HB 87, An Act Relating to Mortgage Foreclosure

On Friday, June 7, 2013, Governor Rick Scott signed (the “Act”).  The Act became law when signed.  Some of the Act is retroactive, and the entire Act is effective as of July 1, 2013.

There is still confusion over how the new law will be enforced, what rules the Florida Supreme Court will put in place to support the Act, and the Act will benefit or hurt lenders, borrowers, homeowners and investors.  The FL Legislature, Circuit Court Judges, mortgage brokers, Realtors and lenders all support the Act as a way to bust the bottleneck of foreclosures clogging Florida courts.  Most consumer attorneys and consumer activists believe the Act is unconstitutional and plan to challenge it on those grounds.

The Act has 7 major components, it:

1. Reduces the Statute of Limitations for the lender to pursue a deficiency following a mortgage foreclosure and deed-in-lieu of foreclosure from 5 years to 1 year;

2. Imposes strict requirements on mortgage servicers and mortgage holders to properly plead in the lawsuit whether the original promissory note is in possession of the lender / servicer or whether the promissory note has been lost, destroyed or stolen;

3. Makes mortgage foreclosure judgments nearly impossible to overturn where a third party purchases the property either at foreclosure sale or subsequent to foreclosure sale, substituting the right of the homeowner to challenge the lawsuit with the payment of money damages by the bank;

4. Gives the mortgagee the right to pursue a deficiency judgment as a completely separate lawsuit from the foreclosure action;

5. Allows second mortgage holders, condominium and homeowner associations, and other lienholders the right to speed up the first mortgagee's foreclosure action;

6. Allows the lender to collect monthly payments from an occupant or tenant during the pending foreclosure suit, but only if the property is rental or investment property; and

7. Provides protection to the borrower in the case of a lost, destroyed, stolen or missing promissory note.

For a more detailed analysis of the Act, please visit our .

Whether the law is good or bad is still unknown and largely depends on whether the Act is analyzed from the borrower’s, lender’s, or investor's perspective.  There is a split amongst homeowner and condominium association attorneys as to whether they will utilize the Act to speed up the bank’s foreclosure lawsuit.  It is also unknown whether mortgage companies will use the new law to speed up foreclosures, although some Florida judges have stated openly that they will use the Act to speed up a lender's foreclosure in every case.

Finally, what impact will this law have on the current real estate investor market in Florida?  With foreclosures processing faster, and with a reduced statute of limitations on foreclosure deficiencies, what incentive do borrowers have to short sale their home?

My analysis – while the Act has some good components to it, the law does do enough to help homeowners and the law gives too much help to the mortgage companies and servicers.  The Act is also redundant in that it defines issues that are already clear under existing Florida case law.  Ironically, the Act also puts banks and associations more at odds with each other.  One thing is certain, the Act will have significant unintended consequences in the Florida real estate market and our fragile economic recovery. 

For more information on Foreclosure issues, please contact me at: 813-774-5737 or email me at: .

This article does not constitute legal advice.  If you have questions regarding a specific situation, please contact a Florida attorney.

– Shawn M. Yesner, Esq.

, is the founder of Yesner Law, P.L., a Tampa-based boutique real estate law firm that handles foreclosure defense with a purpose.  We assist clients with short sales, loan modifications, bankruptcy Chapter 7 and Chapter 13, and counsels consumers on debt settlement, for clients throughout the greater Tampa Bay area.