Rep. Passidomo pushes foreclosure reform measure for 2012 session

Article Courtesy of The Naples News
By Laura Layden

Published December 8, 2011

— A Southwest Florida lawmaker has revived a bill that could speed up foreclosures in Florida.

State Rep. Kathleen Passidomo first filed a foreclosure bill last session in hopes of changing a judicial process that can drag out for years. That bill was never heard.

"We had other significant bills that we were hearing, so that we literally ran out of time," said Passidomo, R-Naples.

In the next session, the Legislature will deal with redistricting and a budget deficit, along with other important bills, including one that would allow casinos to expand in the state. Passidomo acknowledges her legislation might not go anywhere.

"Last year there were 2,000 bills filed," she said. "This year it's half that. My guess is that most people feel there won't be enough time to review a lot of legislation."

Her new foreclosure bill is more detailed, with more input from various groups, including real estate and foreclosure defense attorneys, Realtors and bankers. Work on the 45-page bill began during the summer, starting with a group of real property attorneys she found through The Florida Bar.

"The state of Florida has one of the slowest rates of processing foreclosures through the system in the country, which of course keeps these properties out of the stream of commerce," said Passidomo, herself a real estate attorney.

Her goal is to get the distressed homes back on the market faster.

"Most of the foreclosures that are sitting there and not going anywhere are abandoned homes," Passidomo said. "The borrower has already moved out. So we have these empty homes, where the borrower is not paying anything and the lender is not paying anything, creating problems in the neighborhoods. No one is mowing the lawn, no one is maintaining them. We have pools full of algae."

"Most of the foreclosures that are sitting there and not going anywhere are abandoned homes," Passidomo said. "The borrower has already moved out. So we have these empty homes, where the borrower is not paying anything and the lender is not paying anything, creating problems in the neighborhoods. No one is mowing the lawn, no one is maintaining them. We have pools full of algae."

The legislation, she said, would:

Tighten up the current law, creating a simpler foreclosure process when borrowers don't respond after a lawsuit is filed and there is no defense.

Outline the documents lenders must file with the court to foreclose, which will make it easier for judges to dismiss their cases when the rules aren't followed.

Offer protections for legitimate purchasers of foreclosed homes. If the wrong lender foreclosed, the rightful lender couldn't turn around and foreclose on the new buyers. Borrowers who lose their homes couldn't get them back, but only seek damages if a lender wrongly foreclosed.

Allow homeowners associations or other interested groups to ask for a case management conference with a judge to move a case along when it has stalled.

"Some judges allow it. Some don't. This would create a standard," Passidomo said.

Though Passidomo already has filed the bill, she plans to amend it in committee to address concerns she's heard in recent months. She's already made some changes.

"I just want to get it right. What my philosophy has always been is to take good ideas and use them," she said.

The legislation faces opposition. Some think it will hurt borrowers, making it harder for them to fight foreclosure and stay in their homes.

"We need to focus on keeping people in houses and paying for insurance and taxes and homeowners association dues, not throwing families into the streets,'' said Matt Weidner, a foreclosure defense attorney in St. Petersburg "We have enough families who are homeless. We have enough houses that are vacant."

Passidomo insists the bill won't take away borrowers' rights.

"That is totally a fabrication," she said. "It's troublesome because it's clear that these individuals who have made these comments have never read the bill. But I guess that's politics."

Some opponents have characterized the bill as a "non-judicial foreclosure bill," but foreclosures would continue to be handled by the courts, she pointed out.

Some of the bill's opposition is coming from foreclosure defense attorneys.

"They want to keep borrowers in the house as long as possible without paying anything," Passidomo said.

Matt Weidner, a foreclosure defense attorney in St. Petersburg who is running for a House seat, is one of the most vocal critics of the bill. He said the bill needs to focus more on banks, not borrowers.

"We need to focus on keeping people in houses and paying for insurance and taxes and homeowners association dues, not throwing families into the streets,'' he said. "We have enough families who are homeless. We have enough houses that are vacant."

He said the bill "fails to address the systemic flaws in the legal process," and it doesn't do enough to hold the banks accountable for their own misdeeds.

"The bill is nothing but a back door bailout for the banking industry," Weidner said.

He said what's needed is more funding to support the court system so it can more efficiently handle foreclosure cases.

While Passidomo has sought input from anyone interested in the bill, Weidner said he doesn't think consumers have had a seat at the table in the discussions.

He said speeding up the foreclosure process may hurt, rather than help, the housing market. If a flood of homes come on the market at once, it could depress prices.

Statewide, he said, there are some 350,000 foreclosure cases pending. Some banks can't conclude their cases because they've lost the documents needed to support their right to foreclose. Others don't foreclose because it's unclear who owns the mortgage because it has been resold so many times.

"It's like Humpty Dumpty fell off the wall and they can't put the pieces back together again," Weidner said.Passidomo's bill hasn't been heard in committee yet. That won't happen until January or later, if it's heard.

On average, it takes 700 days for a foreclosure case to get resolved in Florida, from the first filing to the sale at the courthouse steps.

Florida Realtors, the voice for real estate in Florida with 115,000 members, hasn't taken a position on the bill yet, but will look at it more closely at its statewide meeting in January. Trey Goldman, general counsel for the association, said change is needed to stabilize the housing market.

"Before a recovery can get traction, we've got to get through this backlog of foreclosures," he said. "It's hard for home prices to increase. We are starting to see them stabilize, but the increase is slow in coming."

On average, it takes 700 days for a foreclosure case to get resolved in Florida, from the first filing to the sale at the courthouse steps, he said.

Alan Fields, executive director of the Florida Land Title Association in Tallahassee, said speeding up foreclosure is the right thing to do, causing less pain in the end.

"It's less painful to rip the Band-Aid off," he said.


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