TALLAHASSEE, Fla. — The state’s mortgage foreclosure process would be speeded up and streamlined under a new proposal cleared by a Senate panel on Monday.
Critics say a faster process will infringe on the rights of homeowners who already are abused by banks and attorneys gaming the system with questionable — and sometimes outright phony — paperwork.
Mortgages are hard to verify when “they’ve been sold around the world multiple times,” said Deb Lilley of Port Charlotte, who married her husband while he was in the middle of a foreclosure. “That’s why they keep having to manufacture documents.”
The Senate Judiciary Committee cleared the bill (SB 1890) by a 5-2 party line vote. Similar bills are pending in the House.
Sen. Jack Latvala, a Clearwater Republican, said foreclosure was a “dark cloud” hanging over the Sunshine State. He mentioned a backlog of 368,000 foreclosure cases in the state’s courts.
The collapsed real estate market resulted in millions of foreclosures across the country that hit courts like a rogue wave. One recent survey showed Florida has about a quarter of the nation’s foreclosures.
But attorney general’s offices and other authorities have discovered many instances of erroneous and fraudulent filings. A $26 billion settlement between the states and the nation’s five biggest banks was made final about two weeks ago.
Paperwork in many foreclosures was the product of “robo-signers,” people hired to sign documents in assembly-line fashion, often without knowing what’s in them. Such documents included affidavits that a bank actually owns the mortgage on a property being foreclosed when the original paperwork can’t be found.
Other civil and criminal investigations have resulted in the collapse of two major foreclosure law firms and the temporary stoppage of many lenders’ foreclosure filings.
Lynn Drysdale, a Jacksonville Area Legal Aid attorney who represents foreclosure clients, said the problem isn’t with the process, but with the practitioners.
“There are law firms handling tens of thousands, if not hundreds of thousands of (foreclosure) cases, and they don’t have their documents in a row,” said Drysdale, who also chairs the Florida Bar’s Consumer Protection Law Committee.
Among other things, Latvala’s bill:
• Heightens requirements of proof that a party trying to foreclose on a property actually owns the mortgage. Banks or other finance companies would have to clearly show how a mortgage was bought and sold, or explain precisely why original documents were lost or destroyed.
• Requires that when a mortgage is fully paid off, a written acknowledgement has to be filed in the official county records.
• Allows a borrower or other interest-holder in a property to make a written request for the actual payoff amount of a mortgage and be told that amount in 15 days.
• Shortens to one year the time for a bank to go after the balance owed after the foreclosure sale of an owner-occupied, one-family to four-family dwelling.
Consumer advocates, however, were alarmed over other provisions, including ones aimed at condominium and homeowner associations. Those who are owed dues can file requests for a final foreclosure judgment to get what’s owed without an initial hearing.
Another term provides a speedy process for a final foreclosure judgment if the homeowner does not participate in the legal process and the home was abandoned. There’s a list of requirements to be met for a home to be classified as abandoned.
There are concerns that homes of people on long vacations or work assignments, or especially those on military duty, would be accidentally found to be abandoned.