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Florida Homeowners Should Know New Foreclosure Law

Orlando homeowners should know new foreclosure law in Florida recently signed by Florida Gov. Rick Scott. House Bill 87 controls the Florida judicial foreclosures which means foreclosures are controlled by the courts. In short, the lender has to sue the borrower to get an order to foreclose.

Eric Lanigan and Roddy Lanigan have handled foreclosures extensively since the Florida real estate market began its decline in 2007. Clients come into the Winter Park, Florida, and Orlando, Florida, offices for consultations to determine the best  plan of action if a foreclosure is likely.

Florida Homeowners Should Know New Foreclosure Law

Before deciding that you’re throwing in the towel, consult with the Lanigans. Everyone has a different financial scenario and wants different outcomes on their property. Invest in a one hour consultation to find out what your options are as a homeowner with a property that is under water and debt from multiple sources.

Depending on the court schedule and load, it normally takes from 180 to 200 days to complete the foreclosure process in Florida. However, the bill was initiated because the foreclosure process extended on average for between two and three years.

Homeowners could in fact contest the foreclosure or file for bankruptcy, this process may be delayed further.

In Florida the foreclosure process begins with a Notice of Default. This occurs when your mortgage lender notifies you that you’re in default on your mortgage. This notice states you’ve fallen behind enough that the lender is beginning foreclosure proceedings. This typically happens after the borrower is more than three payments behind.

Next, the lender files a Lis Pendens which tells the public that there is a legal action pending on the property. In short, this is a lawsuit against you for defaulting on your mortgage. It demands you to pay your mortgage in full.

The actuality is that the Clerk of Court records a Lis Pendens and you’re served papers.

In a foreclosure action, you the debtor, have 20 days to file an answer with the court. If you file an answer, you get the chance to present and tell your side at a legal hearing overseen by a judge.

When you answer the complaint this will also extend the of the foreclosure which is not guaranteed.

After 20 days the mortgage lender files a motion with the court to declare summary judgment. There’s an additional 20 day period to answer before the hearing is held.

If a debtor can’t contest the foreclosure, or work out a loan modification or a short sale a foreclosure sale date is established 30-45 days after a hearing. At this point, the property will be sold at a public auction to the highest bidder.

Again, this sale can be postponed at the request of the mortgage lender or the mortgage lender’s lawyer.

Following the sale there’s a minimum 10-day waiting period and the Clerk issues the new owner Certificate of Title. There’s one last chance before this certificate is filed for the mortgagor or the holder of any junior lien may cure the mortgagor’s indebtedness and prevent the foreclosure sale. This is known as the Right of Redemption.

At the end of the sale the sheriff may evict the previous owner and remove their possessions.

The lender may sue the borrower for a deficiency judgment if the sale price does not cover the balance due on the loan plus costs.

How Homeowners Are Hurt by the New Foreclosure Law

The speeding up of the foreclosure process is bad news for homeowners.

In Florida, more foreclosures were filed and completed than any other state in May, according to RealtyTrac.

Foreclosures are judicial, which means a lender has to file a lawsuit in state court. The lender starts the foreclosure by filing a complaint with the court and having it served to the borrower along with a summons.

But if you lose the case, the court enters a foreclosure judgment and the property is sold to satisfy the debt.

The new foreclosure law, formerly known as House Bill 87, relates to Florida residential foreclosures.

Even if the Bank Improperly Forecloses You Cannot Get Your House Back

The new law makes all foreclosure judgments final. Any action to set aside, invalidate, or challenge the validity of a final foreclosure judgment of foreclosure is limited to monetary damages when certain conditions are met.

This aspect means a former owner can pursue money damages against a lender that improperly foreclosed, but can’t regain title to the property. The house is gone forever.

The New Foreclosure Law Forces Lenders to Produce Property Title

A mortgage and a promissory note are signed by homeowners. The promissory note establishes a homeowner’s liability for the mortgage loan. The mortgage creates a lien on the property. The holder of the note is the only party that has the right to foreclose on the property.

The changes in the law provide an avenue for plaintiff’s for property other than owner occupied to request the court to enter an order to show cause why an order to make payments or order to vacate the premises should not be entered.

The bill also establishes adequate protection for lost notes and is designed to prevent attacks on foreclosure judgments by borrowers served in the action when the property was  acquired for value by a third party and all appeals are expired.

Foreclosure Judgments are Final

Additionally, the new law makes foreclosure judgments final. Any action to set aside, invalidate, or challenge the validity of a final judgment of foreclosure is limited to monetary damages when the lender meets certain conditions. 

Attorneys working within the foreclosure space note House Bill 87 comes with new legal and procedural requirements. Critics refer to it as the ‘rocket docket’ legislation, in reference to the quickened foreclosure review system previously in place. However, there are many procedural caveats that could make that comparison less appropriate.

Mortgage servicers face more resistance from Florida judges and appellate courts than other states, with borrowers often moving forward in trial cases or obtaining reversals of decisions in favor of lenders on appeal.

HOAs Now Have Power to Speed Foreclosures

If a homeowner wants to work out a repayment solution to stop the foreclosure, maintain all payments on Homeowner Association (HOA) dues. Now HOAs have the power to accelerate a foreclosure. 

The new law allows any lienholder on a property whether the IRS, or the HOA, to request an expedited foreclosure leaving a distressed homeowner with less time to pay up, hold a short sale, a deed in lieu of foreclosure or a mortgage workout also known as a loan modification.

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