For the fourth year in a row, state lawmakers are pushing a bill to speed up foreclosures in the session starting Tuesday.
The measures would force homeowners to show why a lender shouldn’t foreclosure on them. Opponents say the bill would give homeowners no discovery time to build their case before a key hearing to determine the future of their homes.
Under current law, lenders carry the burden of proof to demonstrate late payments and present evidence that they hold the mortgage. Homeowners have time for discovery before a judge considers a motion to dismiss a foreclosure case.
State Representative Kathleen Passidomo, R-Naples, who is sponsoring HB 87 for the third time since 2010, hopes the proposed procedure would close foreclosure cases faster than the current two-year span from filing to repossession.
The lifespan of foreclosures often is caused by lenders who file foreclosure actions but let the cases languish to keep property from becoming their financial responsibility. Yet the bill doesn’t offer any incentives to lenders to move foreclosure cases forward.
Many of the cases clogging courthouses are foreclosures filed by former foreclosure king David J. Stern of Plantation. His foreclosure practice collapsed in 2010 while under investigation for alleged fraudulent filings. Those cases were transferred to other law firms but are barely moving forward.
Anthony DiMarco, executive vice president and director of government affairs for the Florida Bankers Association, said the slowdown wasn’t intentional.
He said loan servicers had a "very small number of law firms" they could use to process foreclosure actions on behalf of loan owners Fannie Mae and Freddie Mac.
"That became a bottleneck," said DiMarco, who welcomes the bill. "The whole system got overwhelmed. Not that they wanted to slow down or not pursue it."
In other instances, cases move slowly because homeowners fight the lenders.
Foreclosure defense attorney Margery Golant sees no need for the bill, which would limit homeowners’ right to due process and make it easier for lenders to foreclose.
Many of the oldest cases "have nothing to do with the current foreclosure procedure or the defendant," said Golant, with Golant & Golant in Pompano Beach. "The first premise of why this bill is supposedly needed is completely baloney."
Uncontested cases from start to finish take four to five months if a lender pushes the case forward, she said.
The bill offers some safeguards for homeowners. For example, lenders would need to file the original note or a certification that they have the note. If they don’t have the physical note, they would need to file an affidavit detailing a clear chain of all assignments.
"If the documentation is done up front correctly, it will solve a lot of problems," DiMarco said.
But foreclosure defense attorney Evan M. Rosen isn’t buying it. He said the Florida Supreme Court came up with a series of verification provisions in 2010 for lenders to follow, but the provisions are mostly ignored by lenders and judges.
"The verification provision has largely gone unregulated," said Rosen with the Law Offices of Evan M. Rosen in Hollywood. "The bill requires a heightened level of verification, but I have very little faith that that would be enforced."
What worries Rosen the most about the bill is that homeowners would have only 20 days after service of a show-cause order or 45 days after the service of the initial complaint to respond to a complaint and say why they shouldn’t be foreclosed upon.
"How can you discuss facts of a case 45 days after the lawsuit when there has been no discovery?" he asked.
Rosen said that could be detrimental to homeowners, especially when judges are showing signs of "foreclosure fatigue" and pay little attention to defenses because all they want is to close cases, he said.
Final Means Final
The bill would require lenders to tell the court when a case is filed if they have lost the note. If so, lenders could be required to provide a surety bond, a written indemnification agreement or cash collateral to run through the applicable statute of limitations for enforcement of the note.
The bill would make a foreclosure judgment final as long as the process was done properly and there is no pending appeal.
Foreclosed homeowners could seek damages but would not get the home back if they successfully challenge the foreclosure action after the fact. That way, whoever buys a bank-owned home wouldn’t be at risk of losing the property to the previous owner.
The bill would protect new buyers from lenders that might claim rightful ownership of the note — rather than the foreclosing lender. The johnny-come-lately lender would have no right to claim the home.
Another provision would shrink the time lenders are allowed to go after borrowers for a deficiency judgment — the difference between the loan amount and the sale price of a foreclosed property — to one year from five years.
Bankers aren’t happy about that element of the bill and are lobbying for an increase.
"We know it has to go down, but five years is too much," DiMarco said.
The bill would make all these changes retroactively so it would affect pending cases.
Community association attorney Donna DiMaggio Berger likes the measure.
She said the bill would give associations the ability to force banks to complete lingering foreclosures.
"If the bank can’t come up with a good reason why it is doing nothing, the court is going to order them to move forward with the foreclosure," said Berger, a partner with Katzman Garfinkel & Berger in Margate and executive director of the Community Advocacy Network. "It allows associations to give the bank a kick in the butt if they need it to move their foreclosures forward."
Associations get financially hurt when a unit languishes in foreclosure court and nobody pays monthly maintenance fees. The sooner a unit is foreclosed and resold, the sooner the association is able to begin collecting fees again.
HB 169, another foreclosure-related bill, would require owners of properties in foreclosure to notify their existing and prospective tenants about the litigation before signing a new lease or renewal.
Other real estate-related bills in play this year include SB 786, a growth management bill that would create a pilot program to expedite the approval process for comprehensive plan amendments.
"Now you can be on the treadmill for many months for comp plan amendments," said lobbyist Ron Book, who represents more than 20 municipalities in Florida. "While there is no House companion yet, there likely will be."
The bill would streamline the permitting process a few years after the Legislature largely withdrew from the concept of state-administered growth management.
Richard Grosso, professor at Nova Southeastern University’s Shepard Broad Law Center and general counsel to the Everglades Law Center, said deregulating development is not a good idea. The Legislature "all but abolished the state’s role in planning in 2011," and legislators need to restore the state’s role in many areas, he said.
"Without the analysis and data from state agencies, most local citizens won’t have a realistic chance to influence local planning decisions or successfully enforce the planning law," he said. "And this bill could be a cynical response to that reality."
He said state oversight is key in helping coordinate growth and its impact beyond one community.
"We need to resume coordinated planning in Florida unless we actually want to be overrun by sea level rise, traffic and pollution," Grosso said. "This bill would take us in the wrong direction."
HB 537 is a growth management bill that would kill any public referendum initiated after June 2011 seeking to overturn a development order or amendment to a city’s comprehensive plan regulating future development.
"That bill is in response to a circuit court decision in Palm Beach last year," said Book, who is familiar with the proposed legislation. A Palm Beach circuit judge sided with a group of Boca Raton citizens who opposed a city ordinance backing a 353-unit apartment building on Palmetto Park Road last October. The bill would clarify existing law that prohibits referendums on development orders and comp plan amendments, Book said.
Another bill, HB 73 sponsored by Representative George Moraitis, R-Fort Lauderdale, would cancel a 2015 deadline to retrofit elevators in condominiums to meet building codes at a cost of . millions of dollars to condo owners. The bill would mandate associations to comply with the new building code when elevators need to be replaced or need major repairs, Berger said.
"We have a community with three elevators, and we were looking at a three-quarter of a million dollar bill to do those upgrades," she said.
SB 596 would expand the power of the state Division of Condominiums, Timeshares and Mobile Homes to regulate homeowner associations. The division would provide regulatory oversight over homeowner associations and, among other things, be empowered to investigate complaints filed by homeowners. Currently, homeowners must sue to seek a remedy for violations of association rules and regulations.
SB 182 would require condo associations to provide a list of rented units to the property appraiser’s office, but associations aren’t happy with this bill.
"The bill creates a burden on associations and the volunteer directors to keep track of that," Berger said.
SB 903 would prevent squatters from breaking into abandoned homes and claiming ownership under the adverse possession law. The bill also would also require confirmation from the owner of record before title is issue to someone new.