TALLAHASSEE — Faster foreclosures could be coming to Florida.
A landmark $26 billion settlement with large banks over robo-signing and a measure moving through the Florida Legislature could help bring the state's bloated, groggy foreclosure machine roaring back to life.
Dozens of protesters from across the state traveled to Tallahassee last week to rally against new legislation that would provide a fast-track for some foreclosures in Florida courts. HB 213, dubbed the "Florida Fair Foreclosure Act," is one of several moves Tallahassee is pushing to unclog the state's swollen foreclosure apparatus.
"I came to support people who are losing their homes — including me," said Frantz Duchet, a Pompano Beach homeowner. He was one of several Floridians who boarded free charter buses last week as they made the 500-mile drive from South Florida to Tallahassee, picking up foreclosure victims and activists along the way.
Proponents of faster foreclosures point out that Florida has the nation's largest backlog of troubled home loans, and one of the longest repossession time lines — 676 days. They argue the state needs to clear its overloaded court system and sell off its glut of abandoned homes in order to bring the market back to normalcy.
Critics of the proposed speed-up say the measures reflect an attempt by the banking industry to force Floridians out of their homes without due process. They believe faster foreclosures could lead to more fraud, more homelessness and more price declines for Florida's already troubled housing market.
Sponsored by Rep. Kathleen Passidomo, R-Naples, HB 213 would provide several options for lenders looking to fast-track foreclosures. For example, the measure would allow expedited foreclosures for homes that appear to be abandoned, based on interviews with neighbors and other requirements.
With new federal regulations banning the state from transitioning to a nonjudicial foreclosure system, HB 213 is a pared-back alternative for speeding up the home-repossession process.
The proposal comes at a time when mortgage lenders are starting to recover from a 16-month-long foreclosure slow-down due to robo-signing allegations — and there are several Tallahassee-based developments that might help them along.
A national settlement agreed to by five major banks gives them immunity from most civil charges over mortgage-related misconduct, in exchange for loan modifications and principal writedowns worth about $8.4 billion in Florida.
The immunity shields the lenders from several lengthy legal challenges over robo-signing. Pam Bondi, Florida's attorney general, led the negotiations on behalf of the state and says the settlement includes several safeguards to prevent future mortgage abuses.
Other recent Tallahassee measures — the scrapping of mandatory mediation for all foreclosure cases, the firing of the state's two most outspoken foreclosure fraud investigators and even property tax reductions for real estate investors — would also potentially help create a leaner foreclosure machine.
By September 2010 — right before evidence surfaced that lenders were routinely cutting corners in their home repossession efforts — there were nearly 60,000 foreclosure filings a month in Florida.
As banks scrambled to deal with the fallout of robo-signing allegations, monthly filings plunged to a low of 18,760 by February 2011.
They've since risen to about 25,000 a month, and are generally climbing as banks put documentation problems behind them. In January, foreclosures rose 14 percent across Florida compared to last year.
About 500,000 Florida homeowners, who have not made a mortgage payment in more than 90 days, have not yet received a foreclosure notice from their bank.
Whether or not quicker foreclosures mean a faster return to normalcy for the housing market or spur further home-price declines is a debate that's intensifying among Republicans and Democrats.
Housing has been a major theme in this year's presidential race, with Republican presidential contender Mitt Romney taking criticism for stating that the government should not interfere with the foreclosure process. The Obama administration has been criticized for its several unsuccessful attempts to save homeowners from foreclosure.