Know Your Rights Under the Florida Fair Foreclosure Act

Florida was among the hardest hit states in the national housing crisis, and state courts are still dealing with the flood of foreclosures crowding dockets. In 2013, the Florida Fair Foreclosure Act(“FFFA”) was signed into law in attempt to unclog the court system with an expedited foreclosure process that both hurts and helps distressed homeowners.

Florida is a judicial foreclosure state, which means all foreclosure actions must be handled in a state court. The FFFA did not change that. However, there were some significant changes in the Florida foreclosure process that homeowners facing foreclosure need to know.

How the FFFA Helps Homeowners

Lender Must Prove Ownership of Note. Before the FFFA was enacted, lenders were able to file foreclosure actions without having to prove they owned the promissory note. This led to a number of abuses and wrongful foreclosures. Now, lenders must prove they have the right to foreclose on a property by producing the promissory note or documentation that shows ownership of the debt has been legally transferred to them.

Reduction in Deficiency Judgment Statute of Limitations. If a homeowner owed more than his or her house was worth, the difference is known as a deficiency. In Florida, lenders can pursue a personal judgment against a homeowner for the deficiency amount. With the passage of the FFFA, the time a lender has to pursue a deficiency judgment has been reduced from five years to one year. In addition, a deficiency judgment cannot be more than the difference between the judgment amount and the fair market value of the home on the day it was sold.

How the FFFA Hurts Homeowners

Any Lienholder May Request Expedited Foreclosure. The FFFA makes it possible for any lienholder — a homeowners association or condo association — to petition the court for an expedited foreclosure. This means that homeowners may have less time to seek a loan modification or other workout that could avoid foreclosure.

Foreclosure Judgments Final. Under the FFFA, foreclosure judgments in Florida are final. Any legal challenges are limited to monetary damages when certain conditions are met by the lender, including:

• Homeowner was served properly in the foreclosure action;
• Final foreclosure judgment was entered;
• Appeal period has been exhausted; and
• Home has been purchased by someone unaffiliated with the lender or former owner.