On July 1, 2013, HB 87, commonly known as the “Florida Fair Foreclosure Act,” took effect. What does this mean for homeowners facing foreclosure? Real Estate Attorney Nancy Cason explains key elements of the law and discusses the importance of seeking solid legal advice as early as possible in the foreclosure process.
HB 87, commonly known as the “Florida Fair Foreclosure Act,” took effect on July 1, 2013. This new Act applies to all pending foreclosure cases as well as cases filed on or after July 1, 2013.
One of the express purposes of the new foreclosure law is to speed up the foreclosure process. Speeding up the foreclosure process means that there will be less time for homeowners to work out a modification, explore loss mitigation alternatives, complete short sales and prepare for a transition in housing. The complexities of the new detailed procedures and expedited time frames under the Act will be difficult for pro-se homeowners to navigate. To many consumer advocates, the law is anything but fair to Florida homeowners.
The Act made many substantive and procedural changes to the foreclosure landscape in Florida. Some of the most significant changes include: (1) expansions to the law providing an expedited process for foreclosure which can now be invoked by any lienholder, including mortgage holders and homeowner and condominium associations;
(2) a provision under which the Plaintiff can request the Court require the borrower, on non-owner occupied residential properties, to make mortgage the payments set forth on the Note into the registry of the Court during the process in order to defend the case;
(3) a provision dictating the finality of a foreclosure judgments in certain circumstances which limits relief to monetary damages; and
(4) specific heightened pleading requirements as to the standing of the party filing the foreclosure and actual physical possession of the Note, verified under oath, which must be set forth in all mortgage foreclosure complaints filed on or after July 1, 2013.
Perhaps most significantly, the Act reduced the time in which a foreclosing lender can seek a deficiency judgment from five years to one year, reaffirmed the longstanding law that a deficiency judgment is within the discretion of the Court, and sets the measure of a possible deficiency judgment (on owner occupied residential properties) to the difference between what is owed and the fair market value of the property, a standard which now expressly applies both in foreclosures and short sales. This provision of the Act is beneficial to homeowners doing short sales as previously, the Lenders who refused to waive deficiency rights in a short sale, asserted they were entitled to the difference between what they netted from the sale (after payment of closing costs and real estate commissions) and what was owed. In essence, parties who sought to mitigate damages by doing a short sale were penalized, but under the new law, they are not, which is definitely a good thing. The full text of HB 87 can be found at www.myfloridahouse.gov.
Within days of the Governor signing the Fair Foreclosure Bill, the Legislature also approved an appropriations bill related to the $200 million dollars the State of Florida received directly from the National Mortgage Settlement. Approximately $16 million dollars went to the court system to hire additional judges to help clear the foreclosure backlog. The combination of these two new developments will most certainly speed up time it takes to complete a foreclosure in Florida.
With the new foreclosure law in effect, it is even more important, now more than ever, that homeowners facing foreclosure seek solid legal advice at the inception of their case. With a trusted counselor in their corner, homeowners not only get the benefit of sound legal advice and a strategy tailored to their own unique situation, but peace of mind knowing that they are being guided by a professional through this difficult process.