Ask Bill your personal finance question

Florida Mortgage Foreclosure & Short Sale

I cannot afford mortgage payments on my Florida home. What are my options?

We have a home in Florida that we bought about 5 years ago to help out our daughter they have been unable to pay rent off and on and more off then on, we decided we can't carry this burden any longer, we are thinking of a short sale our credit is excellent and have not been late on this loan. There is no second just a first which is a adjustable rate we owe $210,000 a realtor said it may go for $100,000 we just need to know will they lien other properties for the difference and will we be taxed also on the difference? And are there any new laws that we need to be aware of for short sales in Florida Thank you so much for any information that you may be able to tell me.

Read full question
Bill's Answer
(4 Votes) | Find Learn Save

  • A lender may recover any deficiency balance under Florida law.
  • Debt settlement is an alternative to bankruptcy.

My answer explores options for you to stay in the home or sell it without incurring a large liability, including:

  1. Home Affordable Modification Program, a federal program to encourage mortgage modifications for distressed homeowners
  2. Home Affordable Foreclosure Alternatives Program, a federal program that sets guidelines for short sales
  3. Foreclosure, in the event you default on your mortgages
  4. Debt Settlement and Bankruptcy, which are means of resolving any deficiency balance

Home Affordable Modification Program (HAMP)

The foreclosure process is expensive for all parties concerned, and the cumulative effect of many foreclosures can depress housing prices. To stabilize the housing market, the Obama administration created the Making Home Affordable (MHA) initiative. One program in MHA is the Home Affordable Refinance Program. HAMP is available to residents of their homes whose first mortgage is no more than 125 percent of the property’s current market value. It is open to open to homeowners whose mortgage is guaranteed by Fannie Mae or Freddie Mac. Borrowers must be current on their mortgage, but at risk for foreclosure. To qualify a homeowner must also not owe more than $729,750 on a single-unit home, and their monthly mortgage payment must come to more than 31 percent of their gross income.

Home Affordable Foreclosure Alternatives Program (HAFA)

Another MHA program is Home Affordable Foreclosure Alternatives (HAFA). HAFA sets guidelines for short sales and deeds in lieu of foreclosure for distressed homeowners. If your servicer (the financial institution collecting your mortgage payments) participates in HAFA, then the servicer must follow HAFA’s guidelines and deadlines. The guidelines provide financial incentives for both servicers and homeowners. The homeowner must also be eligible for HAMP, as set forth by the program guidelines.


Foreclosure is the legal process through which a lender (most typically a mortgage lender) repossesses an asset from the consumer borrower who has defaulted on their mortgage payments. Because foreclosure is expensive and usually results in a poor return, lenders do not like foreclosure any more than homeowners do. Accordingly, learn more about HAFA, as discussed above.

Mortgage Forgiveness Debt Relief Act

You mentioned taxes. The Mortgage Forgiveness Debt Relief Act of 2007 provides tax relief for some mortgage loans forgiven in 2007 through 2012. The Mortgage Forgiveness Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence.

Florida Mortgage Foreclosure

Florida foreclosure laws are found Title XL, Chapter 702 to learn more about the rules surrounding foreclosure in this state, including deficiency balances (Chapter 702.06). Under Florida law, the lender may recover any deficiency balance. However, if your servicer participates in the HAFA program, then it is barred from collecting a deficiency balance.

For the benefit of readers residing in other states, see the resources on mortgage foreclosure in California, Georgia, Illinois, Michigan, Nevada, and Virginia.

Each state legislature created unique foreclosure and anti-deficiency laws. Follow the links just mentioned to learn the foreclosure rules relevant to you.


You can resolve a deficiency balance or deficiency judgment in bankruptcy or debt settlement. Bankruptcy is a complicated process. Chapter 7 and Chapter 13 bankruptcy are the options appropriate for most consumers seeking debt relief. Unfortunately, after the passage of the Bankruptcy Reform Act in 2005, it became harder to file for a liquidation bankruptcy, and there is now more complexity to an already intimidating process. Filing bankruptcy can be difficult and, though a consumer can do themselves, I advise consumers to consult with an attorney licensed in their state to ensure the filing is completed accurately.

Debt settlement is an alternative to bankruptcy. It is also called debt negotiation, and is the process by which creditors agree to forgive a part of a balance, saving the debtor up to 60% of the original balance. The debtor pays the new agreed-upon sum. A debtor can negotiate directly with creditors or hire a debt settlement service to negotiate for you.

Debt distressing you? The Debt Coach is a no-cost online tool that will analyze your debts and show you the options available to resolve them and the costs and benefits of each.


Contact your mortgage company and apply for HAMP. If you do not qualify and cannot afford to remain in your home, ask your loan servicer about putting the home on the market in the HAFA program. Do what you can to avoid foreclosure.

I hope this information helps you Find. Learn & Save.



Get Mortgage Rates!
(4 Votes)

People also like to Read

Daniel Cohen

FHA Loans | FHA Loans have huge benefits, including VERY low down payments and low credit limits. Get FREE info on FHA loans... Read more >>

Betsalel Cohen

Mortgage Basics - Down-payment, Equity, and LTV | Learn about mortgage terms relating to your property's value and how it aff... Read more >>

Betsalel Cohen

Whether you are refinancing or buying a home you will ask yourself if you can afford the mortgage. Learn to prepare and evalu... Read more >>

Betsalel Cohen

Qualify for a Mortgage | You can get qualified for a mortgage and the best rates by preparing yourself. Make sure that your c... Read more >>

Betsalel Cohen

Obama Passes HARP, but borrowers are looking for HARP 3.0 Mortgage Refinance programs. When a HARP 3 update is announced, you... Read more >>

Mark Cappel

Applying for a mortgage with bad credit and a spouse isn't as difficult as you may think. Learn the what lenders look for whe... Read more >>

Betsalel Cohen

PMI | If you are looking to buy a house and take a mortgage loan with a low down payment then PMI can...... Read more >>

Brad Stroh

Refinance My Home? If you are asking 'Should I refinance my mortgage?' or 'Is refinancing my home a good?', then check out ... Read more >>


1500 characters remaining
  • AH
    Jul, 2010
    A Short Refinance is the solution for homeowners that have done everything right but find their home upside down or underwater in value due to an outside influence of the market you now have a very positive solution. (off-site commercial link deleted) For homeowners who have experienced some kind of economic hardship then a Loan Modification is still working today for those who get the right help. (off-site commercial link deleted)
    0 Votes