Floridians facing foreclosure could lose their homes faster under plan making rounds in Tallahassee

Article Courtesy of The Sun Sentinel
By Kathleen Haughney

Published September 23, 2011


Tallahassee -- Floridians facing foreclosure could be stripped of their homes faster and have routine access to the courts limited under a proposal likely to come before Gov. Rick Scott and the Legislature in the coming months.

Bankers see it as a speedy and efficient way to manage foreclosure cases and get tens of thousands of Florida properties in ownership limbo back on the market, helping pull the state out of its economic doldrums.


In contrast, foreclosure defense lawyers and consumer activists see the plan as removing judicial oversight from a system that has proven to be riddled with fraud and abuse, and leaving ordinary homeowners defenseless before some of the state's most powerful financial interests.

"Obviously there's a lot of fraud being perpetrated by the banks in these cases," said Michael Redman, a Palm Beach County resident who founded the Website 4closurefraud.org to chronicle Florida's ongoing foreclosure crisis. "At this point in the game, it's almost ridiculous to take it out of the court system."

But the Florida Bankers Association, which has pushed the plan over the past few years, has key allies. Scott voiced support for the proposal at a Florida Bar convention this summer and told reporters Wednesday he is still interested in it. Some lawmakers have already jumped on board.

"Well, I want to make sure that we have an efficient process, so we don't create a reason for banks or whoever lends money not to lend money in Florida," Scott said. "When you talk to people that are in the system now they say it's 600 days to get through foreclosure. All that does is create another incentive for people to not lend money when we want people to lend money to our state.

"I don't know the answer yet, but I want to look at the process," Scott said. "I want to get more information before I make a decision."

According to RealtyTrac, a foreclosure tracking firm, Florida had the third highest foreclosure rate in the nation and was second in the number of foreclosure cases filed in 2010. On average, the firm said, the foreclosure process takes 676 days.

Usually the lender reclaims possession; other times, homeowners get to keep their property.

Currently, Florida is one of only 20 states to handle the foreclosure process through the courts. In California and Nevada, which have also been plagued by high foreclosure rates, foreclosure proceedings are primarily conducted outside court in about four months, though a judge can get involved if one of the parties deems it necessary.

Typically in states using a non-judicial system, the mortgage contract is based on a deed that includes a clause allowing banks to begin foreclosure proceedings without going to court. The bank gives notice to the homeowner and if the homeowner did not respond, the bank can reclaim the property.

Lawmakers and the Florida Bankers Association have pushed in the past for Florida to become a non-judicial foreclosure state but have come up short, with concerns about rampant fraud by some lending institutions trumping other arguments.

Legislation has not been filed yet this year on the issue, but legislative leaders inTallahassee seem interested. Legislative economist Amy Baker gave a presentation on the issue this week to the House Civil Justice Subcommittee and Katie Betta, a spokeswoman for House Speaker Dean Cannon, said that Cannon, R-Winter Park, has said he is open to it, but cautioned that the "devil is in the details."

"That's going to be a big issue this year. It's already shaping up to be," said state Rep. Darren Soto, D-Orlando, a member of the civil justice subcommittee who is opposed to taking judges out of routine foreclosure proceedings. "When we're talking about the property right being paramount, we need to make sure due process is exhibited," Soto said.

Anthony DiMarco, a lobbyist for the Florida Bankers Association, which represents more than 300 banks and financial institutions, said the association has not finalized its legislative agenda for 2012, but that it has generally supported the change in the past because it believes the faster homes can be repossessed by lenders, the better off the economy will be.

New buyers will move into the houses and apartments and start paying taxes, plus condo or homeowners association fees, he said.

"We have to get to the bottom to get out of this recession and the sooner we can do this the better," DiMarco said.

But defense attorneys say the existing system needs more oversight by the courts, not less. Lawyers in the past few years have reported numerous cases where documents used to support foreclosures were missing or forged. The result has been a process that is not always fair to the homeowner, they say.

"Anything that takes away oversight isn't necessarily a good thing, not necessarily for homeowners in foreclosure or the market in general," said Chris Immel, a foreclosure lawyer in Palm Beach County. "We routinely see documents that just don't add up."

DiMarco argues, however, that with reputable financial institutions, that shouldn't be a problem. Most cases, even when going through the courts, result in foreclosure, he said, but a non-judicial route would get to that end result quicker.

In states that already settle matters outside of the courts, homeowners are still given notice and time by lenders to settle the issue. If there is a mistake, they should be able to notify their bank and straighten out the problem, DiMarco said.

But if the bank is acting irresponsibly, DiMarco added, lawyers and judges should become involved.

"I think the end result is going to be the same and it will just be done a little quicker," he said. "Other states have not seemed to have had a problem."