Courtesy of The Palm Beach Post
January 10, 2013
A fast-track foreclosure bill meant to hasten the legal process and reduce a mammoth court backlog will again be discussed by Florida lawmakers this year — the fourth consecutive session in which the issue has been up for legislative debate.
Proponents of the bill, filed by Rep. Kathleen Passidomo, R-Naples, said the years of deliberation and countless exchanges with stakeholders have refined the proposal, which removes some of the language most resisted by homeowners in earlier versions.
Also, the proposal (HB 87) retains the consumer-friendly provision that reduces the time banks have to recoup money owed on unpaid mortgage debt from five years to one.
But consumer advocates said the 19-page plan still leaves too few protections for homeowners who they fear will have little time to muster a defense under a part of the bill that gives a judge discretion in determining whether a fast-track foreclosure can proceed.
The so-called “show cause” order allows a judge to demand the homeowner prove why a foreclosure judgment shouldn’t be issued if a bank’s documents are considered properly documented. A hearing must then be scheduled no sooner than 20 days from the show cause order, and no later than within 45 days of the complaint filing.
If the judge doesn’t believe the homeowner has a legitimate defense, a foreclosure judgment can be issued immediately.
“It completely wipes out the ability to engage in discovery and get information from the other side,” said Lynn Drysdale, an attorney with Jacksonville Area Legal Aid. “I laud the representative for trying to address a very difficult problem, but I think that some of the provisions in the bill aren’t as protective of the rights of homeowners as they are of banks.”
Florida is one of about 20 states that have strict judicial foreclosure proceedings, meaning banks must get a judge’s approval before repossessing a home.
The real estate crash and recession have left Florida’s 20 circuit courts with 377,272 pending foreclosure cases as of the end of October, and an average foreclosure timeline of 858 days — more than two years.
While states where judicial foreclosures are less common, such as California, Arizona and Nevada, also suffered from the foreclosure crisis, Florida has the highest percent of home loans still in foreclosure. According to a third quarter report from the Mortgage Bankers Association, 13 percent of Florida mortgages are in foreclosure with another 4 percent 90 days or more late on payments.
“We’ve got to get through this cycle for the economy to improve,” said Pete Dunbar, legislative counsel for the Real Property Probate and Trust Law section of the Florida Bar.
Dunbar worked with Passidomo on her bill. He said it was important for the Bar to ensure homeowners are treated fairly in court and receive due process, but he also believes hastening foreclosures on abandoned properties, those no one is defending or homes where there is no legitimate defense, will boost the economy.
“I would say this bill is improved significantly because ideas that became controversial in last year’s bill are not in this one,” he said.
One of the issues omitted was language that allowed a bank to declare a home abandoned and then fast-track the foreclosure.
But another concern of foreclosure defense attorneys and homeowners remains in the plan. The proposal would only allow for monetary compensation to homeowners whose property was taken wrongfully if a third-party buyer had already purchased it.
Dunbar said the provision allows for clear title to be issued without the fear that ownership will be challenged. Drysdale said it deprives homeowners of their property rights.
“Even if you show the court that there were mistakes made, you can’t get your house back,” Drysdale said. “You had to completely uproot your family, you probably lost some of your personal property, and all you get is monetary damages?”
Both sides believe the bill has a better chance of passing this year. During the 2012 legislative session it passed the House in a 94-17 vote. It passed several Senate committees, but stalled before a full vote could occur in that chamber.
“Florida has one of the slowest foreclosure systems in the country,” Passidomo said. “We need to protect borrowers’ rights, but also efficiently move the process along.”
What the bill would do:
Require banks to have all paperwork before filing a foreclosure.
Allow banks to request a fast-track foreclosure from a judge, who can demand a homeowner show why a judgment shouldn’t be entered immediately.
Reduce the amount of time a bank has to seek a deficiency judgment against a homeowner from five years to one.
Allow only for monetary compensation to a homeowner whose house was foreclosed on wrongfully but already sold to a third party.