Lawmakers Mull New Florida Foreclosure Bill

A Florida foreclosure reform bill is making the rounds among state legislators and passage would trigger the enactment of three new laws. The first would be a “show …

A Florida foreclosure reform bill is making the rounds among state legislators and passage would trigger the enactment of three new laws. The first would be a “show cause” mandate that would require defendants in a foreclosure case to specify a reason why a foreclosure not be granted. It would also make it possible for a lender to request a reason for why a borrower should not have to make payments during the foreclosure process. Finally, it would prevent a third party from challenging a foreclosure ruling, awarding money damages instead of a change in title. For more on this continue reading the following article from JDSupra.

In a prior post, we discussed two of the four main components of HB 87, the foreclosure reform bill presently under consideration in Florida. The remaining sections of the bill which merit consideration involve a revised “show cause” procedure and provisions designed to protect third parties who have purchased foreclosed property.

The bill proposes to expand certain aspects of F.S. 702.10(1), an existing statute which establishes a procedure by which a court can require defendants in a real estate foreclosure action to “show cause” why a foreclosure judgment should not be entered, in effect, streamlining the process in certain cases. The bill allows not only a mortgagee, but also any defendant who is a lienholder, including homeowner’s and condominium associations, to request a show cause hearing. The apparent intent is to keep mortgagees from delaying foreclosure cases by making the show cause procedure available to other parties in the lawsuit.

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Another change is to F.S. 702.10(2), which establishes a basis by which a mortgagee can request that the mortgagor show cause as to why it should not be required to make payments during the foreclosure case. The existing law is limited only to non-residential mortgage foreclosures. HB 87 expands its application to include residential property that is not owner-occupied.

The final major component of HB 87 purports to protect the interests of third parties who have acquired title to foreclosed property from subsequent lawsuits which could adversely impact their claim to title. The aim of the legislation is to prevent situations where someone later seeks to set aside or otherwise challenge the validity of the foreclosure judgment. The bill would mandate that many of those claims be treated as claims for monetary damages only and not claims which could challenge the title to the real property.

It is still early in the legislative process and there appears to be both significant support for, and opposition to, the bill. We will keep readers updated as to the bill’s progress.

This article was republished with permission from JDSupra.


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