It’s a great law for the economy, banks and bargain hunters. But it may be a raw deal for homeowners struggling to hang on to their homes.
The proposal sponsored by Florida State Rep. Kathleen Passidomo, R-Naples, and Sen. Jack Latvala, R-Clearwater, looks to speed up the foreclosure process by reducing the number of hearings, easing up on the paperwork and hoops lenders must jump through to reclaim a property, ultimately reducing the wait time from five years to one.
Opponents like MoveOn.org, a liberal nonprofit political action committee, say the law is unconstitutional. The group is threatening to sue if the proposal is passed and is collecting signatures demanding that the governor veto the bill.
The group says The Foreclosure Act was passed illegally and unconstitutionally.
“The Legislature failed to adhere to the requirements of the Florida Constitution. There will be litigation initiated to defeat this illegal and unconstitutional bill, which will be unnecessarily costly litigation to Florida,” MoveOn.org says on its website.
State Sen. Darren Soto, D-Orlando, wants Gov. Rick Scott to veto the bill.
“This legislation would mark the biggest reduction of homeowner (and) homestead rights in generations,” he said. “In a state that ranks first in the nation in foreclosures, not only does the law allow homeowners to be evicted more quickly, but if the eviction was through bank fraud, there is no possibility of arbitration to recover the home. ”
Soto said the law does not allow enough time for mediation, short sales, relocation assistance, reduction of unpaid principal balances, refinancing for borrowers whose homes are worth less than the money they owe, or other options. He said he is particularly concerned about how the law will affect the activities and reports from the Office of Mortgage Settlement Oversight, the federal authority charged overseeing banks to ensure they comply with the servicing standards and consumer relief requirements outlined in the National Mortgage Settlement.
But the law has its supporters.
The Community Advocacy Network, a statewide not-for-profit advocacy network that promotes favorable community association legislation, supports the new law.
“CAN members are very supportive of HB 87 as it would allow community associations to push forward with stalled bank foreclosure,” said Donna DiMaggio Berger, a lawyer and founder of the organization.
“This is an important tool as far too many Florida homeowners have fallen victim to foreclosure while paying for the budget shortfalls created by their neighbors who preceded them on the foreclosure path,” DiMaggio Berger said.
She also paying members of homeowners’ associations are protected by the law.
“There are some very consumer friendly portions of this bill from a debtor’s perspective including the significant reduction in the amount of time a bank can go after a borrower for a deficiency judgment,” she said, adding mortgage defense attorneys would likely not support the bill since their clients benefit from longerforeclosure proceedings.
Passidomo told the media her goal is to make the process as efficient as possibly to avoid a perpetual limbo while still respecting the rights of the borrower.
Florida has one of the highest number of foreclosures in the country.
RealtyTrac, a website that tracks Florida mortgage trends, says one in every 317 homes in the Sunshine State is in foreclosure. Many have been stuck in limbo for years.
Jorge Miguel, of JM International Realty, told Florida Watchdog that there are foreclosed properties that have been stalled in court for more than four years.
“If we see it from the point of view of the economy, is a good plan to streamline and clean all the properties that have been in foreclosure and have taken a long time,” Miguel said. “If we see it from the point of view of the consumer, is a negative. Many people want to prolong the foreclosure process to live in their home (without paying).
What is not yet clear is what the impact the law will have on the local economy, or how the law will coexist with the other laws that were enacted to provide relief to homeowners wishing to remain in their homes.
“I’m unaware of how HB 87 will impact the local and federal programs designed to keep distressed homeowners in their homes,” DiMaggio Berger said. “I assume those programs will adapt if the Fair Foreclosure Act becomes law to ensure that the needed funds and legal services arrive in time to account for the shortened foreclosure timeline,” she said.
Lawmakers, meanwhile, recently passed another bill (SB 1852) authorizing $31 million in relief to homeowners.
Published with permission from Watchdog.org
Contact Marianela Toledo at [email protected]
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