Proposed foreclosure legislation in Tallahassee

Proposed foreclosure legislation in Tallahassee

By Sarah Parr

Lawmakers, real estate professionals and consumer advocates are currently devising plans to change Florida’s status as one of the few states in the country that is still seeing a surge in foreclosure activity. A few proposals are currently hovering in the Florida legislature, creating debate among many people with different solutions.

House Bill 87

House Bill 87, also known as the “Fair Foreclosure Act,” is a proposed bill to accelerate the long judicial-foreclosure process in Florida. Proponents argue that the bill protects borrowers by requiring banks and lenders to thoroughly prove they own a mortgage before they are allowed to file any foreclosure action. If passed, the bill would also allow third-party lien holders, such as condo or homeowner associations, to push foreclosures through a quicker process rather than through the usual court arrangement. The legislation allows borrowers 20 days to provide defense against the foreclosure action. After a final judgment in foreclosure is reached, the bill would give banks and lenders one year instead of the present five years to go after borrowers for losses from a foreclosure. 

House Bill 87 has spawned the most debate of all the proposed measures. Those in opposition state that the legislature seems more concerned with processing foreclosures as fast as they can and less concerned about protecting homeowner rights. They also claim that 20 days is not enough time for homeowners to seek out foreclosure defense attorneys and provide sturdy defenses against foreclosure. On the other hand, supporters claim the Florida foreclosure process is too drawn out, causing distress among everyone involved. Supporters say speeding up the process would also be beneficial for the future success of Florida’s real estate, as homes in foreclosure limbo can be eyesores that push surrounding property values down.

Senate Bill 1666

Senate Bill 1666 proposes allowing retired justices or judges to consent to temporary duty to help go through the backlog of foreclosure cases in Florida. The legislation would also allow second publication of the notice of sale of a home to be published on a publicly accessible website of the clerk of court instead of publication in any form of media.  This changes the requirement that a second notice of pending foreclosure must occur in a print newspaper advertisement, a move some say is unfair to low-income homeowners or seniors who could only find out about a potential foreclosure sale through a print newspaper notice.

House Bill 1777

House Bill 1777 proposes establishing a homeowner bill of rights, like a similar measure recently enacted in California, in the event of late mortgage payments. California’s law is meant to protect homeowners from predatory lenders and further regulate the mortgage industry. California has already seen a large decrease in the amount of foreclosure filings in January since it went into effect on January 1, according to CNNMoney.

Senate Bills 1236, 1226, 371 and 1228

Four bills, proposed and sponsored by Senator Darren Soto (D-Orlando), seek to aid homeowners in distress. Senate Bills 1226 and 371 would require that lenders can only file a deficiency judgment one year after a final foreclosure judgment, and would only have two years to collect any outstanding debt. Currently, collectors can hound borrowers for up to two decades. SB 1236, also known as the “Mortgage Principal Reduction Act,” would require the Florida Housing Finance Corporation to apply for $100 million of the federal government’s Hardest-Hit Program in order to begin a mortgage principal reduction program for Floridians with properties in foreclosure. Soto’s final proposed bill, the “Short Sale Debt Relief Act,” would make deficiency judgments void on a short sale if the original debt was 20 percent or greater than fair market value.

Based on all of the proposals presented, Florida will probably see changes to the foreclosure process soon.  Everyone who has an opinion on what needs to be done most likely wants to see the housing market recover further and succeed.