Solomon Poretsky, Demand Media |
“Florida’s legislature passed the “Florida Fair Foreclosure Act” on July 1, 2013. It’s designed to help clear up Florida’s large backlog of foreclosures. As written, it contains protections for both lenders and borrowers and spans both owner-occupied and investment properties. Even with the homeowner protections, the law is unpopular with many consumer advocates.
The History
Florida has one of the country’s longest foreclosure processes. As of the passage of the bill in spring 2013, the state’s average time between a foreclosure filing and actual repossession was 853 days. At that time, the average for the U.S. as a whole was 414 days. In an attempt to speed up the process, the bill streamlined Florida’s judicial foreclosure system which required multiple hearings to process a foreclosure.
Deficiency Judgment
One of the consumer benefits of the Fair Foreclosure Act is that it changes how lenders are able to get deficiency judgments in Florida. When a home gets foreclosed and the lender receives less than the property is worth, the lender has the right to come after the former homeowner for the difference. Under the law, lenders have one year, instead of five, to file for the judgment. In addition, it gave the court the discretion to decide whether to issue a judgment at all. If it does, the court can cap the judgment at the difference between the debt and the fair market value, which protects short sellers.
Enhanced Filing Requirements
Lenders also have to meet more stringent requirements to file foreclosures under the act. Specifically, any lender foreclosing under it will have to swear that it physically holds the promissory note underlying the mortgage. Lenders that hold notes that have been sold will also have to provide additional documentation to justify their right to enforce the promissory note by foreclosing.
Expedited Process
Any lien holder, including both lenders and homeowners or condominium associations, can force defaulted borrowers into a much faster foreclosure process. Once a homeowner is served with an “order to show cause,” he will have just 20 days to prepare his defense before having to go to court. This leaves minimal time to find an attorney or challenge any documents that are presented against him.”