Florida is known for being one of the worst foreclosure states in the nation. Florida is a judicial state, meaning foreclosures are required to pass through state courts before title is transferred to the lender and then sold in auction. In recent years this process could take anywhere from 480 days to 860 days! This lengthily timeline was largely due to the increase in defaulted mortgages around the market crash in 2007/2008. The court system and many lending institutions were unable to handle the increase in defaulted mortgages and in result prolonged the process of foreclosure.
House Bill 87 was passed by Governor Rick Scott earlier this year and began taking effect June 7th, 2013. There were a number of changes that could benefit and harm both the borrower as well as the lender. The most prominent change in Bill 87 is the expedited foreclosure process for any lien holder in default in uncontested cases or against homeowners who have an illegitimate defense. Coming from an investment/lender stand point, this is a tremendous victory. ALL lenders (including HOA’s) are now able to file a foreclosure complaint (Lis Pendins) and if uncontested within 45 days or failure to produce genuine defense allows the lender to enter a final judgement of foreclosure and request an order of foreclosure sale. In addition, HB87 made all foreclosure judgements final.
One major change that has negatively effected the lenders position is the requirement to produce the note or certification of ownership of the note when a deficiency judgement is filed. The lack there of can invalidate the deficiency judgement and can inevitably forces the lender to “dismiss” the borrower from the judgement “without prejudice” and begin the process over again at a later date. If the original note is lost, an affidavit with clear chain of title needs to be produced in order to initiate foreclosure.
The last major stipulation in House Bill 87 is a lessening in time allowance for deficiency judgements to be ordered. A deficiency judgement is the lenders ability to collect the difference in unpaid balance to the foreclosure sale price. Previously, the lender was able to collect for up to 5 years the difference in unpaid debt to sale price, but is now reduced to 1 year allowance to seek a deficiency judgment on residential properties with no more then 4 dwelling units. (If you’re interested in learning about 4 dwelling units or larger, please click here).
In our business, dealing with foreclosures is always a possibility. It is important not only for us to understand how these provisions affect our business but also for our partnering investors. It is important to us that we are able to give accurate estimations in timelines, and understanding the laws allows us to do this. Florida is finally able to liquidate some of those “empty house” assets, and Seasoned Funding is here to help!