Monday, December 11, 2017
Business

High court ruling means no more 'free houses' for Florida homeowners in foreclosure

There will be no "free houses'' for Floridians who have defaulted on their mortgages but continue to live in their homes without paying.

In a major opinion, the Florida Supreme Court has ruled that lenders can resume foreclosing at any time, even if they have taken no action in years. Previously, they had to act within five years of when the borrower first defaulted.

While a boon for banks, the ruling is a blow to thousands of delinquent borrowers who hoped that their cases would be permanently dismissed and that the banks could no longer collect on the outstanding mortgage debt.

"This case resolves an important issue for Florida, one of the states hardest hit by the foreclosure crisis,'' said Michele Stocker, a Fort Lauderdale lawyer who represents lenders. "The decision effectively removes the unfair notion that people can live in a home for free after an extended period of time. It could help clear out the backlog of cases that have been sitting around for a while.''

By some estimates, a ruling in favor of borrowers and against lenders would have wiped out as much as $400 million in real estate-related debt obligations in Florida.

"This ruling comes as no surprise,'' Stocker said. "Any other ruling would have created such havoc in Florida as it pertains to foreclosures and properties. I don't think the Florida Supreme Court would have wanted to dip its toe into that.''

Matt Weidner, a St. Petersburg lawyer who represents delinquent homeowners, agreed that the ruling was expected but said banks should have been more diligent in foreclosing.

"Get used to living in a world where the banks always win,'' he said. "Even before this (ruling), you can't deny that the courts had a radical pro-business, pro-bank, pro-insurance company tilt. There was never any way the court was going to tell the banking industry they can't collect on billions of dollars' worth of loans.''

The high court's ruling last week came in the case of Lewis Bartram, who defaulted on a $650,000 mortgage on his home in Ponte Vedra Beach. In 2006, the law offices of David Stern began foreclosure proceedings but the case languished along with thousands of others when Stern's firm collapsed amid allegations of fraud and mismanagement.

In 2011, Bartram's case was dismissed after his attorneys argued that the five-year statute of limitations had run. U.S. Bank appealed, however, and in 2014, Florida's 5th District Court ruled in the bank's favor. Bartram then appealed to the state Supreme Court.

At the heart of the case was the issue of "mortgage acceleration.'' Most mortgages have an acceleration clause that allows the lender to sue for the entire loan amount immediately, starting a five-year clock on the foreclosure process. The 5th District ruled that the dismissal of U.S. Bank's lawsuit in 2011 negated the original 2006 acceleration date and reset it to 2011, giving the bank more time to foreclose.

In their ruling, the justices agreed. They said the statute of limitations for banks to file a foreclosure suit resets each month that the borrower defaults on a mortgage payment. That means a bank can file suit more than five years after the borrower first defaulted. It also means borrowers can't stay in their homes forever without paying.

"The decision finally brings some clarity to the issue and will allow judges who have been reluctant to rule on foreclosure cases to move forward with ones that have been pending for years,'' Stocker said. "Now everyone knows what is and what isn't permissible.''

Weidner, though, said the justices were excusing the "bad conduct'' of lawyers in the Bartram case and others.

"There's no reason why a bank acting diligently should not and could not comply with existing law and complete foreclosure,'' he said. "But we have a court system stepping in and giving them a gift.''

If it speeds up foreclosures, the ruling is likely to help Florida homeowner associations. After the housing crash, thousands of unit owners defaulted on their dues. Associations had to take over the properties and maintain them or try to rent them out while waiting for the banks to foreclose.

At the same time, the ruling likely will put a chill on the popularity of HOA foreclosure auctions. Some companies quickly discovered there was big money to be made by getting temporary title to homes by bidding just high enough to pay off the delinquent dues, often only a few thousand dollars. Then they could rent out the homes for months or even years until the banks foreclosed.

The Florida Attorney General's Office is investigating one company, Tampa-based HOA Problem Solutions, that got its start through auctions and has rented out dozens of homes in foreclosure in the Tampa Bay and Jacksonville areas.

Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate

Comments
Outback Steakhouse co-founder Chris Sullivan steps off Bloomin’ Brands’ board

Outback Steakhouse co-founder Chris Sullivan steps off Bloomin’ Brands’ board

Chris Sullivan, co-founder of Outback Steakhouse, resigned from the board of the restaurant chain’s parent company last Wednesday, according to a Monday filing with the Securities and Exchange Commission. The document, filed by Tampa-based Bloomin’ B...
Updated: 7 hours ago
Tampa Hillsborough Expressway Authority plays beat the clock on GOP tax bill

Tampa Hillsborough Expressway Authority plays beat the clock on GOP tax bill

TAMPA — With the Republican tax bill poised to eliminate the opportunity, the Tampa Hillsborough Expressway Authority on Monday said it had refinanced a big chunk of its debt to save money in the future.The authority borrowed $152 million from the bo...
Updated: 9 hours ago
JW Marriott Clearwater Beach project still on target despite some bumps

JW Marriott Clearwater Beach project still on target despite some bumps

CLEARWATER BEACH — While Tampa is excited about its first JW Marriott hotel, plans are moving ahead for a $130 million JW Marriott property on Clearwater Beach, despite some hiccups. "We’ve done really well in our opinion," Uday Lele, developer of t...
Updated: 10 hours ago
HSBC says U.S. will dismiss criminal charges against it

HSBC says U.S. will dismiss criminal charges against it

HSBC said Monday that U.S. authorities were preparing to dismiss criminal charges against the bank, five years after it reached an agreement to avoid prosecution related to lapses in its money-laundering controls.In 2012, the bank, one of the world’s...
Updated: 11 hours ago
Major auto manufacturer offers longer hours, incentives to fix airbags

Major auto manufacturer offers longer hours, incentives to fix airbags

TAMPA — With nearly 200,000 people around Tampa Bay still driving around with defective airbags that could kill them, a major automaker is trying to dramatically cut that number down this week.Fiat Chrystler Automobiles U.S. has launched Airbag Recal...
Updated: 12 hours ago
This 6-year-old kid made $11 million in one year reviewing toys on You Tube

This 6-year-old kid made $11 million in one year reviewing toys on You Tube

When most people think back on the child celebrities of their time, they likely think of child movie actors, the well-trained stars of showbiz. For some, these were stars like Mary Kate and Ashley Olson, or Macaulay Carson Culkin from "Home Alone." F...
Published: 12/11/17
Ticket-fighting firm hires former Florida Bar president to sue the Bar

Ticket-fighting firm hires former Florida Bar president to sue the Bar

Times Staff WriterWell, this is awkward. A company that is suing the Florida Bar has hired a former Bar president to represent it. Ramon Abadin has joined the legal team of TIKD, a company that expedites the process of fighting traffic tickets in Pin...
Published: 12/11/17
A longer wait: Some now try nearly 3 years to get disability insurance

A longer wait: Some now try nearly 3 years to get disability insurance

By the time Teralyn Fleming could finally plead her case to get federal disability insurance, she had been waiting two years and three months. The wait was not a peaceful one — a blood clotting disorder pushed her out of the workforce in 2015 so she ...
Updated: 9 hours ago
Tampa: Hundreds protest Trump’s decision on Jerusalem

Tampa: Hundreds protest Trump’s decision on Jerusalem

TAMPA — Hundreds rallied near the University of South Florida on Friday night to protest President Donald Trump’s recent declaration that the United States will recognize the divided city of Jerusalem as the capital of Israel.The protest was organize...
Published: 12/08/17
Updated: 12/09/17

Duke outage leaves 7,700 without power near Pinellas Park

PINELLAS PARK — Up to 7,700 customers across Pinellas Park, Lealman and Kenneth City lost power in a Thursday night outage, according to Duke Energy.The outage impacted a cloverleaf-shaped area of customers, with pedals extending in the cardinal dire...
Published: 12/08/17