The controversial Florida law intended to whisk foreclosures through court has instead led thousands to pile up, prolonging the agony of the state's housing crisis, new court data show.
When the "faster foreclosures" law first took effect in July, Florida courts saw 4,386 new foreclosures, plummeting 70 percent below the state's average of 15,000 filings a month.
The plunge was even more severe in Hillsborough, Pinellas and Pasco counties, where banks filed 465 new foreclosures, down from an average of more than 2,000 a month.
Attorneys say the law, which was supported by banks and became the state's most prominent foreclosure shift since the housing crisis, has fallen victim to unintended consequences.
The law demands banks prove they own the mortgages and have the right to foreclose in return for a quicker case. But defense lawyers say banks have struggled to abide by the strict new rules, including tracking the ownership of some of the millions of mortgages chopped up and shuffled around amid the financial meltdown.
"This is a lesson (for the banks) to be careful what you wish for," St. Petersburg defense lawyer Matt Weidner said. "What it illustrates is how incomplete and inconsistent the banks' records truly are."
Bank representatives defend the slowdown as only a brief breather for their attorneys, who they said are beginning to learn the new law and are eager to do it right.
"Any time you add a new anything, it takes time to change," said Florida Bankers Association head state lobbyist Anthony DiMarco. "You can't change an ocean liner in the middle of the ocean and turn it around like it's a speedboat."
The huge slowdown in what has long served as one of the nation's epicenters of distressed homes could pile onto the state's logjam of more than 300,000 pending foreclosures, nearly 50,000 of which span Tampa Bay.
The longer those homes stay in limbo, the longer neighbors must worry over overgrown lawns, vandalism and sunken property values. The housing market will struggle to return to normal until banks — through foreclosure, short sales or other means — unload the backlog of distressed homes.
It's unclear when banks' court activity could snap back to normal. In Pinellas, new foreclosures fell from 825 in June to 150 in July, the deepest dive since the housing crash. They nudged back up a little last month, to about 330, but are still a third of where they were last year.
Signed by Gov. Rick Scott in June, HB 87 was designed to let banks that met tight, new paperwork requirements speed up the legal process between mortgage default and repossession. Florida has one of the slowest foreclosure timetables in the country, with the average case taking about 900 days, RealtyTrac data show.
The fast-track bill also allows condo associations to hurry along cases where banks are proceeding too slowly and gives lenders legal protections if they are sued for wrongful foreclosure.
Rep. Kathleen Passidomo, the Naples Republican who sponsored the bill, said she doubted the sudden slowdown was due to banks' lack of preparation. She credited an improving economy, more bank-homeowner cooperation and summertime vacations.
"Banks have spent the last year and a half going through all their files," Passidomo said. "They knew this was coming. It didn't just happen overnight."
But neither the shift into summer nor the rebounding of the housing market has led to a drop of this magnitude since the housing crash, court data show. New filings also plunged in 2011, but that was part of a voluntary freeze by banks in the wake of the "robo-signing" scandal, during which many foreclosures were found to have been hustled improperly into court.
Parts of the foreclosure machine are still moving full speed ahead. Tampa Bay judges closed or dismissed about 2,500 cases in July, close to an average month. Nearly 1,400 auctions of foreclosed homes were scheduled in Pinellas in the past two months. And a squadron of statewide judges are devoted to resolving the most stagnant of foreclosures, including some that are four years old.
Banks have come under fire, too, for pushing foreclosures with too much speed. The state of Illinois on Monday sued Safeguard Properties, a property management company that also works with banks in Florida, claiming the company wrongly bullied hundreds of people out of their homes.
"We get beaten up back and forth for trying to do it too slow, too fast, and this is the same thing," said DiMarco, the bank lobbyist. "We don't want to do it, but when it happens, it needs to be quick."
As bank attorneys recalibrate their efforts to move foreclosures back into action, housing advocates say courts, homeowners and neighborhoods will be the ones suffering due to indefinite foreclosure delays.
"This law comes in the middle of chaos in the mortgage industry right now," Weidner said. Lenders weren't "prepared for the monstrous mess this has caused."
Contact Drew Harwell at (727) 893-8252 or firstname.lastname@example.org.