Green Designation was developed in response to growing consumer awareness of the benefits of resource-efficient homes and buildings. The designation helps consumers who care about energy efficiency and sustainable building practices identify REALTORS® who can help them realize their green real estate and lifestyle goals.

As an NAR Green Designee, Curt has gained the knowledge and the tools necessary to become a trusted green resource for Orlando and Central Florida area.

Curt Roese, Orlando, FL, has earned the EcoBroker Certified® designation, having successfully completed an award-winning informative training program on the energy and environmental issues that affect real estate transactions. Curt joins the movement of professionals pushing the real estate market toward energy-efficient, sustainable, and healthier features in homes and buildings. Today’s focus on high-performance energy-efficient homes is a priority for this type of high-quality real estate professional earning the EcoBroker Certified® designation.

EcoBrokers® like Curt Roese are building premier market presence by serving as consumer and community resources on energy and environmental issues. With national surveys indicating that 9 out of 10 consumers consider energy efficiency and the environmentally sound aspects of a home to be almost as important as interior finishes, Certified EcoBrokers® are simply in a better position to serve the savvy green-minded real estate consumer.

“I’m always looking for the best ways to not only offer my clients the best value but to also develop a relationship where they feel I am a trusted resource,” Roese explains. “My EcoBroker Certified® training helps me ensure that my customers, who are my number one priority, get the knowledge they need. From energy-efficient appliances to solar options to overall energy savings, I now have more resources at my disposal to help my buyers and sellers make informed real estate decisions. The EcoBroker Certified® designation doesn’t make me an energy and environmental expert, but it puts me in a position to recognize issues and convey information on the products and services available to my buyers and sellers.”

EcoBroker International’s premier designation program is designed exclusively for real estate professionals who care about the environment and want to help their clients benefit from the energy-efficiency, “green,” and healthier features of properties. The extensive curriculum of energy and environmental training requires participants to fulfill additional program requirements to become Certified EcoBrokers®.

“Curt is an example of the quality real estate professional the EcoBroker Certified® designation continues to attract,” explains EcoBroker International CEO Dr. John Beldock. “These real estate professionals are not only distinguishing themselves in a competitive market place, but they are really giving back to the community in very constructive and meaningful ways. Central Florida needs more contributors like Curt Roese. The planet and our grandchildren need them, too,” says Dr. Beldock.

With over 20 years experience as a Real Estate and Home Building professional in Orlando and Central Florida , I can provide you with the information and professional guidance you need on home buying, home selling, financing and owning real estate in the Orlando and surrounding Central Florida areas.

Green Homes is just not a new buzz word, it represents a commitment from builders to provide high-performance, energy-efficient healthy homes that you and your family deserve. Whether you need my assistance in buying a new Green Home or purchasing a home that you can remodel with green sustainable features, please visit my site Central Florida Green Realty for more detailed information.

Learn the TRUTH about Short Sales – as a Certified Distressed Property Expert (CDPE), I have specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners.

The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. I have built a team of advisers, including a CPA and an Attorney, to best provide solutions for homeowners facing hardships in todays market. Please contact me for a no obligation consultation!

Looking to buy or build a new home? By working with a former Custom Home builder, you can benefit from my years of experience operating an award winning custom home building company – Westmont Homes. Please visit my site Central Florida Custom Homes which is dedicated to helping you find your luxury dream home – whether you are building or buying an existing spec home.

It would be my honor to work with you if you believe I can help you in achieving your real estate goals. Please read more about my experience and background and Contact Me for a no-hassle conversation.

>>>HOMEBUYER TAX CREDIT EXTENDED – DETAILS HERE<<<

And don’t forget to come back an visit My Blog – please feel free to leave comments or Contact Me for anything!

Central Florida Green Realty is a real estate website focused on green homes, healthy homes and energy-efficient homes.  As a Real Estate Broker who has also built green homes, I believe I am uniquely qualified to work with Builders and Buyers who are committed to enjoying the benefits of living in a beautiful, healthy, energy-efficient home.  For tons of great information, please visit:

>>Central Florida Green Realty<<

To some people, “going green” means living life only using the bare minimum of resources and to otherwise criticize anyone who refuses to live life in this manner. This narrow thinking is why many people are turned off to any message relating to “green” anything!

I believe one should live their life in abundance, whatever that means to them.  If the affluent choose to live in large custom homes, to drive the finest luxury automobiles in the world, to travel to five-star resorts and to otherwise live in abundance – I say, wonderful!

And, since the affluent consumer is going to make these lifestyle choices anyway, why not show them how they can join the “New Class of Luxury”. To learn more about living in Green Luxury please visit:

>>Green Affluent Living<<

Every family should, and quite frankly “deserves”, to live in a healthy, energy-efficient, high-performance home – one that not only creates a safe and clean enevironment for all those who live there, and greatly reduces energy costs and maintenance costs, but one that utilizes sustainable products and is safer to the environment as a whole.

To learn more about green homes, energy efficient homes, healthy homes, recycling, indoor air quality and other topics affecting your home, please visit:

>>Green Healthy Home<<