New Florida Legislation Would Speed Foreclosures
People have short memories. Or maybe lawmakers just think we do. Foreclosure cases are once again picking up in Florida (up 20% last year) and there is a substantial backlog of cases to slog through. In response, Florida legislators have once again introduced an attempt to speed the foreclosure process. From The Miami Herald:
“The bill, HB 87, offers a slew of changes to the civil procedures governing foreclosures in Florida, where home repossessions are on the rise again.
Most of the provisions are aimed at speeding up and cleaning up the foreclosure process, which currently takes more 600 days to run its course in Florida.
“We need to make the sure the process is as efficient as possible while at the same time giving the borrower their due process rights,” said Passidomo [the legislator who introduced the bill]. “Unfortunately, if you don’t have an income or you can’t afford to pay anything, the property can’t just sit in limbo forever.”
The bill — which proposes strict paperwork requirements for lenders, fast-track foreclosure procedures and a shield against some thorny legal scenarios — comes at a time when banks are beginning to rev up their foreclosure machines again after a two-year lull.”
One of the reasons that it takes so long to do a foreclosure in Florida right now is that foreclosure machinery, so to speak, was never designed to handle the volume of foreclosures that it has over the past several years. The foreclosure machinery, along with badly screwed up mortgage paperwork, was one of the things that caused the whole “robo-signing” debacle. Things were so bad that the Economic Crimes Division of the Florida Attorney General’s Office issued a report titled “Unfair, Deceptive, and Unconscionable Acts in Foreclosure Cases.” Side note: the authors of the report were fired shortly after it was issued, for reasons that were supposedly not politically motivated.
Bear in mind that this legislation is being proposed in the same state that employed the infamous “rocket dockets” in order to quickly dispose of foreclosure cases. From Matt Taibbi’s 2010 Rolling Stone article on the rocket docket (which is well worth reading in whole):
“The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This “rocket docket,” as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and labyrinthine derivative deals of a type that didn’t even exist when most of them were active members of the bench. Their stated mission isn’t to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity.”
Right now we’re generally seeing rising foreclosure activity in states with judicial foreclosure (such as Florida), and falling foreclosures in states with non-judicial foreclosure. This foreclosure backlog does in fact prevent the market from clearing, and probably drags out the recovery process. This is one of the reasons that some people advocate for faster foreclosures.
Look, in an ideal world, foreclosures would be much faster. They wouldn’t drag on for years, and there wouldn’t be a massive pipeline of them. In an ideal world, they would also be done accurately according to the rule of law (also, in an ideal world I’d be living George Clooney’s life). I have come to the conclusion that these propositions may be mutually exclusive when we are dealing with massive numbers of foreclosures. If this is the case, I think we should err on the side of the rule of law rather than the side of expediency. If someone wants to foreclose on a home, it should be done legally – period.