There’s a proposed law being pushed up in Tallahassee once again this year that aims to end Florida’s long-standing judicial foreclosure process, and this year it seems to be gaining strength, though it died a pretty quick death in its earlier version last year. Perhaps you remember all the public outcry over this proposed legislation last year, where protesters marched on the Florida House from all across the state to protest against passage of last year’s HB 213, dubbed the “Florida Fair Foreclosure Act.”
They’re calling it a “foreclosure reform bill.” That’s an interesting nickname for HB 87 because there are lots of folks who aren’t viewing it as “reform” at all, but instead a sweet way for banks to avoid responsibility for bad acts and to disregard longstanding real estate law that has been on the books for years – law that was considered and passed by both the legislature and the judiciary (in court opinions).
To track House Bill 87, you can monitor its legislation page at the Florida House of Representatives web site. Here’s their official description of the proposed law:
Mortgage Foreclosures: Revises limitations period for commencing action to enforce claim of deficiency judgment after foreclosure action; provides for applicability to existing causes of action; specifies required contents of complaint seeking to foreclose on certain types of residential properties; authorizes sanctions against plaintiffs who fail to comply with complaint requirements; requires court to treat collateral attack on final judgment of foreclosure on mortgage as claim for monetary damages; prohibits court from granting certain relief affecting title to foreclosed property; provides for construction relating to rights of certain persons to seek relief or pursue claims against foreclosed property; limits amount of deficiency judgment; revises class of persons authorized to move for expedited foreclosure; provides requirements & procedures with respect to order directed to defendants to show cause; provides failures by defendant to make filings or appearances may have legal consequences; requires court to enter final judgment of foreclosure & order foreclosure sale; provides for liability of persons who wrongly claim to be holders of or entitled to enforce a lost, stolen, or destroyed note & cause mortgage secured thereby to be foreclosed.
Larry Tolchinsky’s Take:
There are some good ideas in this proposal. Here’s some of those good things:
- The limitation on the amount of time that a bank can file a lawsuit to collect a deficiency amount on a home loan, taking it from the present five (5) years to a new, shorter time frame of one (1) year would help a lot of people move on with their lives without the threat of a bank lawsuit (or the shock of an unexpected claim years after a short sale or foreclosure).
- The recognition in Florida law that banks need to be held to higher accountability on the paperwork they use in foreclosure lawsuits is good, too. Banks and mortgage servicers are notorious here in Florida for filing lawsuits in Florida court clerk’s offices without proper legal standing or support. Any suggestion of stricter laws dedicated to stopping this bad and disrespectful activity is sound.
- Help for condo associations is warranted, too, and the proposal does try to help homeowners’ associations who are dealing with banks that intentionally delay foreclosing on units so they don’t have to start paying for the unit’s maintenance fees.
However, here’s the thing: HB 87 is a big, big gift to banks. If it becomes law in the State of Florida, any bank that forecloses on a Florida home or condo, and does so wrongfully, sort of gets a free pass. If HB 87 becomes law, then banks who are flat out guilty of wrongful foreclosure get to keep the house. The proposed law states that the victim of the wrongful foreclosure can get some money (“monetary damages”) in a successful wrongful foreclosure action. Period.
How big of a gift is this? You’re in Florida, and the bank does wrong, and everyone admits a wrong has been done to you, and your family home was wrongfully taken from you by your lender – Do you get that home back — the land, the place where you had birthday parties, taught the kids to cook or catch a football? No you don’t. The bank does not have to return that home to you under this proposed law. One question that comes to mind is what is the impact on the title of a wrongfully foreclosed property.
Consider this: it’s being quoted from today’s testimony before the Florida Subcommittee, as this bill was being considered for voting, that a representative of the Florida Title Insurance Industry testified today as follows:
You should not buy a foreclosed property, knowing how much fraud was out there. … We cannot determine what files are infected with fraud, I wish we could, but we cannot, so you should not purchase foreclosed property.
Florida land titles are in disarray right now, and everyone in the real estate business knows it or should know it. Banks haven’t respected longstanding Florida real estate law in their fury to get foreclosures completed – the result is many homes that are being bought and sold today have serious title issues. How will this new law effect longstanding real estate laws that are related to and are written to protect title? If a bank has acted wrongfully by taking ownership of home that it otherwise should not have, when they resell that home, is the title defective? If so, how can the defect be cured? Is the homeowner who buys that home being taken advantage of by the bank because the bank has persuaded a title company to issue a title policy? These are important questions to consider.
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.
“I’m happy to take your call.”