Article Courtesy of The Sun Sentinel

By Roy Oppenheim

Published March 25, 2013

Proposed legislation – House Bill 87 and Senate Bill 1666 — which backers claim will clear the backlog of foreclosure cases in Florida, instead will create more problems by putting speed ahead of justice.

The backlog is blamed on foot dragging by homeowners. In reality, banks are to blame due to federal directives to pursue loss mitigation alternatives or by voluntarily slowing down the process to explore settlement options in the interests of both parties and the market.

However long it takes to conclude a foreclosure in Florida, given the magnitude of fraud, forgery and abuses that the banks admitted to, we should exempt this category of civil court cases from "time to complete" requirements.

Public policy decisions should not be based on unverified, incorrect and misleading information, particularly when that data are provided by the same industry that admitted wrongdoing.

The next problem behind any push for foreclosure reform is that the market is improving. Florida home prices have rebounded, due in part to the fact that banks and homeowners are managing the backlog of foreclosures.

Short sales and negotiated resolutions, which yield higher returns than faster foreclosures, would disappear under the proposed legislation.

Only institutional buyers will win. When they buy in bulk, they exclude Realtors who profit from short sales and other end-user transactions. Instead of supporting this legislation, Florida's Realtors should take California's lead and oppose attempts to speed up foreclosures.

Foreclosure legislation proponents have convinced homeowner associations to support their bills by arguing that it will help them. It's true that the so-called, "show cause" provisions in both bills would allow any lien holder to show cause as to why a final judgment of foreclosure should not be entered. But if the plaintiff chose not to file any of the evidence needed to obtain a foreclosure judgment, a court could not enter a judgment.

Since 2012, the market for third-party investors to purchase association liens at foreclosure auctions has been robust. Investors pay the $4,000 to $20,000 in HOA liens, take title to the property and rent it out before a foreclosure. This market will disappear and associations will be stuck with large inventories of unpaid lien cases.

It is undisputed that those responsible for the foreclosure crisis are the financial institutions that filed these cases. These settlements should lead to more protections, not lowered standards.