A "Mixed Bag" Foreclosure Bill Becomes a Law in Florida
Florida leads the nation with the highest rate of foreclosed homes. Sadly, 1 out of every 355 properties is in foreclosure, with over 55,000 of those being vacant homes. More than a third of a million foreclosure cases are backlogged in our courts. What affect does this have on homeowners? The answer is simple. Vacated properties tend to be a drag on the value of surrounding properties, and newly listed foreclosed properties hamper any improvements in the real estate market.
One of the main reasons for these issues is that the foreclosure process takes too long. An average foreclosure in Florida takes about 2.5 years, more than twice the national average. On June 7, the Florida Fair Foreclosure Act was implemented to combat the enormous number of backlogged foreclosure cases. Justification for this act was that the new process will put homes back into the housing market. It will also allow Florida families who have experienced a foreclosure to begin work to repair their credit and finances.
Interestingly, the law contains provisions both for and against every interest group, making it a truly mixed bag. There are several noteworthy changes. The bill cuts the time period in which a bank can seek a deficiency judgment against a foreclosed homeowner from five to one year. The deficiency is also limited to the difference between the proceeds from the foreclosure sale and the fair market value at the time of the sale and not the original mortgage amount. The most controversial change limits the original owner of a fraudulently foreclosed property to collecting monetary damages and mandates that a person who buys a foreclosed home cannot have that home taken from them.
While the bill may seem somewhat unfair, a number of consumer protections are in place to avoid this kind of situation. One of the best of them is that banks will be forced to scrupulously follow paperwork and service requirements. Overall, the law is better for consumers than banks.