This article is the final article of a series and is excerpted from my book entitled Mortgage Foreclosure and Loan Collection: A Practical Guide for Lenders which is now available at Amazon.com. Here, we discuss Florida’s show cause procedure as a means of expediting mortgage foreclosure cases and therefore reducing cost.
On average, a Florida foreclosure can take nearly two years from service of process to final judgment. Lenders have little option but to suffer the costs of this delay in the form of depreciating value of the property, vandalism, accruing property taxes and assessments, and increased legal fees. To help reduce delay, a lender might consider using Florida Statutes Section 702.10. The legislature apparently recognized the need to address unnecessary delays in foreclosure cases back in 1993 when it enacted this statute, the intent of which was to minimize delay by providing for an expedited process and also a procedure to remove a mortgagor’s economic incentives for delaying the case.
The first part of the statute allows a foreclosing mortgagee, in either residential or commercial cases, to expedite the foreclosure through a “show cause” procedure. Upon filing a verified (or sworn) complaint, the mortgagee can apply to the court for entry of an order directing the defendant mortgagor to appear and show cause why the final foreclosure judgment should not be entered. If the defendant either fails to appear or appears but cannot raise issues that might constitute valid defenses, the court can enter a foreclosure judgment at that time. In theory, then, it is possible for a foreclosure judgment to be obtained in very little time since the hearing can be held relatively quickly in a case. In practice, the disadvantage is that it is not too difficult for a defendant to raise sufficient issues to prevent the entry of a foreclosure judgment at the show cause hearing. In that event, the case would proceed as any other foreclosure and without the benefit of the expedited process. The procedure is best used in cases with few defendants and particularly cases where defendants are likely not to appear and defend.
The second part of the statute gives creditors the opportunity to obtain a court order directing the mortgagor to make the loan payments during the foreclosure suit or give up possession of the premises if it cannot do so. There are surprisingly few Florida cases that have interpreted the statute. However, in a 2011 case, the court upheld two trial court orders requiring the mortgagor to make monthly payments totaling in excess of $70,000 during the foreclosure proceedings. Obviously, that can create significant leverage on a mortgagor not to delay a case!
Overall, Florida Statute 702.10 can present a means by which a lender can expedite its mortgage foreclosure and save money on legal fees and costs in the process.