Mortgage companies suing homeowners
Wednesday, 31 July 2013 09:09

Foreclosure doesn’t always remove debt

by David Portney J.D.

    On June 15, the Washington Post published an article based on an in-depth investigation by journalist Kimbriell Kelly. 
    Kelly reported that many homeowners nationwide and some in Maryland whose houses had been foreclosed upon are being taken to court as a result of their former lenders filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue left over debt, plus court fees, attorneys’ fees and tens of thousands of dollars in interest that has been accruing for years. 

“It’s an aftershock of the foreclosure crisis, and most homeowners don’t know it’s coming,” Kelly wrote.
     This debt is known as a “deficiency judgment,” which is allowed under Maryland law. 
    Fannie Mae and Freddie Mac, which own or guarantee half of all mortgages in the country, are among the lenders pursuing deficiency judgments. 
    Kelly reported that in 2011 Fannie and Freddie flagged more than 35,000 properties (12 percent of 298,327 properties they had foreclosed upon nationwide) for deficiency judgments in an attempt to collect $2.1 billion in unpaid mortgage debt. 
    Although deficiency judgments are presently not a large problem, there is a potential for them to be a large problem in the near future, as foreclosed-upon homeowners begin to recover from the loss of their homes and begin to work again and save money. 
    Just as they are getting on their feet financially may be the time that the lender decides to take legal action, since there will be monies that can be recovered.
    If your home has already been foreclosed upon, or if you are thinking about giving up your home to foreclosure, it is strongly suggested that you schedule an appointment with an attorney to discuss the strategies available to you to avoid the possibility of a deficiency judgment. 

•David Portney is a partner in the Baltimore law firm Grossbart, Portney and Rosenberg, P.A.