In response to the continuing foreclosure logjam, the 2013 Florida Legislature passed House Bill 87 (“HB 87”). While it remains to be seen whether HB 87 will become LAW, it provides clear procedures for a lender to follow when trying to foreclose property where the lender cannot locate the original paperwork, including, most importantly, the original note signed by the borrower. The stated purpose of HB 87 is to “expedite the foreclosure process by ensuring initial disclosure of a plaintiff’s status and the facts supporting that status, thereby ensuring the availability of documents necessary to the prosecution of the case.”
Those against HB 87 argue that it further erodes both Federal and State Constitutional protections that prevent government from enacting laws that impair substantive contractual rights. Those in favor of HB 87 argue that its remedies create new procedures that will alleviate an already over-burdened judicial process of foreclosure. The gravamen of this issue will likely turn on the newly created requirement that, as a pre-requisite to raising any defense, a foreclosure defendant is first required to deposit the alleged monetary shortfall into the registry of the court. Those against HB 87 might argue that such a requirement can lead to extreme abuse. For example, what happens if an unscrupulous lender alleges an amount not lawfully due? According to HB 87, the defendant must still deposit the monetary shortfall into the court registry to be in a position to contest the lender’s false allegations.
By way of background, on May 12, 2013, the Palm Beach Post reported that, in 2012, there were 186,651 new foreclosure cases filed in Florida and another 156,069 foreclosure cases were “re-opened”. Included in those figures are Palm Beach County’s foreclosure filings where 13,500 new foreclosure cases were filed, while another 13,389 cases were re-opened.
A judicial workgroup found that almost thirty percent of Palm Beach County’s pending foreclosure cases are at least three years old, and more than fifty-one percent have been on-going for two or more years as compared to the rest of the State, where only forty-two percent of foreclosure cases have been pending for greater than two years. This is compared against non-foreclosure litigation matters where the average jury trial case takes approximately eighteen months and non-jury cases take around twelve months to reach closure. Considering that foreclosure cases are routinely disposed of by the court in non-jury settings, the judicial workgroup’s findings are even more alarming.
The workgroup, according to the Palm Beach Post, explained that the court has limited power over two barriers that prevent the cases from moving faster. The first is that the courts have limited power to force the foreclosing bank to move their case along, and the second has a lot to do with the lender’s lost paperwork and other procedural problems.
HB 87 also provides that, in a legal proceeding to set aside, invalidate, or challenge the validity of a final judgment of foreclosure of a mortgage or to establish or reestablish a lien or encumbrance on the property in abrogation of the final judgment of foreclosure of a mortgage, the court shall treat such request solely as a claim for monetary damages and may not grant relief that adversely affects the quality or character of the title to the property.
Amongst its many other provisions, HB 87 also provides that the Florida “Supreme Court is requested to amend the Florida Rules of Civil Procedure to provide expedited foreclosure proceedings in conformity with this act and is requested to develop and publish forms for use in such expedited proceedings.”
A few years back, lawyers representing community associations sought and found relief against the banks’ delays by invoking the trial court’s equitable remedies. For a few months, it seemed there might be a few judicially crafted remedies that could be used against stalling lenders. However, the lenders appealed the trial court’s exercise of its equitable powers. It did not take long for the State’s appellate courts to rule that, where legal remedy existed, trial courts were not free to exercise equitable relief. As a result, tens of thousands of foreclosure cases continue to stall.
We will all know soon enough if the Governor will veto HB 87, sign it into law, or do nothing at all, which, ultimately, has the same effect as signing the Bill. As long as the Governor doesn’t veto it, House Bill 87 becomes law on July 1, 2013. If you feel strongly one way or the other, please email the Governor and share your thoughts, “for” or “against”.