Florida State Representative Kathleen Passidomo (R-Naples) may have success this year in changing how Florida handles foreclosures as her proposed House Bill 87, co-sponsored with Florida Representatives Caldwell, Moraitis, and Rodrigues, is building steam up in Tallahassee. Here's the official Florida House description of Rep. Passidomo's proposed law:
Mortgage Foreclosures: Revises limitations period for commencing action to enforce claim of deficiency judgment after foreclosure action; provides for applicability to existing causes of action; specifies required contents of complaint seeking to foreclose on certain types of residential properties; authorizes sanctions against plaintiffs who fail to comply with complaint requirements; requires court to treat collateral attack on final judgment of foreclosure on mortgage as claim for monetary damages; prohibits court from granting certain relief affecting title to foreclosed property; provides for construction relating to rights of certain persons to seek relief or pursue claims against foreclosed property; limits amount of deficiency judgment; revises class of persons authorized to move for expedited foreclosure; provides requirements & procedures with respect to order directed to defendants to show cause; provides failures by defendant to make filings or appearances may have legal consequences; requires court to enter final judgment of foreclosure & order foreclosure sale; provides for liability of persons who wrongly claim to be holders of or entitled to enforce a lost, stolen, or destroyed note & cause mortgage secured thereby to be foreclosed.
The bill would become effective upon its passage, and right now it's made its way through subcommittees to the Florida House of Representative's Justice Appropriations Subcommittee.
Kathleen Passidomo Understands the Florida Foreclosure Process and its Bottleneck
Kathleen Passidomo is an attorney; in fact, she is Board Certified in Real Estate by the Florida Bar. Last year, she was unsuccessful in getting some kind of foreclosure reform law passed, but this year's HB 87 may well success where her previous venture failed.
Today, RealtyTrac is reporting that Florida has two times as many foreclosures as the national average. Florida's judicial foreclosure system requires mortgage lenders, by law, to file a civil lawsuit in order to foreclose on a home that has gone into default. With the unprecedented number of defaults on mortgages that Florida banks have experienced in the past few years, it's meant that Florida foreclosure lawsuits have increased to never before seen numbers.
As a result, the Florida judicial system has become clogged and bottlenecked. Passidomo's bill is an attempt to fix this problem and get things moving - for the good of everyone here in Florida.
With the goal of clearing that bottleneck, Passidomo's HB 87 would allow some foreclosure lawsuits to be re-routed into an expedited foreclosure process.
What Passidomo Is Offering as a Solution
HB 87 does not do away with judicial foreclosures, although there are many states that are "non-judicial foreclosure" states and their systems seem to work just fine. Instead, what Passidomo's bill is offering is to cull through the foreclosure lawsuits and if the borrower-defendant in a specfic suit simply has no viable defense to the foreclosure request, then these suits could be moved through the system faster.
HB 87 addresses situations where borrowers have simply defaulted on their home loans and have no defense to offer a judge. Some have walked away from the property. Some may be living in the property without paying rent or a mortgage payment. Once the case comes before the judge, the foreclosure will be granted; the problem is getting these clean and clear cases out from being stuck in the bottleneck.
HB 87 isn't a sweet deal to some banks, however. Included in its language is a change in the statute of limitations period for a bank to pursue a deficiency judgment against a borrower to obtain the amount left due and owing on the mortgage after the real estate has been sold. Right now, banks have five (5) years to file these deficiency suits but under HB 87, they would have to move fast as the limitations period would be a mere one (1) year.
Critics of HB 87 include those who argue that it denies homeowner-borrowers their due process rights. Banks don't like that big change in the deficiency limitations period.
Controversial Bill That is on the Fast-Track
Of course, there are lots of strong opinions out there on whether or not Florida should change its system in order to rooter out that clog in the court system made by all these foreclosure actions.