Monday, June 10, 2013

Governor signs Foreclosure Bill (HB 87) - What it means for your association?

On Friday, June 7, Governor Scott signed House Bill 87 (HB 87) relating to Mortgage Foreclosures into law. What this mean for your association and a new weapon to fight stalled mortgage foreclosures.... 

The biggest impact for associations from this bill is the ability to ask the court for an "Order to Show Cause." This is a legal procedure that was available to foreclosing banks for quite some time.  Basically, it allows a bank to immediately ask the court to review their foreclosure complaint. Upon a finding of the basic facts which would grant the bank foreclosure, the court gives the defendant a chance to refute the allegations and make a defense. If none is presented then the bank automatically wins and the foreclosure judgment is entered.  See Fla. Stat. § 702.10. When used properly, a foreclosure action can be pushed though in a matter of weeks. As a side note, why don't more banks use this procedure now???? Mainly because it's a technical process that requires a little bit of planning and extra work. I mainly see this procedure used in large commercial foreclosures.  Plus, it's my opinion that most of the major national banks are stalling foreclosures on purpose...that'll be discussed another time though.  

With that all being said, HB 87 now makes the "Order to Show Cause"  procedures available to associations and other junior lien holders. It's a great idea in theory and in the right circumstances will undoubtedly increase the speed of mortgage foreclosures (which is almost always a good thing for the association).  However, I'm still unsure how the practical aspects of it will work. I have several associations that are interested in proceeding under this new law. The law immediately took effect when the governor signed it into law. I will likely post something when I find out the practical realities of this procedures and encourage anybody else who is considering it to contribute their thoughts in the comment section.  

The other impacts of this bill that aren't immediately relevant to associations are as follows:
  • Reduces the statute of limitations for deficiency judgments on a foreclosure action from 5 years to 1 year and limits the recoverable amount of the deficiency in some cases.
  • Requires the plaintiff in a foreclosure action to provide information to the court upon filing of the case regarding a lost, destroyed or stolen promissory note. 
  • Provides finality of a mortgage foreclosure judgment for certain purchasers of a property at a foreclosure sale while allowing for monetary damages.
  • Defines adequate protections where there is a lost, destroyed or stolen note.
For your reading (or sleeping) enjoyment, the text of the bill can be found here, for the shorter staff analysis click here

No comments:

Post a Comment