Article Courtesy of The Palm
By Brian Korte, Esq.
Published April 20, 2014
A year ago, Florida’s Legislature was on a drive to pass a fast-track foreclosure bill as a way to expedite the thousands of cases clogging the state’s courts. The bill’s sponsor, Rep. Kathleen Passidomo, R-Naples, had said the foreclosure process needed to be efficient while maintaining due process.
Neither of those goals has been met by the law that effectively shut the spigot on new filings. The law requires lenders filing a foreclosure to sign an affidavit attesting to the truthfulness of the documents and that they are the holder of the mortgage note at the time of filing. The difficulty or inability to comply resulted in a 36 percent drop in new foreclosure filings. Should anyone be surprised? Not really, given that the five biggest mortgage lenders — Citi, JPMorgan Chase, Wells Fargo, and Ally – paid billions in deals with the attorneys general of nearly all 50 states to make up for fraudulent mortgage documents.
The real shame of it is that justice wasn’t served. Owners who struggle or who have stopped making payments still live under the cloud of foreclosure with nothing in the state law to prompt banks to work with owners on modifications. The law eroded property rights, increased the burden on banks, and did not relieve the courts of the glut of foreclosure cases. And despite rising home values, neighborhoods and cities continue to be damaged from the more than 14,000 “zombie” foreclosures in South Florida — those homes abandoned by their owners and left unclaimed by their lenders.
A number of foreclosure cases now sit before the appeals courts, which consistently have been reversing the lower courts on basic contract and evidence laws. As these cases are overturned, some families will find they have another shot at a fair and honest day in court. But the crisis exists today, and homeowners deserve a solution now. The fast-track foreclosure law actually impedes an end to the crisis as far too many cases are stuck in neutral.
There’s a much bigger hammer now forcing banks to change their practices and giving owners a fighting chance. Provisions of the federal Dodd-Frank Act that became effective this year change how mortgage lenders and servicers do business. The rules are designed to protect home buyers from risky mortgages and shady mortgage practices. Anyone wrestling today with a lender or loan servicer may be able to sue in federal court for damages. Unfortunately, the law is not retroactive.
The changes require lenders to provide the borrowers with detailed information about their loan. They also must credit payments promptly and give a prompt response to requests for pay-off information. Lenders also must give notification to borrowers before slapping a new homeowner’s insurance policy onto their loans. So-called forced-place insurance policies were responsible in themselves for many foreclosures.
The list sounds like sound business practices that any lender or servicer already would be doing — except history shows those facing foreclosure or attempting to modify their mortgage loans have faced ridiculous communication roadblocks in getting simple information from their lenders and servicers.
People may not be aware that they now have rights since little has been written about the most recent provisions of Dodd-Frank. Had this law been in place at the height of the housing crisis, all the people who lost their houses illegally would have had recourse.
Another significant change restricts “dual tracking,” the practice of a mortgage lender beginning a foreclosure action at the same time it offers a borrower a loan modification.
This has been a common practice, and there are countless times when a homeowner has been attempting to work with a lender on a modification at the same time his foreclosure case would appear on the court calendar.
If any homeowner dealt with unresponsive lenders, unrecorded payments, and dual tracking, the homeowner now could have a case against their lender. But Dodd-Frank doesn’t eliminate the problems created by Florida’s fast-track legislation. One year after the law was adopted, there’s plenty of evidence to show it has failed to provide efficiency or due process. Florida’s Legislature should make it a priority to repeal the fast-track foreclosure law.