After the loss of your home to a Foreclosure Sale, there may be a good chance for you to receive Surplus Funds remaining after the auction is complete. This chance for Florida Foreclosure Surplus Funds has increased since the 2008 housing crash. At the time of the crash, home values dropped, and interest rates were extraordinarily high. This had the effect of most properties being underwater, meaning that the property was worth less than what was owed. This resulted in far fewer Surplus Funds being available after the Foreclosure Auction.
In order for there to be Surplus Funds from a Florida Foreclosure Auction, the property must sell for more than what is owed to the lender. After the 2008 housing crash many properties that went into foreclosure did so because the property value was low, but the amount owed was high. The lender would place a requirement for a minimum bid for the property of what was owed. For instance, if the property is worth $150,000, but the property owner owes the bank $200,000, the lender will require a minimum bid of $200,000. This means that anyone wishing to purchase the property at auction would have to pay at least that minimum amount or greater. Most third-party purchasers would not want to buy the property for more than what it was worth, and the property would simply be retained by the bank after the foreclosure sale. This had the effect of there being very few surplus funds available around the state.
Today, most homeowners are not in this same situation. Home values are still very high and interest rates are very low. The effect of this is that more and more homeowners who are being foreclosed on are not upside down in their mortgages. This means that when a property goes to a Foreclosure Auction, the third-party purchasers will pay more for the property knowing they will still be able to make money from “flipping” it. So, there is a much greater chance of there being Florida Foreclosure Surplus Funds available after the sale of the property. For instance, if the property is worth $250,000 but you only owe $150,000, then there is a good chance that a third-party purchaser will bid over the amount owed. If they bid $200,000, then there would be a resulting surplus amount of $50,000.
Based on Florida Statute 45.033(1), “there is established a rebuttable presumption that the owner of record of real property on the date of the filing of a lis pendens is the person entitled to surplus funds after payment of subordinate lienholders who have timely filed a claim.” According to this statute, once any subordinate lienholders have been paid, then anything remaining belongs to you, the former owner. As long as home values continue to rise and interest rates remain low, any person who loses their home to foreclosure sale has a greater chance of receiving Florida Foreclosure Surplus Funds after that sale.
If you or a deceased family member have lost your property due to Foreclosure and you believe you may have Florida Foreclosure Surplus Funds available, please give me a call for a free consultation. I handle Foreclosure Sale and Tax Deed Sale Surplus cases in every County in the State of Florida, and I don’t get paid unless you do.