For the last few years the Florida Legislature has tried to make some changes to Chapter 702 of the Florida Statutes to help speed up the foreclosure process and clear out the substantial backlog brought on by the Sub Prime Mortgage debacle from several years ago. This Session chances are looking good that it may well become law. It has passed through several committees and seems to have a lot of momentum and support.
HB 87 addresses a wide variety of subjects within the foreclosure process. The proposed amendments can be grouped into two categories; those that favor the Borrowers and those that favor the Lenders. The proposed Amendment has some candy for each side. The primary benefit to Mortgagor’s is that the limitations period in which to initiate an action for a deficiency is to be shortened from five years to one year. A deficiency balance is the amount which remains owing to the lender after the property is sold at the foreclosure sale.
The statutory scheme identifies who has legal standing or ability to initiate the fast track foreclosure. Because of all the turmoil related to ‘lost’ original documents, the Statute requires that the original Note and Mortgage be filed with the Complaint. The Statute establishes procedures for pleading and proof for the Lenders who do not have the original loan documents. [F.S. 702(5)]. A substantial pleading and proof burden is placed on the Mortgagee to establish and document Standing.
For the Lenders; an expedited foreclosure process (when the Lender files all of the original loan documents), the issuance of an Order to Show Cause. [F.S. 702.10]. This is a short evidentiary hearing based on testimony and affidavits so the Court can see the quality and scope of the Lender’s proof. This helps the court make a preliminary determination whether there are valid defenses to the enforcement of the Note and Mortgage.
As is always the case, when the Legislature speeds up the foreclosure process, they need to pay attention to the fact that every Defendant is entitled to due process of law, i.e. their day in court. While the Bill provides a streamlined process to expedite the foreclosure and sale, the Legislature and the Courts must balance Due Process requirements for the Lender’s and the Borrowers.
Time will tell is if HB 87 becomes law, but if it does, don’t expect any tremendous shift, there are large numbers of defaulted mortgages which have yet to reach the foreclosure stage. In short, this change will not likely have a great affect on the time it takes for the lender, lien holder or servicer to foreclose a residential mortgage. The law, if passed will speed up some and slow down others, on balance, it is a mixed bag.