Foreclosure Bills Facing Challenges

Posted on October 13, 2009
Filed Under foreclosure | 1 Comment

Three early bills are being filed in Tallahassee in an attempt to give more protection to house owners in Florida who are facing foreclosure. It also aims to give protection to tenants. But the chances are slim that these bills would be passed.
All the bills have been filed by the Democrats and it will face challenges in the Republican dominated Legislature in 2010. Similar proposals had been rejected in 2009. All the three suggestions are being opposed by the banking group of the state. This lobby remains politically powerful despite the beating it has taken lately.  Experts are opining that some of the provisions of the bill might be overlapping the mortgage relief efforts being initiated by the federal as well as state governments.

Rep Darren Soto (Democrat) said, “I doubt any will get passed, but we’ve got to do something about this crisis.”

Florida is the second most foreclosure affected state with a rate of one foreclosure per 140 houses in August according to the findings of RealtyTrac.
One of the bills aims to stop deficiency decrees being passed in foreclosure ruling against homesteaded estates. The deficiency decree is a ruling against a borrower for the balance that is still due if the house has been sold for less than the loan due at the final hour.

Another bill would permit the borrowers to ask for mediation in matters relating to foreclosure of residential units.

The third one initiated by Rep Hazel (Democrat) would compel lenders to allow more time after issuing notice of foreclosure. Financial assistance would also have to be given to tenants who lived in units that were being either foreclosed or sold in short sale.

It seems ‘Foreclosure Bill of Rights’ of Soto would be facing the toughest challenge as a similar kind of bill never saw the light of day during the last session in the current year. If passed it would allow borrowers of residential houses facing foreclosure to seek mandated mediation. To do so the lenders would have make up to date appraisals and provide copies of the original mortgage agreement. Lenders would also be expected to talk over the matter with a sincere attitude of wanting to avoid foreclosures. In their turn the house owners would have to show details of their personal finances for the last three years.

If the outcome of the mediation resulted in bringing down the principal the lender would be permitted to file for a forbearance lien covering the reduced amount. It basically would mean postponing the foreclosure.

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