Courtesy of The Palm Beach Post
By Kimberly Miller
December 12, 2011
Some Florida lawmakers want to tweak a rarely used fast-track foreclosure law to shrink the state's court backlog and as an end run around Wall Street reforms that may bar nonjudicial foreclosures.
The Senate judiciary committee, which has discussed ways to reduce the average two-year timeline to repossess a home in Florida, is scheduled to meet today in Tallahassee.
Committee member Sen. David Simmons, R-Maitland, said this week that he has drafted a bill that would change Florida Statute 702.10, a 1993 law that requires a property owner to "show cause" why a final foreclosure judgment should not be entered on an expedited basis. The bill isn't on the agenda yet.
According to a foreclosure report by Senate staff that was presented to the committee last month, bank lawyers haven't used the law because they believe it is limited to nonresidential property and doesn't allow for a deficiency judgment to be entered against the owner.
The report also says that the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010, puts limits on nonjudicial foreclosures and that adopting a nonjudicial process would require substantial changes to property laws.
Simmons said the Florida Bankers Association asked him to work on a proposal that will help clear an estimated court backlog of 371,000 foreclosure cases. His bill, which would affect current foreclosures, is still being drafted and not yet available online, he said.
"We've got to create an expedited method of dealing with this that will take down the backlog where the homeowner has no defenses and is simply waiting it out, or where the homes are abandoned," Simmons said. "At the same time, if there is a legitimate defense that a homeowner wants to raise, then they need to be able to raise it."
Florida is one of 21 states that have strict judicial foreclosure proceedings, meaning banks must get a judge's approval before repossessing a home.
Rep. Kathleen Passidomo, R-Naples, was the first this year to file a bill aimed at expediting foreclosures. The proposal, HB 213, has since been substantially rewritten to include changes to the same statute Simmons hopes to amend, she said Tuesday.
She said her changes would require the courts to decide whether a homeowner has a legitimate defense to fight the foreclosure. If not, the judge could issue a final judgment.
"Some defenses should be heard, but if the borrower just responds by saying 'I don't want to move out,' that doesn't do anyone any good," Passidomo said. "At some point, we've got to get these houses back on the market and this issue resolved."
Passidomo said her bill also would allow third parties, such as homeowners associations, to move foreclosures forward when banks are delaying action.
Foreclosure defense attorneys and homeowner advocates have opposed changes to Florida law that would take cases out of the court system. They argue that chain of ownership confusion created by the mass securitization of mortgages, as well as paperwork problems caused by banks taking foreclosure shortcuts, would sail through without correction if judges were taken out of the process.
Expedited foreclosure legislation has failed the past few years in Florida, but bank representatives and lawmakers believe they have a better chance of getting something passed during the 2012 session.
"Everyone is starting to realize that to turn around the economy we have to get through this housing market," said Anthony DiMarco, executive vice president of government affairs for the Florida Bankers Association.