Are You Owed a Foreclosure Surplus Refund?

The foreclosure process can be exhausting and a bit demoralizing. You’ve worked hard to secure a property and pay off the mortgage, but we understand sometimes the process doesn’t go as planned. However, the foreclosure process could give you a surprising financial boost in the form of excess funds after the foreclosure sale.

How do you know if you’re eligible and how does the process play out?

Determining excess amount

The foreclosure process will play out over several months, but once the home is sold at trial then the total amount will be judged up against the remaining balance of the mortgage loan. If the total is less than what remains on the mortgage the lender can actually file a lawsuit in Florida to get money back from the lender. This is called seeking a “deficiency judgment.”

Where borrowers can benefit is when the foreclosure sale price exceeds the total balance remaining on the mortgage. In this case, the first step will be for the lender to use the excess funds to pay any fees incurred throughout the foreclosure process. If there are any additional liens against the property then those lenders will also get to claim excess funds.

After the fees and any additional liens are sorted out, the former owner of the property would then be entitled to the remaining balance.

Claiming a surplus

The disbursement of surplus funds after a judicial (foreclosure) sale is laid out in Florida law. The former owner needs to file a claim with the court clerk for the surplus funds. At this point, the court will review the claim and verify that:

  • The claimant was the owner prior to the sale
  • No additional money is owed on the home
  • There are no outstanding unpaid judgments, tax warrants, liens, or homeowners’ association fees against the claimant
  • The claimant is not in bankruptcy
  • The right to the mortgage surplus has not previously been waived or sold
  • There are no additional parties entitled to the surplus or an agreement with those parties has been reached

The last point is an important one to highlight. If another person, such as a spouse or an ex-spouse who claimed full or partial ownership of the property through a divorce, claims entitlement to the surplus then the courts will convene to debate the merit of this claim.

Timeline

If the former owner has not claimed the funds within a year after the judicial sale, then the funds will be considered unclaimed and no longer be disbursed (to either the former owner or the lender). If you are in this situation, it’s important to handle this case quickly and place a claim before this deadline. If your claim is ongoing, the courts will ignore the one-year deadline and proceed with your case.

You should never face the foreclosure process alone. The right attorney will know the rules and make sure you get any foreclosure surplus funds you’re entitled to. At the Law Offices of Ray Garcia, we stand by our clients and make sure the courts don’t leave them out of any money owed to them. Contact us today.