Thinking of Living for Free?  New Law to Expedite Foreclosures….

By SHANNON BEHNKEN | The Tampa Tribune

A controversial bill in the legislature would speed up foreclosures in Florida and remove the process from the court system. “This would have a profound and dramatic change on the foreclosure landscape,” said John Byrne, a Tampa lawyer with Byrne Law Group. “This bill was filed very late and slid under the radar. I see zero benefits to homeowners.”

House bill 1523 would change that by allowing lenders to skip legal proceedings unless the borrower requests the foreclosure goes through the courts. The process could take as little as 90 days.

There are 30 other states that have a non-judicial foreclosure process, allowing some lenders to foreclose on properties in as little as a month.  The bill is sponsored in by Tom Grady, R-Naples. The Naples area is one of Florida’s hardest-hit by foreclosure.

Grady has said in published reports that the bill would “expedite the resolution” in foreclosure cases, providing needed protections for lenders and property owners. It would also require mortgage holders to prove that an owner is in default, he has said.

Part of the bill says that borrowers will not be liable for the unpaid portion of the loan if they act in good faith during the foreclosure process. But Byrne and other lawyers who represent homeowners in foreclosure actions say this bill takes away a homeowner’s rights to due process. “I think this is intended to keep these cases out of court because it’s easier for lenders,” Byrne said.

While a homeowner can request their case go to court, Byrne said they have only 20 days to do that and would have to file a lawsuit. That, he said, could cost $1,700. While it’s true the bill would streamline the process for banks, Alex Sanchez, president of the Florida Bankers Association, said it would also make it easier on the court system.

“The judges are overwhelmed with foreclosures,” Sanchez said. “We actually have homeowners writing to us, asking us to speed up the process so abandoned homes can be sold to someone who can afford it and can fix it up.”
Florida has always been a judicial foreclosure state, Byrne said. Unless a state passes a law making foreclosure a non-judicial process, a lender must go through the court system to take possession.

Homeowners in states with non-judicial foreclosure systems don’t have as long to try to work something out with their lender. In Georgia, for example, lenders can foreclose in as little as 30 days. Critics of the bill in Florida fear that could happen in the Sunshine State too.

But just as Georgia has a reputation for being strict on delinquent homeowners, Florida is known for being lenient, said Kevin Caiaccio, of The Caiaccio Law Firm in Atlanta.

“Maybe our system is too much in favor of the lender and your system is too much too much the other way,” said Caiaccio, a real estate attorney. “You need to strike a balance because you are taking people’s property away. But it’s not fair to homeowners who do pay to allow other owners to live for free.”

Georgia’s law wasn’t looked at that closely, Caiaccio said, until the economic downturn. Now, there are proposals in the Georgia legislature, he said, that would soften the law. One would give the borrower more time get caught up on their loan before a foreclosure. Another would allow the borrower to buy back the property after the lender takes it back.

“The law is becoming more controversial,” he said. “In this environment, there are some people wanting reform.”

HAFA Stands For: Home Affordable Foreclosure Alternatives Program

The HAFA program took effect on April 5, 2010—although some servicers may implement it sooner, if they meet certain requirement–and sunsets on December 31, 2012.

Home Affordable Foreclosures Alternatives Program: Guidelines and Forms

HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA.

A list of servicers participating in HAMP (including HAFA) is available by contacting us.

HAFA Provisions

• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses standard processes, documents, and timeframes/deadlines.
• Provides the following financial incentives:
  • $3,000 for borrower relocation assistance;
  • $1,500 for servicers to cover administrative and processing costs;
  • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

Need a Real Estate Agent to list your home as a short sale? Contact Me: Rae Catanese, P.A. –Realtor

See Also: Hiring an attorney to represent you in a Short Sale

Radio show features consumer scams and foreclosure prevention
This month’s show features the latest consumer scams and foreclosure prevention tips. Guests are Deborah Berry, Operations Manager Pinellas County Consumer Protection and Bill Sanchez, Vice President of the Homebuyers Club from Tampa Bay Community Development Corporation.

The program, sponsored by the Housing Finance Authority, airs the first Thursday of each month from 10:00 to 10:30 a.m. on WRXB 1590 AM. If you miss a show, listen at your leisure on-line at HFA Radio Shows. You can also watch on Pinellas County Connection TV — There’s No Place Like Home. If you have a question you’d like us to answer, please call 813 784 7744.

A short sale is also something you may want to consider before you go the route of foreclosing on your property.  Here are several articles I wrote on short sales and what you need to know.

Need Advice? Thinking of listing your home for sale in Tampa Bay? Contact your local Realtor.  Rae Catanese