This week, the proposed Florida Fair Foreclosure Act got one step closer to becoming law when the Florida State Senate Judiciary Committee okayed the foreclosure bill. In the near future, the Florida Legislature should be voting on this proposal and you can track the progress of this bill (SB 1890) online here.
This is a very, very controversial piece of legislation and it’s seeing busloads of Floridians showing up in Tallahassee in protest of this legislation and what they believe it will do to Florida home owner’s legal rights under state real estate law as well as their federal constitutional right to due process.
For example, as written, this bill would change things so that a Florida victim of wrongful foreclosure would no longer be able to get their home returned to them but instead, they would only be able to legally receive money damages in a wrongful foreclosure lawsuit against their lender. That doesn’t seem like justice, does it?
Nevertheless, there is some good news in this proposed Florida Senate bill: it addresses the harsh reality of deficiency lawsuits and deficiency judgments in this state. The proposed legislation does not block deficiency lawsuits, but it does go a long way towards protecting Florida homeowners in these situations.
As we have discussed in detail in earlier posts (read them here), homeowners in Florida that have gone through the stress of a foreclosure or short sale and then believe that they are ready to begin a fresh start and to move forward from their financial crisis. Unfortunately, they are all too often blindsided by a new lawsuit filed against them by their lender that seeks to collect the unpaid balance left on their mortgage after the sales price of the home is deducted (the “deficiency”).
Five Years to One Year for a Bank to Sue on a Deficiency is Better for Florida Home Owners
As currently written, the new state law would change the deadline that a bank has to file that deficiency proceeding from the current five years down to just one year. Five years cut back to one year, that is helpful to the Florida homeowner.
Sounds great, doesn’t it? And it is a good deal better than the current situation, where a Florida home owner has to wait five years for the other shoe to drop unless they are savvy enough to negotiate that deficiency as part of their short sale or mortgage loan modification.
There is already a proposal up in Washington that would do the same thing as a widespread federal law, impacting all the states not just Florida. For details, read our earlier post on the Fairness in Foreclosures Act of 2011, and track its progress online here. (As of the date of this post, the federal bill was before the Committee on the Judiciary’s subcommittee on Courts, Commercial, and Administrative Law.)
So, the Florida Legislature is really doing nothing more than the U.S. Congress is already considering doing – assuming that both pieces of legislation pass. Duplicate laws on the federal and state level would both be effective and valid, but they would not be granting a Florida homeowner any additional benefit. A man only needs one tie to wear at a time, if you get the drift.
The bigger news would be if Florida were to go ahead and follow the lead of states like Texas and California, that have outlawed banks from seeking deficiency judgments by holding home mortgages as nonrecourse debts. In these states, the banks do not get the chance to go after the homeowner after the house is short sold or foreclosed: they had to take the value of the home and write off the balance.
Considering what the Florida Fair Foreclosure Act is offering to do for banks and against Florida home owners, you’d think that including a non-recourse provision wouldn’t be too much to ask.
You may also be interested in:
- Florida Deficiency Foreclosure Claims: Now, One Year Statute of Limitations Deadline on Banks to Pursue the Deficiency
- Florida Deficiency Judgment Overturned by Florida Court: Bank Loses Deficiency Because it Fails to Provide Valid Evidence of Fair Market Value
- Can the Bank Garnish My Wages During a Florida Foreclosure?
- Florida Deficiency Judgments – What is Fair Market Value?
- Deficiency Judgments in Florida
- Florida Deficiency Judgments – The Rest of the Story
- Estate is Liable for Mortgage Deficiency, Not Heirs
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org, or (954) 458-8655. If you have a specific situation, please call or email Larry because he can’t answer specific fact questions in general comments. He’s happy to take your call.