Yesterday, Florida’s foreclosure situation hit the national news again, as NPR picked up WUSF reporter Robin Sussingham’s story, “Foreclosure Process Hammers Florida’s Housing Market,” where the impact of Florida’s judical process – and our state’s judicial foreclosure system – is considered as a contributing factor to Florida having the highest foreclosure rate in the nation, with a huge amount of time lag between the default on a mortgage and a sale of the foreclosed property. And by “time lag,” we’re talking years here, of course.
There’s lots of places to point fingers, and of course, that is happening. What’s going on here in Florida?
1. It’s true that the states that don’t bother with the requirement that banks go through court oversight when they foreclose on a property (the “Non Judicial Foreclosure” states) do get things done faster.
2. It’s also true that the Florida court system has been inundated with an unprecedented number of civil lawsuits over the past few years, as so many foreclosure lawsuits were filed around the state.
3. It’s a valid criticism to suggest that there is a huge paperwork problem. Things like the inability of banks, as plaintiffs, to prove up their legal right to foreclose in the foreclose actions they have filed has been a big contributor to Florida’s current situation.
4. There are those individuals who are trying to take advantage of the situation. People are looking at the longstanding Florida Adverse Possession Laws, for example, and trying to grab up vacant, abandoned homes for free under adverse possession statutes that were never intended to be used for this sort of “lottery win.” (This is happening everywhere, by the way – and sometimes, it’s being done by advocates trying to help the homeless find temporary housing.)
5. There are people who want to live “rent free” in their homes and they’re trying to find ways to not pay their mortgage while staying in the home for as long as possible. These borrowers may or may not be actively negotiating with the lenders on loan modifications, or trying to short sell the property, as they stretch their freebie home payment strategy for as long as possible.
Larry Tolchinsky’s Tip:
In anything that is as big and as messy as the current Florida housing crisis, you will be able to find lots of examples of bad actors. No responsible Florida foreclosure defense attorney is going to report that every banker is a wolf to every borrower as a sheep. There are some bank officers that feel for the borrowers and are good people; there are some borrowers that take advantage of a broken system. It’s the reality of Florida real estate today.
However, to move for a change in the system so that we are no longer a state that provides the protection of the courts to those who are facing the loss of their homes through foreclosure isn’t the answer. There is legislation being offered in Tallahassee once again to do this; however, it fails to answer the question of what to do about the loss of protection to borrowers if judges are not there any longer to double-check what the banks are doing.
Lenders and borrowers aren’t on the same footing; theirs is a classic example of unequal bargaining power.
Having the judicial foreclosure process in place helps to protect individuals from banks who might take advantage of the inequality between them. Surely no one has to look very far to consider that banks can, and do, try to do this? (Consider the foot-dragging by banks in modification negotiations, for example.) And this hurts future buyers as well as defaulting borrowers. (Zombie titles ring a bell?)
Sure, there are going to be stories of individuals who try to take advantage, like the Brazilian man named Andre Barbosa who recently failed in his attempt to gain legal title to a mansion in Boca Raton, Florida, based upon the Florida adverse possession statutes and the opportunity to occupy a property abandoned by the home owners and held by Bank of America.
However, the stories of bad acts like nefarious squatters pale in comparison to the volumes of stories that can be told about banks doing bad things to people who were losing the family home, and to the communities where the banks have control over properties for which they are responsible to maintain. If the Boca Raton home had been better maintained and secured, then would squatting have been an option? Calls to end the longstanding adverse possession statute based upon Barbosa’s actions are worrisome.
We don’t know the details about that Boca Raton circumstance, but we can point to examples of the real and vital need for courts in Florida’s housing crisis today:
- Florida home owners and borrowers are filing suit to stop unscrupulous and insupportable foreclosure lawsuits;
- Homeowner’s associations are being forced to foreclose on banks because they aren’t doing their duty in that community; and
- There are individuals who are filing lawsuits against banks who aren’t dealing fairly in loan modification negotiations.
Courts exist to insure justice. In today’s housing crisis, Floridians need that protection now more than ever before.
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 or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.
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