TALLAHASSEE — Lawmakers on Wednesday continued to float ideas for reforming Florida's foreclosure process, with debate centering around when a judge needs to be involved in a foreclosure case.
Florida is one of 20 states that requires all foreclosures to move through the courts.
But top Republicans, including Gov. Rick Scott, House Speaker Dean Cannon and Senate President Mike Haridopolos say they want to explore changes to limit court involvement.
One option that emerged Wednesday — a hybrid system where some foreclosure cases are presided over by a judge and some cases are not. A hybrid-type system is being used in 25 states.
"That option would be more palatable than a total restructuring," said Rep. Mike Weinstein, R-Jacksonville, who in 2010 voted in favor of a failed bill that would have directed all foreclosures away from the courts unless a property owner requested otherwise.
"What we would want to do is take the good parts of the current system and match it up with a swifter process that other states are using," Weinstein said. "We would be negligent in our responsibility if we didn't seriously look at it."
Opponents say removing courts from the process allows foreclosures handled improperly by lenders to fly through the system, forcing people unjustly out of their homes.
"There's a tidal wave of lawsuits surrounding foreclosures across the country. Why would we lessen the scrutiny that's applied to these cases? They're trying to get less judicial oversight and due process protection," said Matt Weidner, a St. Petersburg lawyer who represents property owners in foreclosure cases. "It's just madness."
Weinstein and others argue getting the state's 200,000 or so foreclosures off the books quickly will force housing prices to bottom out and speed Florida's economic recovery.
"Right now you're prolonging the agony. Do you want to take the Band-Aid off your arm slowly so you can feel each hair being pulled out by the root, or do you want to do it quickly and get it over with?" said Sean Snaith, an economist at the University of Central Florida. "For the state's economy as a whole, it's a positive development."
Generally speaking, nonjudicial foreclosures allow lenders to simply send notices of default and intent to foreclose to property owners and record them in county public records.
If after a certain amount of time the property owner doesn't settle the unpaid loan or address the problem with a bankruptcy or some other means, the bank can sell the house.
Under a Florida bill filed in 2010, property owners could ask for the foreclosure to go through the courts.
Currently in the state, foreclosure proceedings require a lender to file a complaint in court and serve a summons to the borrower. If the property owner doesn't respond to the complaint, the lender can ask a judge for a final judgment and the right to the sell the house. When a borrower does respond, it can launch a lengthy and costly court battle.
On average, foreclosure proceedings in Florida take 638 days.
It's the involvement of the courts, though, that has uncovered foreclosure scandals, such as improperly "robo-signed" documents and foreclosure proceedings initiated by lenders that didn't have a right to the property in question, Weidner said.
Those scandals, some say, are to blame for the slow pace of foreclosures, not the large number of foreclosures.
On the other hand, Rep. Kathleen Passidomo, R-Naples said she hears stories of borrowers hiring lawyers to fight foreclosures just so they can stay in their homes longer.
"We have such a backlog of cases because of delays and the like on both sides, the lender side and the borrower side," she said.
Last year, she filed a bill that would have allowed for nonjudicial foreclosures if the borrower didn't contest the proceeding.
But there were so many objections to it, she said, she decided not to pursue that again this year. Instead, she said, she will offer a bill that tightens the judicial process, in part by requiring lenders to provide paperwork showing they actually have the legal right to foreclose on the property.
That would reduce the number of frivolous challenges to complaints, she said.
"It's a simple concept. But with all the properties under water you get issues. Borrowers are responding to complaints by saying the complaint's defective. I want to know who owns the note," she said.
Reducing the number of foreclosure cases, whether it's because of a change in policy or the natural progression of the economy, will pose a problem for the state's court system.
Foreclosure filing fees provide 64 percent of the state courts budgets, although those proceedings represent only 8 percent of its workload.
"When this money goes away, it's a big problem," said State Courts Administrator Lisa Goodner. "We as a court system want to eliminate our dependency on this funding source. The policy questions relating to foreclosure is a separate issue."
Janet Zink can be reached at firstname.lastname@example.org or (850) 224-7263.