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Florida bankers move to dramatically speed up the foreclosure process

If bankers get their way, Floridians facing foreclosure could be kicked out of their homes in as little as three months.

The Florida Bankers Association, the 400-member-strong lenders' lobby, has presented state legislators with a bill to upend decades of Florida law and establish "non-judicial" foreclosures in Florida by July 1.

What's a non-judicial foreclosure? Banks would accelerate foreclosures against defaulting homeowners by bypassing the courts. Judges would no longer rule on foreclosure cases.

Some states — 37 in fact — already grant that fast-track foreclosure authority, including California, Georgia, Alabama and Texas. But Florida, with its plethora of vacation and retiree homes, has always been big on homeowner rights.

If you're a financially strapped Florida homeowner — 62,719 Tampa Bay properties got foreclosure notices last year — the 53-page bill contains worrisome signs:

• Non-judicial foreclosures must conclude in no less than three months and no more than a year. Most Florida foreclosures take a year to 18 months to work through the courts these days, longer if a lawyer fights a successful rear guard action. So in 90 days banks can theoretically auction the home out from under you.

• The Florida Supreme Court's newly endorsed mandatory mediation for lenders and homeowners would effectively go bye-bye. The bill provides only for informal meetings between creditors and debtors.

• Even after homeowners are evicted, banks can still pursue them for unpaid mortgage debt. But banks will waive that right if homeowners avoid trashing or stripping the house before the new owner takes over.

The bankers association has titled the bill The Florida Consumer Protection and Homeowner Credit Rehabilitation Act. Association president Alex Sanchez views the bill as a way to break a foreclosure crisis partly caused by mortgage fraud.

He offered a list of innocents the bankers aim to help: neighbors annoyed by abandoned houses next door; condo associations pursuing dues from properties in legal limbo; cities grappling with urban blight; and judges overloaded with thousands of foreclosure cases.

"We don't want the property. We're not into the property management business," Sanchez said of bankers. "We want to get a property out of the courts and sold to a productive Florida family.''

Finalizing a foreclosure is time-consuming and expensive. The longer a property lingers in the courts, the longer banks get no mortgage income from the property. One Tampa mortgage banker revealed this month that each foreclosure can cost lenders an additional $30,000 in legal fees.

The law would apply to foreclosures after July 1, not old cases already in the courts. Kristopher Fernandez, a Tampa foreclosure attorney, blames the banks themselves for much of the judicial foot dragging.

"These cases are stuck in legal limbo because banks don't want to push foreclosures," Fernandez said. "I've seen cases where nothing is done. The lenders don't want these homes back. They know they have to pay assessments once they take them back."

Pinellas-Pasco Chief Judge Thomas McGrady backs up that point. McGrady has talked about a "dam" in the courts from banks reluctant to schedule sales of foreclosure homes.

What's the chance of this legal revolution getting consideration? The Florida Legislature convenes on March 2. As of yet, the bill has neither an official number nor formal sponsors.

With populism resurgent and anti-banker attitudes rife, passage could be a stretch. Gov. Charlie Crist would have to sign a pro-banker bill as he's contesting a U.S. Senate seat with state Rep. Marco Rubio.

"We've had conversations in both chambers to have it filed,'' said Anthony DiMarco, the bankers association's executive vice president of government affairs.

"Sure, it's a change in Florida law. But it will help us get to the bottom of the foreclosure crisis faster."

Florida bankers move to dramatically speed up the foreclosure process 01/28/10 [Last modified: Friday, January 29, 2010 12:08pm]
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