Florida home owners fighting foreclosure, and foreclosure defense attorneys, and Florida lawyers helping with short sales for that matter, may need a bit of good news after dealing with the ramifications of the Florida Supreme Court’s decision in Pino v. Bank of New York this month – and we’re getting some from lawmakers in Tallahassee and Washington, D.C. on proposed new laws that will help home owners get those short sale deals done and finalized at the closing table.

1.  Federal Legislation Proposed to Force Banks to Decide on Short Sale Offers Within 30 Days:  30 Day Short Sale Deadline for Banks.

Up in Washington, two Congressmen have introduced legislation to Congress that, if passed into law, will help home owners in Florida and elsewhere who are trying to short sell their homes and avoid foreclosure.  The federal bill proposes the “Prompt Decision for Qualification for Short Sale Act of 2013,”  sponsored by Tom Rooney, a Congressman from Florida (17th District) and Robert Andrews,  elected to the House of Representatives by voters in New Jersey.

Introduced two days ago, on February 26, 2013, this bill is a revamp of prior unsuccessful attempts at passing legislation to put time deadlines on banks to approve (or disapprove) a proposed short sale offer.  In earlier versions, the bills would have given lenders 45 days to make a call.  This new bill, the 2013 version, pulls the knot a little tighter and puts the deadline at 30 days.

From Congressman Rooney’s statement:

“A robust housing market is critical to growing our economy and creating jobs in Florida,” Rep. Rooney said. “By streamlining short sales, we can help keep homes out of foreclosure, fuel growth in the housing market, and deliver a needed boost to Florida’s economy.”

“Potential buyers cannot afford to sit and wait for months while lenders drag their feet on short sales,” said Rep. Andrews. “Since a short sale cannot go through without the lender’s permission, we need to ensure that unnecessary delays by lenders do not turn away buyers when a prudent deal could have been made. Speeding up this process will keep many homeowners out of foreclosure and give our housing market the boost it needs to bounce back.”

2.  Florida Bill Will Make Deficiency Judgments Unenforceable for Many Florida Short Sales

Here in Florida, State Senator Darren Soto has been targeting the suffering of Florida homeowners in a series of bills (more on that later) and in his proposed law, Senate Bill 1228, Senator Soto is pushing for a new Florida law that would block banks from trying to collect the “short” in many short sale scenarios.

From the Florida State Senate Session Tracker, here is how this new bill is described:

Short Sale Debt Relief. Creating the “Short Sale Debt Relief Act”; providing that a debtor does not owe a deficiency to a lienholder related to an eligible real property sold pursuant to a bona fide short sale if an offer is received by a debtor within a specified time period and under specified conditions; requiring a lienholder to approve the short sale of property and execute any document necessary to close the sale within a specified time period if a debtor procures a buyer who makes an offer in writing equal to the fair market value of the eligible property, etc.

Larry Tolchinsky’s Tip:

SB 1228 was filed yesterday by Senator Soto, who knows his stuff:  Darren Soto hails out of the Orlando area and after getting an economics degree from Rutgers he went on to get a law degree from George Washington University Law School.   Soto is hot on the trail of foreclosure fraud wrongdoing, and this bill is only one of many he filed just this week to help Florida borrowers and home owners fighting against foreclosure.

Soto’s Short Sale Debt Relief Act, if passed as currently written,  will bar banks from trying to enforce short sale deficiency judgments (make them “unenforceable” in legal terms) on any Florida short sale where the debt of the original mortgage is more than 20% of the home’s FMV (fair market value).  Of course, there might be fights on the appraisal here and exactly what the FMV should be (yes, banks will argue over that to try and get around this law if passed) – but it’s a good deal for lots of Floridians and let’s hope it becomes law.

As for the Congressional legislation to force banks to belly up to the bar and decide on a short sale within 30 days, well hooray for that if it passes.  However, this bill has been proposed up in Washington for several years now, in various forms, and it’s failed to survive all those bank lobbyists and other forces fighting against fairness for Florida home owners, so while fingers are crossed it’s not as exciting as everything that Soto is doing (or trying to do) for Florida.

Do you have questions or comments?  Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, 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.”