By Sarah Parr
The state of
Florida was one of the hardest hit during the housing crisis and the struggle
that followed after. Recovery is slowly building, but unlike most of the United
States, Florida still had a recent jump in foreclosure activity, according to
RealtyTRAC’s year-end report. In 2012, foreclosure-related filings in Florida courthouses
increased by 3.11 percent. Lawmakers, real estate professionals and consumer
advocates are working on ways to change Florida’s status and restructure its
foreclosure process.
A handful of laws are currently under consideration in
Tallahassee, causing debate between people from all sides of the issue. The
proposed laws include measures that could significantly rework the way
foreclosures are handled.
The process could be sped up
The “Fair
Foreclosure Act,” also known as House Bill (HB) 87, is proposed as a solution
to Florida’s backlog of foreclosure-related cases. Proponents of the bill argue
that the bill protects homeowners by making banks and lenders prove ownership
of a mortgage before filing any act towards foreclosure in Florida. Homeowners
would then be allowed up to 20 days to provide a foreclosure defense with an
attorney or not.
Under HB 87,
banks and lenders would only have one year instead of the present five years to
go after borrowers for losses from a foreclosure after a final judgment in
foreclosure is reached. The bill would also allow third-party lien holders,
such as condo or homeowner associations, to move foreclosures through a faster
process rather than through a court proceeding.
Those in
opposition state that HB 87 strips homeowners from basic legal rights by
shifting the burden of proof from the banks and lenders to the homeowner. An
expedited foreclosure process would mean less time for consideration of
alternatives to foreclosure, such as short sales or loan modifications.
Homeowner bill of rights
House Bill
1777 proposes to create a homeowner bill of rights, in the event of late
mortgage payments, similar to the one established by California’s legislature.
The goal of California’s laws is to protect homeowners from predatory lenders
and further regulate mortgage servicers by prohibiting processes such as
dual-tracking and robo-signing, and requiring mortgage companies to provide
homeowners a single point of contact. California has already seen a large
decrease in the number of foreclosure starts since its laws went into effect on
January 1, according to CNNMoney.
More judges could hear cases
Senate Bill
(SB) 1666 would allow retired justices or judges to consent to temporary duty
in order to help decrease the backlog of foreclosure cases in Florida. Court
administrator Lisa Goodner said there is a backlog of approximately 366,000
cases in the courts as of January 31. Compared with the nationwide average of
13 months, foreclosures in Florida take on average 29 months to process. The
law would also allow public notice of a foreclosure sale to be posted online in
lieu of in print media.
Critics of
the bill claim that current law, with additional funding for new judges, is
ideal because allowing retired judges to hear cases is just a temporary
solution. They also argue that many people, including low income and senior
citizens, don’t have regular access to the internet so it’s unfair for a
foreclosure sale notice to only be posted online.
Deficiency judgment time could
shorten
A deficiency
judgment occurs when courts rule in favor of lenders if they can show that
borrowers owe more on a mortgage than the total price of a property. Senate
Bills 1226 and 371 would mandate that lenders can only file deficiency judgments
a year after final foreclosure judgments, and would have only two years to
collect any outstanding debt. At the moment, collectors can contact borrowers
for debt for up to two decades.
Another
proposed measure, the “Short Sale Debt Relief Act,” would make deficiency
judgments unenforceable on a short sale if the original debt was 20 percent or
greater than fair market value.
Florida will
likely see changes to its judicial-foreclosure process soon. Despite what
happens in the legislature, many people do want to see more recovery in the
housing industry.
Sarah Parr is a Florida writer who
blogs about Central Florida foreclosure issues.
See Foreclosures Homes in Fort Lauderdale, Pompano Beach, Oakland Park and Wilton Manors, Florida