Bank Can Seize Assets if You Default on Loan or Fall Into Foreclosure

If a Florida bank sells your foreclosed home and does not recover the entire loan amount, especially if you are a substantial mortgage holder, they can and probably will seize any and all of your assets.  In South Florida, almost 50% of loans are under default and a lot of their owners are concerned that the mortgage company can levy their income or even put their deposit accounts into a deep freeze.  Every state is different when it comes to banks seizing assets, and it also depends on the specific terms of the loans and accounts.  

Typical home loan issues don’t usually rear their ugly heads prior to foreclosures, they hit the homeowner once the bank has sold the home and walks away with less than what is owed to them.  Florida banks go to court for a “deficiency judgment” and win the right to seize assets. They pursue other assets, file liens on boats, planes and cars. 

Banks reserve the right to go after other assets if they find enough to tap into, as it’s expensive and very time consuming.  The mortgage companies are willing and ready to fight their court battles for multimillion-dollar homes or those owners who default on commercial properties.  They check for additional accounts in the same bank as where the mortgage is.  The terms of the savings or checking accounts dictate if they can move to freeze, sweep, garnish or seize any and all accounts to collect the money owed to them.

Smaller home borrowers are still at risk however, as banks may sell their deficiency judgments to collection agencies, who are properly staffed and prepared to spend ample time to come after the balance still due.  The judgments remain alive for up to 20 years. 

It’s extremely important for home borrowers to deal with their loan issues immediately, so as to avoid foreclosure and the many ugly issues that can and probably will follow.  The next best step is to do a short-sale through the bank, approach them honestly and fairly and clear up the loan issues.  Who wants to walk around for 20 years with a ticking time bomb on their back? 

 Get everything in writing, as some types of assets are off the table when banks start rooting around to collect money due on defaulted mortgages.
Unemployment Benefits, Social Security Checks, Veteran’s Benefits and some Railroad Retirement payments, among others, cannot be garnisheed at any time to cover a mortgage.  However, sometimes banks will mistakenly seize assets when monies, as mentioned above, are electronically deposited into individual accounts, and then you have to go to court to prove the funds came from exempt sources.