Fast foreclosure bill may return

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published March 22, 2012 


Florida's quickie foreclosure bill died quietly in the Senate on the last day of the 2012 legislative session, and although homeowner advocates fear it will reappear next year, sponsor Kathleen Passidomo said it may not be her pushing it.

The Naples Republican is confident the controversial bill, dubbed the Florida Fair Foreclosure Act, would have passed if it had come up for a vote by the full membership. Instead, she said it got lost in the last minute hustle to hear dozens of proposals before the end of the session March 9.

The Florida Bankers Association agrees there were enough votes in the Senate to pass the nationally watched proposal, which flew through the House in a 94-17 vote on Feb. 29.

But Anthony DiMarco, executive vice president of government affairs for the association, said it's too early to tell what kind of expedited foreclosure plan may materialize in 2013.

The association said in its end-of-session newsletter that it believes "internal Senate politics" led to the bill's demise and that it will push for similar foreclosure legislation next year.

"I think there will be a foreclosure bill filed next year if the prediction of a huge glut of foreclosures in the courts holds true, but whether I file it or not, I don't know," said Passidomo, noting that she has other interests and that this was the second time she tried and failed to streamline the state's foreclosure logjam with legislation. "This was a missed opportunity."

Still, it was the furthest a bill aimed at reducing Florida's mounting foreclosure backlog has made it since the real estate crash. An estimated 368,000 foreclosure cases are in the courts statewide, with more on the way.

February foreclosure statistics released last week by the research group RealtyTrac showed a nearly 53 percent increase in South Florida filings compared with the same time in 2011. The spike was 40 percent statewide.

Homeowner advocates and foreclosure defense attorneys fought Passidomo's bill, which was sponsored in the Senate by St. Petersburg Republican Jack Latvala, saying the plan reduced borrower protection from wrongful foreclosure.

In cases of abandoned homes or where the home­owner did not have a legitimate defense to stay in the property, any lien-holder, not just the bank, would have had the ability to ask for a "show cause" hearing. The hearing requires the homeowner to quickly prove why the foreclosure should not occur or face an immediate ruling from a judge.

The bill also would have reduced the amount of time a bank could file to pursue unpaid borrower debt from five years to one year - something homeowner advocates liked, but not enough to support the overall proposal.

"In each step of the process you were taking rights away from consumers without giving them any real benefit and making it worse for the courts," said Lynn Drysdale, an attorney with Jacksonville Area Legal Aid.

Drysdale said the bill made it so far this year because people are frustrated with the system and are trying to find a solution. But, she said, the answer may not lie with a lawmaker fix.

She blames overwhelmed banks, faulty paperwork and lender attorneys for the delay in processing foreclosures.

Foreclosure defense attorney Michael Wasylik agrees.

"There already exists a process to expedite unopposed foreclosures, and banks almost never use it," Wasylik said.

Banks drag their feet in foreclosure court because they don't want more homes and it's expensive, said Guy Cecala, publisher of the trade publication Inside Mortgage Finance.

For proof, he said, "There are bounties worth thousands of dollars being offered to do a short sale. They're effectively bribing defaulted borrowers to give up on foreclosure and just get out of the house."

But the bribes won't be enough to clear the backlog, and attorneys said they expect another bill next year.

"I would be very surprised if the bill does not come back," Boca Raton attorney Margery Golant said. "The industry is pushing everywhere it can to be able to move faster on foreclosures."