Tuesday, May 7, 2013

Florida HB 87

This legislation changes the landscape of foreclosure defense in some significant ways.

1.  Finality of Judgment:  Once a final judgment is entered in a mortgage foreclosure case, the property is sold to a third-party, and the appeal time has run, the mortgagor is precluded from getting title to the property back, even if the foreclosure was wrongful.  Instead of being able to ask for the judgment to be vacated under Fla.R.Civ.P. 1.540 up to a year after the judgment was entered – or, in some circumstances, many years post-judgment - the homeowner’s remedy is now limited to claims for money damages.
For obvious reasons, the title insurance industry was the driving force behind this aspect of the bill.

2.  Order to Show Cause:  Expedited Foreclosure:  Any lienholder (to include condo associations and homeowners’ associations) can ask the Court to issue an Order to show cause, forcing the homeowner to come to court and convince the Court not to enter an expedited foreclosure judgment.  If the homeowner doesn’t file the appropriate paperwork/defenses, a foreclosure judgment is entered at that hearing.  This sounds bad, but it’s similar to the existing version of Fla. Stat. 702.10, except it now enables any lienholder (as opposed to just the bank) to request the show cause hearing.

The condo and homeowners’ associations were the driving force behind this aspect of the bill.  They believe this will give them leverage to accelerate the mortgage foreclosure lawsuit when the bank is slow to prosecute the case. If you’re current on your association dues, the association probably won’t feel a reason to make this request.  If you’re behind on those payments, however, you run the risk that the association will cause that hearing to be set.  If you’re paying your dues and taking care of the house, they probably don’t care if the house is in foreclosure.  If you’re not paying your dues, however, then the association likely prefers that you get foreclosed so a new owner – who pays his dues – will get put in the house.
Don’t let a rather nominal association payment cause you problems on your mortgage foreclosure case.  Pay those dues!

3.  Order to Show Cause:  Monthly Mortgage Payments:  If a residential property is not owner-occupied, the plaintiff can ask the court to require the mortgagor to make normal monthly mortgage payments to the plaintiff during the foreclosure case.  If those payments are not made, then the mortgagor is removed from possession of the property even before the case is over.  If this happens, the homeowner can still defend the lawsuit, but will be removed from possession before the case is over. Similar to requesting rents be deposited into the Court with a  twist.

4.  Statute of Limitations:  On claims for deficiency, reduced to one year from five.

5.  Pleading requirements:  The new bill imposed a few new pleading requirements for plaintiffs.
(a)  The foreclosure plaintiff must plead it is the “holder” or its specific factual basis to foreclose in its Complaint.  This codifies what defense attorneys have been arguing in motions to dismiss for many months – it’s not enough to say you’re entitled to foreclose, you have to plead ultimate facts.
(b) If the plaintiff is suing on behalf of another entity, it must identify the document which sets forth that authority.
(c)  The plaintiff must file a certification under oath, upon filing suit, that it possesses the original Note.  If the note is lost, it must file an affidavit detailing the chain of assignments/transfers and must attach documents showing how ownership was acquired.