3 Ways Florida’s Foreclosure Process Could Change

Florida is one of the few states in the country that still saw a recent gain in foreclosure activity. In 2012, foreclosure filings in Florida increased by 3.11 percent. Lawmakers, real estate professionals and consumer advocates are currently looking to change Florida’s status and streamline its foreclosure process.  A couple proposals are currently making their rounds in the Florida legislature, causing debate among people from all ends of the issue. The proposed laws include measures that could noticeably alter the way foreclosures are handled.

Less power for banks and lenders

House Bill (HB) 87, also known as the “Fair Foreclosure Act,” is proposed as a means to expedite Florida’s lengthy judicial-foreclosure process. Those in favor of the bill argue that the bill protects borrowers by requiring banks and lenders to prove ownership of a mortgage before they can file any decision towards foreclosure in Florida. Borrowers would then be allowed 20 days to challenge the action.

After a final judgment in foreclosure is reached, banks and lenders would only have one year instead of the current five years to go after borrowers for losses from a foreclosure. If passed, the bill would also allow third-party lien holders, such as condo or homeowner associations, to push foreclosures through a more rapid process rather than through the usual court proceeding.

Another proposal, HB 1777, would create a homeowner bill of rights, like the one enacted by California’s legislature this year, in the event of late mortgage payments. The goal of California’s law is to protect homeowners from predatory lenders and further regulate lending practices.

Shortening of deficiency judgments

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. Senate Bills 1226 and 371 would require that lenders can only file a deficiency judgment a year after a final foreclosure judgment, and would have two years to collect any outstanding debt. At the moment, collectors can contact borrowers for up to two decades.

Another proposal, the “Short Sale Debt Relief Act,” would make deficiency judgments invalid on a short sale if the original debt was 20 percent or greater than fair market value.

Help from retiree judges

Sponsored by Sen. Jack Latvala (R-Clearwater), Senate Bill (SB) 1666 would allow retired justices or judges to consent to temporary duty in order to help alleviate the backlog of foreclosure cases in Florida. As of Jan. 31, court administrator Lisa Goodner said there is a backlog of 366,000 cases in the courts. Foreclosures in Florida take nearly 29 months to process on average, compared with a nationwide average of 13 months.

With all of the proposals, one thing is guaranteed: the foreclosure process in Florida will see some changes soon. Everyone who has an opinion on what needs to be done most likely wants to see more improvement in the housing market.

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