Foreclosure backlog cut by 40%
Foreclosure backlog cut by 40%
But many of those cases may find their way back to court
Senior Editor
The backlog of foreclosure cases in Florida courts has been reduced by more than 40 percent in the past year, due to both stepped-up efforts by the courts and from cases being dismissed or dropped by lenders. But nearly a quarter of the state’s properties with mortgages are either in foreclosure or behind on payments.
Statistics from the Office of the State Courts Administrator show that 201,524 foreclosure cases were disposed last year, with 96,630 being handled by summary and final judgments and 104,126 being dismissed. Most of those dismissed cases could later be refiled.
As of June 30, the end of the 2010-11 fiscal year, 260,815 of the foreclosure cases pending at the start of the year remained in the court system. They were joined by around 117,000 fresh cases filed during the year — a lower number than expected because many lenders self-imposed a moratorium after problems surfaced with their paperwork.
The numbers also show that filings remain well below the number necessary for Florida courts — which are budgeted to get over half their operating revenues from foreclosure filing fees — to generate enough funds to operate through the 2011-12 fiscal year.
“The backlog was cleared for a couple of reasons; we had these resources, plus we had a decrease in filings,” said Kris Slayden of the courts administrator’s office. “Dismissals, which can occur for a number of reasons, may take place after a hearing by a judge, at the request by the plaintiffs’ attorney, or following a review by a case manager. Variances in case management practices may influence which cases are scheduled for hearings, which would affect the number of dismissals and summary/final judgments.”
The Legislature appropriated extra funds last year to attack the skyrocketing backlog, enabling the courts to assign more senior judges and hire case managers and attorneys to get the cases ready for court, Slayden said.
“Those resources were very helpful. Even with the voluntary moratorium, we were able to clean up our case files. It was well-spent money,” she said. “It was an avalanche that we couldn’t dig out of without some extra help.”
Circuits had flexibility in using the funds to attack the backlog. Some circuits used case managers to review cases and only forwarded those that were judged ready for resolution, while others set all kinds of cases for hearings, which led to a larger number of dismissals or cases dropped by lenders.
For example, the 13th Circuit had only 226 cases dismissed, while 6,530 reached a final or summary judgment. The 11th Circuit had the opposite result: 23,794 were dismissed, while 7,224 reached a final or summary judgment. The 15th Circuit reflected the statewide experience: 11,638 cases were dismissed, and 11,044 had some sort of judgment.
Gone, But for Good?
Dismissals probably do not mean an end to court involvement in the mortgage.
“They can be refiled,” Slayden said. “You heard of the ones dismissed with prejudice. We don’t have the data, but I’m sure those were few and far between.”
Other findings in the foreclosure statistics showed:
• Relatively few cases — 198 — actually went to a trial. Another 364 were consolidated into another case, transferred to another jurisdiction, or administratively dismissed, and 206 were resolved in unidentified ways.
• The 260,815 identified as “backlog” did not include all foreclosure cases remaining in the court system. Overall, at the end of June, 196,212 cases were identified as active, another 180,180 were inactive, and 2,260 were stayed for bankruptcy, appeal, or other reasons. (That total exceeds the 260,815 figure because it includes cases filed during the year, which were not counted as part of the backlog that existed on July 1, 2010. The total number of cases as of June 30, 2011 — around 378,000 — was significantly lower than the more than 460,000 cases that were in the system at the start of the 2010-11 fiscal year. Put another way, the courts both reduced the existing backlog and disposed of more old cases than the number of new cases added during the year.)
• Clearance rates, which had seriously lagged behind the number of new filings as the foreclosure crisis escalated, began climbing even before the special programs were launched. The courts actually disposed of more cases than were filed for the last quarter of the 2009-10 fiscal year and continued to improve that performance throughout 2010-11. That was helped after October 2010, when major banks began a voluntary moratorium on filing cases after reports of foreclosure paperwork irregularities.
The paperwork snafu caught the courts by surprise. It erupted as news stories revealed that bank employees were signing foreclosure paperwork without personally verifying the information in the documents — so-called robosigning. Other problems arose with notarizing signatures, erroneous or forged assignments, and missing or erroneously prepared mortgage documents.
Some foreclosure filing has resumed, but the levels remain much lower than prior to the paperwork scandals.
The paperwork difficulties proved to be a double-edged sword. The drop in filings gave time to attack the backlog but at the same time devastated court finances. That’s because about two years ago, the Legislature revamped budgeting for the courts. Instead of the majority of court funding coming from state general revenues, it came from filing fees. The highest fees (up to $1,900 per case) were set on foreclosures, and they became the largest source of court funding.
Before the moratorium, the courts had built up a surplus in the court operating trust fund because of the large number of filings. After the moratorium, the courts quickly ate through that surplus and needed a $27 million loan to get through the 2010-11 fiscal year without a partial shutdown. The Legislature gave the courts a $54 million loan for the first three months of the 2011-12 fiscal year, but the budget is based on an expectation that foreclosure filings will again rise and provide the bulk of court funding.
Slayden said while there’s been a slight improvement in foreclosure filings, the level is still far below what the courts need.
Before the moratorium, filings were averaging 20,000 to 30,000 cases a month. From last November through May, filings averaged 9,000 cases a month. That picked up slightly in July, when filings hit 11,700.
The court needs $31.6 million a month from foreclosure filings to meet its budget needs, not counting the 8 percent the state charges for collecting and distributing the filing fees. The July filings will yield $16.3 million for the courts, Slayden said, and estimates for August are for $14.9 million.
There definitely are more foreclosure cases to be filed. Slayden said of the state’s 3.2 million loans for property purchases; 23.1 percent are either in foreclosure (14.4 percent) or delinquent (8.7 percent).
“We know for sure there’s an inventory out there of delinquencies; the question is when they’re going to file or if they’re going to file,” she said.
According to news reports, banks have been looking at and using alternatives to foreclosures, including allowing short sales, approving loan modifications, and allowing owners to stay in properties pending the final foreclosure action (so the property doesn’t become vacant). There have also been concerns that if banks quickly push through all mortgages, there will be an even worse glut of foreclosed properties on the market, further depressing home prices.
There is another state revenue estimating conference on court funding scheduled for September 12 (after this News went to press) where the courts, the governor’s office, and state economists will present estimates of what funding will be for the remainder of the year.
“There are so many unknowns; it’s so hard to find out what’s going to happen,” Slayden said. “We’ve got a retired judge who is working in a law firm that handles foreclosures and represents one of the bigger lenders, and they say they’ve got a stockpile of cases waiting to file.”
The report only looked at foreclosure filings and did not evaluate the Supreme Court-ordered mediation program for homestead properties in foreclosure. Slayden said a report on that should be released in a month or so.
