TALLAHASSEE – With Florida among the slowest states to wade out of the post-boom foreclosure morass, lawmakers in Tallahassee have proposed a number of bills to speed up the process of property seizures.
Two that have the backing of both the state’s banking industry and Florida Realtors, are House Bill 87 and Senate Bill 1666, sponsored by Naples Republican Kathleen Passidomo and Sen. Jack Latvala, R-Clearwater, respectively.
Both would accelerate the judicial foreclosure process for the benefit of lenders and real estate alike.
Another, HB 1777, would create a homeowner “bill of rights” in the event of late mortgage payments, similar to a law passed in California last summer. That bill is sponsored by Rep. Mark Danish, D-Tampa.
“The reality is that in this Legislature, the power structure seems less concerned about protecting the homeowners than about simply pushing foreclosures through as rapidly as they can,” said Alice Vickers, an attorney who lobbies on behalf of the Florida Consumer Action Network.
In Florida last year, 3.1 percent of all housing units—or one out of every 32 homes—were subject to a foreclosure filing, the highest state rate in the nation.
In Southwest Florida, banks’ rush to refile cases derailed by federal legal action has sent the region’s courts’ foreclosure dockets back into overdrive. Filings in 2012 surged 70 percent from the previous year. Many had been previously dismissed as a result of inadequate paperwork or fraudulent bank practices.
The 12th Judicial Circuit, composed of Sarasota, Manatee, and DeSoto counties, now has roughly 16,000 cases—1,000 more than it did two years ago when the economy was substantially worse.
HB 87 would shorten the statute of limitations on deficiency judgments, to one year from five.
A deficiency judgment occurs when courts rule in favor of lenders, if they can show that borrowers owe more on a mortgage than a property has sold for.
But consumer advocates say another feature would prove more troublesome, with the bill putting the burden of proof on borrowers to show why a lender should not win an expedited foreclosure from a judge.
Passidomo says the provision “preserves all appropriate due process rights protecting borrowers. It eliminates unnecessary court hearings, and it permits community associations standing to participate when there are delinquent assessments due.”
The bill also would be retroactive, which has raised the ire of foreclosure defense attorneys.
“Say you’re already fighting a foreclosure in court,” said Charles Gallagher III, a St. Petersburg attorney. “If this passes, even though the bill wasn’t in effect when your case started, all of a sudden you’d have a new burden and new guidelines. The bill itself is very bank-friendly, and revokes a whole lot of procedural protections.”
But the Florida Bankers Association said the bill would accelerate a stymied process.
“Our position is, once we start the foreclosure proceeding, the faster we can complete it, the faster the property can get sold,” said Anthony DiMarco, the association’s executive vice president of government affairs.
Delinquent borrowers now can live rent-free in homes where mortgages are in default for months at a time, and delay foreclosure hearings or force actions to trial, DiMarco said.
The association is hoping to negotiate a longer time period for filing deficiency judgments.
“We understand they want to go down, but we think going from five years to one is too much of a change,” DiMarco said.
Florida Realtors also supports HB 87. The group says that it would help neighborhoods plagued by foreclosed and empty homes, and also prop up house and condo values.
“We think it provides protections for homeowners and allows for faster foreclosures,” said Trey Goldman, the group’s legislative counsel.
Another HB 87 provision mandates that even if an appeals court determines that a homeowner was erroneously foreclosed on, they could not get their property back as part of a judgment. Instead, those borrowers would be entitled only to a monetary payment.
“We think that will bring more certainty to the market,” said Goldman.
HB 87 also would enhance condo and homeowner associations’ standing in legal proceedings.
“This is going to help them, which is important to all the members of the association,” Goldman said.
Senate Bill 1666 is roughly parallel in its reforms, but it adds two other important measures.
It would make the appointment of retired circuit court judges as foreclosure judges more permanent. The practice has been used extensively in the 12th Circuit, hard hit by foreclosures.
The Senate bill also eliminates the requirement that property owners be notified a second time about a pending foreclosure in a print newspaper advertisement.
Instead, that second publication requirement could occur on a publicly accessible website, such as a clerk of the court site, in lieu of other media.
Foreclosure defense attorney Matt Weidner, another St. Petersburg attorney, calls that aspect of the bill “troubling.”
“Particularly with these lower income folks, the only way they found out they were being foreclosed upon is in a newspaper,” Weidner said.
As the Legislature kicked off its annual session Tuesday, other bills pertaining to foreclosures are also circulating.
Orlando Senator Darren Soto, D-Orlando, has several.
His SB 1228, a “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.
But Weidner, the St. Petersburg attorney, contends many of the new bills would be superfluous.
“The problem in foreclosure court is not that pesky defense attorneys are holding up the procedure, and it is not that the courts are not doing their job or that the existing laws don’t work,” said Weidner, who along with other attorneys has formed Florida Consumer Justice Advocates, to fight some of the reform bills.
“The foreclosure problem is the banks, choosing not to complete foreclosures,” he said. “They don’t want to. They realize it is better to negotiate or get a short sale done.”
Originally published in the Herald-Tribune (By Michael Pollick Published: Tuesday, March 5, 2013 at 8:49 p.m.)