We spend a great deal of time counseling prospective short sale sellers regarding the advantages of attempting to pursue a short sale rather than allowing their property to go through the foreclosure process. Many people do not realize that the foreclosure process is a two step process. The first step is the sale of the property at auction. The second (more painful step) is the establishment of a deficiency judgment against the borrower for, among other things, the shortfall. Many people are unaware of this second step, and in our opinion, those who quickly allowed their property to go through foreclosure may not understand that they are not out of the woods by a stretch of the imagination.
The linked article corroborates something that we routinely tell all sellers…that under Florida law, lenders have the right to pursue deficiency judgments against delinquent borrowers and will indeed aggressively do so when the first phase of the foreclosure boom begins to subside.
As such, we continue to strongly advocate short sales as the best exit strategy for homeowners who are under water (but are not bankruptcy candidates), and will be more than happy to explain to any potential short sale seller why. This would be in the nature of legal advice, so we would discourage any non-lawyer from performing this type of legal counseling.