Written by
Fort Myers News-Press
(News-Press.com) - Critics are opposing a bill they claim introduces nonjudicial foreclosures to Florida, favors banks and threatens homeowners' rights, but the Naples legislator sponsoring it insists the opposite is the case.
House Bill 213 tries to streamline the foreclosure process, staying within the court system rather than bypassing it, and protects homeowners' rights, said Kathleen Passidomo, a Republican state representative and real estate lawyer from Naples.
However, some homeowners, watchdog groups and lawyers, fearing a foreclosure defendant's day in court is in jeopardy, are blogging and speaking against the bill. A coalition of groups that include the Mortgage Justice Group; ForeclosureHamlet; 4closurefraud.org; Awake the State; the Occupy Movement; and the Foreclosure Coalition will march to the Capitol on Feb. 16 to protest HB 213 and any moves toward nonjudicial foreclosure at the annual Rally in Tally.
They have been misinformed, Passidomo said. "I have been saying from day one that I will not support a nonjudicial foreclosure bill."
HB 213 is a fair bill, Passidomo said. "It will give the courts the tools to move the process forward. In no way, shape or form does it take away the rights of any borrowers."
Woody Ryan, a Naples area homeowner in foreclosure who is a member of the Mortgage Justice Group, disagrees. The phrase "nonjudicial foreclosure" isn't directly in the language of HB 213, he said.
"However, this is the first step to go there and, No. 2, if you look at the specifics of the bill, there is not one thing in that bill that benefits the homeowners and that really will eliminate the backlog in the court docket," he said.
Nonjudicial foreclosure means a lender can take a house in foreclosure legally without going before a judge - considered cheaper, quicker and moving foreclosed homes back into the marketplace sooner. Passions are high on both sides of the debate in a state with the second highest number of foreclosures in the nation.
A foreclosure study from September 2011 by the Legislature's Office of Economic and Demographic Research shows Florida has the third highest number of underwater mortgaged properties in the nation, at 45 percent. The average time for a foreclosure to be processed to its conclusion in Florida is 749 days, or more than two years, according to a November RealtyTrac report. The company also has predicted an increase in foreclosures for 2012.
Gov. Rick Scott has expressed interest in looking at nonjudicial foreclosure as a possible remedy. The Senate Committee on Judiciary released a November study that looks at the viability of nonjudicial foreclosure vs. judicial foreclosure.
Florida is one of about 20 states that use judicial foreclosure only; 25 use nonjudicial foreclosure, the rest use use both methods, according to federal and state statistics.
Bill contents
Passidomo said nonjudicial foreclosure won't help with the backlog because most mortgage contracts say that if there is a default, the lender can foreclose, but the case has to go through the courts. So nonjudicial foreclosure could only start with future foreclosures, she said.
>> HB 213 keeps the foreclosure process in front of a judge but adds ways to speed it up, Passidomo said. Aspects of another bill sponsored by Rep. Greg Steube, R-Parrish, were added to HB 213 while in committee, and now Passidomo and Steube are listed as sponsors. The bill:
>> Allows all lienholders to use expedited foreclosure procedures, instead of just the bank. That includes condominium and homeowner associations that can call for a case management conference to jump-start a stalled foreclosure.
>> Has a more condensed time frame; reduces the number of required hearings.
>> Shrinks the amount of time a bank can go after a foreclosed homeowner for a deficiency judgment from five years to two. A deficiency judgment means the homeowner would be liable for the remaining money owed on the loan if the home is resold at a price that doesn't satisfy the debt.
>> Allows for expedited foreclosure of abandoned residential property, and provides a legal definition for abandoned property.
>> Requires the bank to provide information to the court about lost, destroyed or stolen promissory notes at the time the foreclosure is filed instead of later in the process.
This is meant to address past problems where lenders file foreclosure complaints without proper documentation or even fraudulent documentation that says the bank owns and can enforce the note.
However, the bill says if the lender doesn't provide evidence it is entitled to enforce the note, the court can sanction the lender, but it doesn't provide grounds to set aside a foreclosure sale.
The fact is foreclosure will happen anyway, no matter who holds the note, Passidomo said. The reality is the borrower borrowed something from someone, and didn't pay his debt, she said. If a bank forecloses on a homeowner improperly and a third party comes forward with proof they are the real owners of the note, the bill protects the homeowner from being sued or thrown out of the house by the third party.
Ryan said here are ways to expedite foreclosures in foreclosure law, but banks aren't using them because many lack proper documentation or use fraudulent paperwork to enforce the delinquent note.
Due process
The Florida Bar's Real Property, Probate and Trust Law Section is in favor of the bill, said Peter Dunbar, an attorney and lobbyist for the bar. "We have worked with Rep. Passidomo on the content. We have a standing position aggressively against the concept of nonjudicial foreclosure because it potentially emasculates the concept of due process."
The Florida Bankers Association also had input into the creation of the bill, offering opinions and suggestions, said Anthony DiMarco, executive vice president. However, "As an association, we'd like nonjudicial foreclosure," he said.
HB 213 is "not nearly as objectionable as nonjudicial foreclosure," said Michael Hagen, a Fort Myers attorney who specializes in foreclosure defenses.
He said some of the better provisions are the criteria to define an abandoned home and expedite its foreclosure; the ability of the condominium or homeowners association to take part in the process; and reducing the ability of a bank to file a deficiency judgment from five years to two.