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Rick Scott, GOP look at taking courts out of Florida foreclosure process

In Florida, which has the nation’s second-highest foreclosure rate, proceedings take 638 days on average.

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In Florida, which has the nation’s second-highest foreclosure rate, proceedings take 638 days on average.

TALLAHASSEE — The push is on in Florida to cut the courts out of the foreclosure process.

Supporters of the concept — which is used in nearly 30 states — say it will speed foreclosures, get houses back onto the real estate market and boost the economy.

Opponents say it puts property owners at the mercy of banks.

Gov. Rick Scott, House Speaker Dean Cannon and Senate President Mike Haridopolos all say they are interested in considering legislation to change Florida laws so judges won't have to referee foreclosures.

And the House Civil Justice Subcommittee on Tuesday heard a presentation on foreclosures detailing states that include courts in the process versus those that don't.

Bottom line: Foreclosures take longer and are more expensive in states that involve courts, said state economist Amy Baker.

"I don't want to leave you with the impression that the data suggests the judicial process is a terrible process," Baker told lawmakers. "It's actually ultimately a policy decision on where you want the burden to be, where you want the rights protection to be."

Florida has the nation's second-highest foreclosure rate, and is one of 20 states that require all foreclosures to go through the court system.

Court action isn't needed in Michigan, Arizona, California and Nevada — other states with high foreclosure rates. On average, foreclosure proceedings in those states take from 392 days in Arizona to 511 in California, according to Jacksonville-based Lender Processing Services.

In Florida it takes 638 days.

That's too long, Scott said in a recent interview with the Times/Herald.

"It's not good for anybody in the process," he said. "It costs money. Either the homeowners lose money or the lenders lose money, and the longer it takes, it slows down what actually happens in the real market."

Scott said he is eager to learn more about how making the switch might impact Florida's housing market.

"If we do go down that path, does it really change anything?" he said. " And we've got to make sure that citizens are treated fairly. We can't create an environment where the homeowners aren't treated fairly."

Speaker Cannon said nonjudicial foreclosures are worth exploring. "The devil is in the details, but we need to consider any and all options for moving beyond the foreclosure crisis so our economy can slowly recover."

In 2010, the Florida Bankers Association pushed unsuccessfully to change the state's law so judges didn't need to sign off on foreclosures.

Much of the state's housing crisis is caused by a glut of homes awaiting foreclosure, said Anthony DiMarco, executive vice president of government relations for the association.

"If you can move more quickly, properties can get back on the market, and it will stimulate the economy," he said. "You won't have blight. Property taxes will get paid. Condo fees and homeowners association fees will be paid. People will buy paint and furniture."

But state Rep. Darren Soto, D-Orlando, who fought the 2010 legislation, said he will fight it again if it returns in 2012.

"I don't think we need to be replacing people's rights with expediency, particularly when we're talking about property rights," said Soto, a lawyer who represents homeowners facing foreclosure. "This is a homesteader's right to access the courts. I can't think of any property right more important."

Even in states where judges aren't forced to preside over foreclosure cases, property owners can take the proceedings in court.

But the filing fee alone costs almost $2,000 in Florida, Soto said.

"That's cost-prohibitive for most people, and that's not including the legal fees you'd have to incur to fight it," he said.

At the least, Soto said, legislation should include an exemption for homesteaded property owners who could be fighting to save their home.

Janet Zink can be reached at jzink@sptimes.com or (850) 224-7263.

States with the process

Theses states offer nonjudicial

foreclosures in at least some cases:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Iowa, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, North Carolina, Oklahoma, Oregon, Rhode Island, South Dakota, Tennessee, Texas, Virginia, Washington, West Virginia, Wisconsin, Wyoming

Source: Realty Trac

How would it work?

The process for nonjudicial foreclosures varies by state. But Florida lawmakers considered a nonjudicial foreclosure bill in 2010 with the following provisions:

• Borrowers would first receive notice of default on the loan via U.S. mail.

• No less than 30 days later, the borrower would receive a notice of foreclosure, and the lender would file a notice of foreclosure in county public records.

• Five days after filing the notice of foreclosure, the lender must furnish copies of the notice to anyone with an ownership interest in the property, and 10 days after filing the notice with the clerk, the notice of foreclosure most be posted in a conspicuous place on the property.

• The foreclosure would have to be completed no less than 90 days and no more than one year after filing the notice of foreclosure.

A way to speed up foreclosures?

Foreclosure proceedings in Florida are among the slowest in the nation, averaging 638 days. Lawmakers are considering removing judges from proceedings to speed up the process.

States with the quickest foreclosures, in days (nonjudicial states are in bold):

Utah: 388

Colorado: 388

Idaho: 381

Alaska: 379

Wyoming: 367

States with the slowest

foreclosures, in days:

New York: 664

Florida: 638

Hawaii: 580

New Jersey: 563

Maine: 551

Source: LPS Applied Analytics

Rick Scott, GOP look at taking courts out of Florida foreclosure process 09/20/11 [Last modified: Wednesday, September 21, 2011 12:08am]

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