(Editor's Note Update: The foreclosure bills referred to in the following story died in the waning days of the legislative session. A complete update will be included in the April 1 News.)
By Gary Blankenship
Thanks to a last-minute Senate committee meeting, bills to speed foreclosure on abandoned properties and those instances in which homeowners don’t have a valid defense have progressed in the Florida Legislature.
The House approved its version, HB 213, on February 29, while the Senate Banking and Insurance Committee held a special meeting on February 27 just to consider its bill, SB 1890. Rep. Kathleen Passidomo, R-Naples, one of the sponsors of the lower chamber’s legislation, helped Sen. Jack Latvala, R-St. Petersburg, present the amended version of his bill, which closely tracked HB 213.
The Senate bill cleared the committee by a 6-4 vote, guaranteeing both chambers would likely consider a foreclosure bill on the floor before the March 9 scheduled end of the session (after this News went to press).
Both bills drew criticism from consumer groups and homeowners, who said they don’t give foreclosed homeowners enough time to mount a defense and that the bills don’t punish banks that pushed buyers into homes they couldn’t afford and then relied on faulty documentation to foreclose.
“This bill is about half and half,” Latvala said. “It’s about half expediting the process on the properties that should be expedited, and the other half is giving the protections [to the homeowner] — making sure there is proper paperwork and there’s redress with damages if the paperwork is missing.”
Passidomo said while the courts now have an expedited process for foreclosures, it is rarely used because only the mortgage note-holder can pursue it. The bills allow any lienholder — including homeowner or condominium associations — to use the expedited show-cause process in the legislation. She said her expectation is that the speedy process will be used for abandoned properties or when property owners have no valid defenses.
“What we’re saying to the lender is, ‘Don’t file your complaint unless you have all your ducks in a row and everything lines up,’” Passidomo said. “If you don’t [have the paperwork in order], the borrower can file a meritorious defense on why the foreclosure should not go forward.”
Another key advantage for homeowners is, like the House bill, the time for seeking a deficiency judgment following a foreclosure is reduced from five years to one year.
The bill produced some uncertainty among the Senate committee members.
Sen. Mike Bennett, R-Bradenton, said he would vote for the bill but hoped for some changes by the time the bill reaches the Senate floor. He said the measure should have been considered earlier in the session.
Sen. Steve Oelrich, R-Gainesville, a former sheriff, said he too was concerned homeowners didn’t have enough protections under the bill, given findings by a recent study of widespread document and other problems in California foreclosures.
“I don’t mind being the sheriff, but I don’t want to be the sheriff of Nottingham,” he said.
Sen. Don Gaetz, R-Niceville, said he didn’t have any reservations.
“The only properties affected are those whose payments are seriously delinquent,” he said. “I’m voting for it today, and I’m voting for it on the floor.”
But Sen. Eleanor Sobel, D-Hollywood, disagreed, saying, “I believe this bill needs a lot of work, so I’m going to vote ‘no’ for that reason. . . .The last thing we want to do is increase homelessness.”
Several homeowners attended to testify, but were forced to abbreviate their presentations as the committee ran out of time. They were critical that the bill was not harder on fraudulent documents that were rampant in many foreclosure filings and argued the bill gave homeowners as little as 20 days to prepare for the show cause hearing. That, they said, was an insufficient amount of time to hire an attorney, conduct discovery, and investigate whether the foreclosure documents were proper.
HB 213 passed the House 94-17 after garnering bipartisan support.
“We aren’t talking about putting people out of their homes who already aren’t out of their homes,” said Rep. James Waldman, D-Coconut Creek. “We’re talking about getting this process moving along much quicker.”
Rep. Eric Eisnaugle, R-Orlando, said the bill protects consumers by requiring banks to have their paperwork in order and by lowering the time for banks to seek deficiency judgments from five years to one year.
But Rep. Darren Soto, D-Orlando, said the bill doesn’t give foreclosed homeowners enough opportunity to contest a foreclosure.
“Justice demands due process and fairness when we are taking people’s property,” he said.
If ultimately passed and signed by the governor, the bill becomes effective July 1 and applies to existing foreclosure cases, as well as new cases.