Three years, three attempts to pass bills pushing for Florida foreclosure reform. The newest takes the form of Bill 87 and is destined to be a hot topic in the upcoming session. What might this newest incarnation of the Fair Foreclosure Act mean for homeowners?
Consumer advocates are armed and ready. The last attempt to speed foreclosures ended in the Senate last year with House Bill 213 that contained language allowing lenders to speedily foreclose on property that was deemed abandoned. 213 was a hot button topic that led consumers on a protest march on the state Capitol last year. Advocates feared 213 would allow lenders to kick Floridians out of their homes without notice simply because after conducting interviews with neighbors the lender deemed the home “abandoned.” But Representative Kathleen Passidomo who filed 87 earlier this month urges consumers that this version has “far more borrower protections than what is current.”
House Bill 87 requires lenders to certify that they have the right to foreclose on a property. Proponents hope this step will reduce the paperwork mishaps of previous years that are still gumming up foreclosures in Florida. The bill also requires lenders claiming to hold the original mortgage note to provide detailed facts about the physical location of the note. While this would benefit consumers fraudulently foreclosed on by lenders, the bill offers some protections to lenders that may have many homeowners up in arms.
Namely, 87 prohibits homeowners from suing lenders who have fraudulently foreclosed for a return of their property. These situations are currently sticky situations because the lender has generally sold the property to an unsuspecting third party. This bill limits the homeowners remedy to monetary damages, allowing the purchaser to keep the property.
Condominiums will also receive a benefit should this bill find its way through the legislature. Associations will be allowed to hasten foreclosures when banks are dragging their feet to cut their own costs. Unfortunately Condo associations have been stuck footing maintenance costs when banks carry out lengthy foreclosures on units.
But, consumers may be happy to find that the bill decreases the time lenders have to file deficiency suits against foreclosed homeowners. Currently, lenders have five years to bring suit for the difference between the debt owed and the price the property sold for at auction, 87 would decrease that time to 1 year. If lenders fail to file suit within the shorter time period after a final judgment is entered, homeowners would be protected from the remaining debt liability.
The retroactive nature of the bill also has some on edge. The bill allows some changes to apply to all mortgages, and foreclosure proceedings currently on file, while other provisions would be limited to suits and notes filed after the July 1, 2013 deadline or upon enactment of the bill itself.
Changes may be coming to Florida foreclosure law, and homeowners should be prepared. Please feel free to contact our office to discuss further.