Florida's foreclosure process could be streamlined during the upcoming legislative session, action that could help the state move past its status as "foreclosure capital of the country," as former U.S. Sen. George LeMieux describes it.
LeMieiux discussed his interest in changes being proposed by the legislature Friday at The River Club during the last stop of a six-city state tour. He was joined on the tour by economist Henry Fishkind of Orlando-based Fishkind & Associates.
Friday's lecture focused on Florida's business, legal and economic landscapes, of which the foreclosure issue addressed all three.
"We are the foreclosure capital of the country. There were actually some states that were worse in foreclosures, but we have failed to recover in that area like other states," said LeMieux.
By the end of 2012, there were 305,766 homes in Florida in some stage of the foreclosure process or bank-owned.
LeMieux partially blamed the slow recovery on the state's process used in foreclosure cases.
Florida uses a judicial process, in which cases are heard before a judge, while other states use an administrative process that does not require a judge.
According to information from market data firm RealtyTrac, the average time in Florida between the first foreclosure filing and bank repossession is 853 days. The national average is 414 days.
"Florida would be recovering a lot more quickly if we didn't have this hamstring," LeMieux said when discussing the judicial process for foreclosures.
State Rep. Kathleen Passidomo has filed House Bill (HB) 87, Mortgage Foreclosures, to help speed up the process for some cases, such as those that have no defense to offer a judge on why they defaulted on their loan. The bill may receive some resistance from banks as it seeks to reduce the amount of time for a bank to pursue a deficiency judgment from a borrower to recover the amount left due and owing on a mortgage from five years to one year.
The bill has four co-sponsors including State Rep. Travis Cummings of Clay County.
Other foreclosure bills filed include four from state Sen. Darren Soto (R-Orlando). They are:
• Florida Mortgage Collection Fairness Act, SB 1218, prohibiting a mortgage collection firm from offering false evidence in a mortgage foreclosure proceeding. It says a violation is a deceptive and unfair trade practice and can result in penalties and remedies. This can include awarding attorney fees and costs under certain circumstances.
• Homestead Foreclosure Relief, SB 1226, providing for application to homestead property mortgaged within a certain time period. It provides a statute of limitations for entering a deficiency judgment and limits the period the lienholder can collect money owed. It also provides that the collection time may be tolled if the debtor commits fraud or if the debtor is held in contempt of court.
• Short Sale Debt Relief Act, SB 1228, providing that a debtor does not owe a deficiency to a lienholder related to an eligible real property sold pursuant to a bona fide short sale if an offer is received by a debtor within a specified time and under specified conditions. It requires a lienholder to approve the short sale of property and execute any document necessary to close the sale within a specified time if a debtor procures a buyer who makes an offer in writing equal to the fair market value of the eligible property.
• Mortgage Principal Reduction Act, SB 1236, requiring that the Florida Housing Finance Corporation apply to the U.S. Department of the Treasury by a specified date to request funds not to exceed a specified amount from the federal Hardest Hit Fund program to establish a new state program to reduce the principal on mortgages for people whose homestead property is in foreclosure. It would require the corporation to use the allocated funds to purchase delinquent mortgages on those properties from lenders at a discount to reduce the mortgage principal amount due on the mortgage.
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