Second Mortgage Lawsuit After Foreclosure

In the state of Florida is it legal for a debt collection agency to sue me for a second mortgage on a second home I had bought in Florida?

The home could not be sold as a short sale and was foreclosed on. Before it foreclosed the bank which held both mortgages sold off the second mortgage to a debt collection agency.

I was unable to pay them and now they have served papers on me and are suing me for the sum of the second mortgage.

I have heard in other states that they cannot do this but am unsure about in Florida.

Any help would be greatly appreciated. Thanks!

Bonnie

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Hi Bonnie,

When a first mortgage forecloses and the property is worth less than the first mortgage balance, the second has its lien extinguished. 

With the seconds’ interest in the property now foreclosed by the first mortgage, the second is given the status the same as any defaulted consumer debt with a statute of limitations of five years on a written contract (F.S. 95.11(2)(b)). 

A lawsuit may be brought to collect the balance owed plus interest within five years of the default.  There are defenses and possibly counterclaims to such a lawsuit, but to answer your question directly, yes, it is possible (and likely) that a second mortgage would bring a lawsuit to collect the balance after foreclosure in Florida.  Whether or not it is a primary, second home, or investment property has no bearing in Florida.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.