It’s no secret Florida is one of the states hardest hit by the mortgage foreclosure crisis. Because of the sheer number of foreclosures in Florida, it takes much longer for the banks to repossess homes here—an average of 853 days, compared with the national average of 414 days. However, the Florida legislature has been working to speed up the foreclosure process and clear the logjam this crisis has caused in the courts. In June of this year, Governor Rick Scott signed into law House Bill 87, Florida Fair Foreclosure Act.
The bill has good and bad consequences for Florida homeowners. First, the bad news:
The overriding goal of the law is to speed up the foreclosure process, which can be detrimental to homeowners because it could mean less time for homeowners to be considered for a loan modification, forbearance, repayment plan, or some other alternative transition such as a short sale or deed in lieu of foreclosure.
OTHER LIENHOLDERS MAY EXPEDITE THE FORECLOSURE PROCESS
The way the law existed prior to this change, in uncontested cases, or in cases where the homeowner did not assert a legitimate defense, the lender could (and still can) request a summary judgment. Basically, if the court finds that the homeowner doesn’t have a defense, the lender, as a matter of law, is entitled to a judgment in its favor. The homeowner can forgo his or her defense by failing to respond, or by filing a response that doesn’t contest the foreclosure or by not showing up for the hearing. Regardless, if the court enters a judgment in the lender’s favor, the court will set a date for the property to be sold.
Now, any lienholder, not just the lender, but the homeowners’ association or the condo association, for example, also may request the courts expedite the foreclosure process in the same manner.
FORECLOSURE JUDGMENTS FINAL
More bad news for homeowners: the new law makes foreclosure judgments final. Now, the only remedy for a fraudulent foreclosure is monetary damages. So if the homeowner files an action to set aside or challenge the validity of a final judgment, and the lender can show the homeowner was properly served, a final judgment was entered, the appeals period has run (with no appeals having been taken, or if taken, resolved), and the property has been bought by a person not affiliated with the foreclosing lender or the foreclosed owner, then the homeowner cannot get the house back.
EVIDENCE OF PROPER STANDING MUST BE FILED WITH COMPLAINT
There is, however, some good news for homeowners as well. The new law does offer some additional protection for homeowners. First, it increases the requirements for lenders to produce evidence of its right to foreclosure. When the lender files its foreclosure complaint, the complaint now must include certification that the lender is in possession of the original promissory note OR, if the note is lost, an affidavit stating that the note is lost and establishing a clear chain of endorsements, transfers or assignments of the promissory note. The purpose of this is to ensure that the proper party is bringing the lawsuit.
STATUTE OF LIMITATIONS ON DEFICIENCY JUDGMENTS REDUCED
The new law also limits the statute of limitations on deficiency judgments. A deficiency judgment is the difference between what the homeowner owes the lender and the amount the property is worth at the time it is either sold at auction on the courthouse steps or in a short sale. Unless the lender chooses to forgive this deficiency, the lender may legally pursue the homeowner to collect this debt. Most lenders have not been immediately attempting to collect this debt right after a foreclosure, because the statute of limitations has been five years. The new law reduces the statute of limitations to one year. Now, if the lender is going to try to collect the deficiency judgment, it is going to need to act fast. Most likely it won’t because it knows it won’t be able to collect it. As the saying goes: You can’t get blood from a turnip.
HOMEOWNERS MUST BE PROACTIVE
On thing is for sure, Florida is working hard to deal with the backlog and get through this crisis quickly. Through this legislation, it is sending a clear message to lenders to resolve their business. The smart homeowner will pay heed and be proactive.
If you have lost your job or your hours have been cut, the bills are piling up, and you are facing financial hardship and worried you might lose your home, now is the time to act. The only wrong answer is to ignore the problem. You may be able to negotiate with the lender, to modify your home loan, restructure your debt or get a fresh start altogether.
Sultana Law is experienced in working with lenders and lender law firms. We understand the terminology, the complexities of these matters, and all the many options available to you. It costs you absolutely nothing to sit down with a lawyer to discuss your situation. You have nothing to lose to talk with us about your options. Call us today to schedule a free 30 minute consultation.