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February 1, 2012
Foreclosure backlog stands at 368,000, with more on the way

Panel has little interest in nonjudicial remedies

By Gary Blankenship
Senior Editor

Foreclosure filings are expected to begin increasing in Florida again, and the state court system has a multi-year plan to deal with the hundreds of thousands expected new filings.

State Courts Administrator Lisa Goodner appeared before the Senate Criminal and Civil Justice Appropriations Subcommittee January 12 to discuss handling an estimated 368,000 foreclosure cases pending in state courts and expected new cases.

Goodner’s appearance was a day after the House Civil Justice Subcommittee held a workshop on the subject which, among other things, indicated little support for nonjudicial foreclosures.

Goodner said she expects the backlog of cases to grow by another 380,000 cases by 2016, which is when she expects foreclosures will return to their “normal” rate of around 70,000 cases a year. For 2012-13, she predicted 165,000 foreclosure filings.

“The 750,000 is what we don’t think we have the resources to handle,” she told the Senate committee. “We have put together a proposal and filed it as a supplemental budget request for your consideration. We basically reinstituted the program we had in place that the Legislature funded in 2011, that allows us to put case managers online and senior judges and case managers online to manage the backlog.”

Goodner said the courts would ask for the money year by year, and only for what it expects to need for the next fiscal year. She estimated $5.7 million would be needed for the 2012-13 budget cycle.

“We ran this program for a year in 2010-11, and we really feel like we can effectively put these resources to use, once the cases start coming,” Goodner said. “The projections are only projections. We need to work with the lenders and work with the Legislature to make sure that if the resources go out and online with the courts, that the cases are moving in the system. . . . The dollars would be used to reduce the backlog.”

Foreclosure filings — and consequently the court revenues which are heavily dependent on them — have been severely depressed since late 2010 when the robosigning scandal came to light. That showed that some banks and some of the companies and law firms they hired to handle the glut of foreclosure cases were using questionable documents and procedures in preparing their cases.

Goodner told the subcommittee that the courts are seeing an “uptick” in the number of foreclosure filings. She also echoed what some lawmakers have said: “A lot of these cases are backlogged because there is no activity on the case, and the lenders have not been moving them forward.”

The discussion in the Senate subcommittee came a day after the House Civil Justice Subcommittee had a workshop discussion about foreclosures. One point of consensus was that nonjudicial foreclosure would be unlikely to help because it would apply only to future mortgages.

“Taking the route of just doing nonjudicial foreclosure does nothing with alleviating the [backlog] problem,” said Rep. Richard Steinberg, D-Miami Beach.

The only supportive voice on the panel was Rep. Shawn Harrison, R-Temple Terrace: “The idea we would allow a bank or other institution to engage in nonjudicial foreclosures in exchange for giving up the deficiency judgment would do a great deal to clean up the foreclosure mess. I, for one, would like to see us move down that path,” he said.

The subcommittee went on to discuss problems with the state’s existing expedited foreclosure process. Those include the failure of plaintiffs to file all the needed documents, problems with the required service, the necessity of having two hearings, and the wariness of title insurance companies about properties that have gone through that procedure.

Rep. Gregory Steube, R-Sarasota, and Rep. Kathleen Passidomo, R-Naples, discussed their separate bills addressing foreclosures. Passidomo said any changes must protect property owners’ due process rights and also ensure that someone who buys a foreclosure property is not later divested of the property if a paperwork or procedural problem is later discovered.

Steube said other lienholders, such as homeowners or condominium associations, should be able to ask the court to move a foreclosure case along.

Other remedies, Passidomo said, must also address paperwork filed by banks, particularly when the mortgage note is missing and the lender is relying on affidavits to prove ownership of the mortgage obligation.

Rep. Darren Soto, D-Orlando, who represents homeowners in foreclosure cases, agreed.

“There’s very little stopping the lender who has all the affidavits from proceeding with the foreclosure,” he said. “The real issue is becoming the documents.”

The subcommittee also discussed defenses raised by homeowners, and whether in some instances those include frivolous defenses. That conversation included not allowing affirmative defenses unless the homeowner continues paying the mortgage or, in some cases, splitting the proceeding by allowing the foreclosure to proceed and trying the other issues later, with the homeowner being limited to damages if he or she prevails.

Goodner also presented the plan for attacking the foreclosure backlog to the House panel. She emphasized the bulk of the money would not be used unless there is an increase in foreclosure filings, and said getting more case managers would give court officials a better handle on trends in foreclosure filings.

The courts are seeing, Goodner said, an increase in motions to move forward among pending cases, as well as an increase in new foreclosure filings.

Subcommittee Chair Eric Eisnaugle, R-Orlando, said that practitioners have told him renewing the court program “would be a huge benefit in moving the cases along.” He praised the workshop discussion for giving the panel a good base for considering foreclosure legislation.

Senior Editor Jan Pudlow contributed to this report.

[Revised: 10-10-2014]