A new Florida Foreclosure Bill being considered by Congress has caused disagreements amount members of the Florida Bar Real Estate Section. Those lawyers representing homeowners feel that the bill is detrimental to homeowners and will only speed the foreclosure process without taking into account viable defenses that homeowners have against the banks. Those for the proposed bills argue the necessity of speeding up the foreclosure process which has bogged down the courts for years.
The two bills being considered are HB 87 in the house, and SB 1666 in the Senate.
Some of the provisions of the proposed bills are:
Lenders would have to first show that they own the note or show proof of a lost note, prior to filing for foreclosure. Failing to do so would subject them to damages.
The deficiency judgment period in which banks can come after homeowners for the amount between the mortgage and what the property sold for would be reduced from five years to one year.
Condo associations would be able to file actions to force the banks to take title to properties.
Provides protections for new buyers from later claims of homeowners who later claim the foreclosure process was flawed.
Even if foreclosed on homeowners were able to successfully challenge the foreclosure procedure, once a final judgment is issued, homeowners could only seek damages, but not the house back.
Most worrisome of the provisions being considered would require homeowners to show cause within a very short period of time why, after the bank provides its evidence, the homeowner should not be foreclosed on.
Fannie Mae and Freddie Mac announced a program to start in July which will ease the way for many homeowners to obtain permanent mortgage loan modifications. Under the new rules, borrowers will no longer need to be late on their payments to apply for the modification. Further, borrowers who enter into trial period modifications will automatically qualify for a permanent modification after three consecutive payments. Previously homeowners experienced problems whereby after their trial period the banks were denying the modifications.
On Tuesday the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, proposed a new rule which would prohibit insurance companies from paying a commission to banks and servicers who use the insurance companies to obtain forced-placed insurance policies on the homes of homeowners who fail to maintain their own insurance policies.
This is important as what is happening now is that when homeowners who have fallen behind on their mortgages or are upside down and unable to maintain their insurance policies, banks or servicers are coming in to protect their investments by purchasing their own insurance policies on the property with payments that are significantly, if not astronomically, higher. The homeowner would then later be billed for this forced place insurance.
The US Supreme Court made a ruling on the First-Sale Doctrine in Copyright Law which strengthens the law. The court ruled that if you by copyrighted goods outside of the United States, you can resell them without violating the Copyright Act in the US. In the case of Kirtsaeng v. John Wiley & Sons, the Court held that Kirtsaeng was authorized to sell goods in bought outside of the country in the United States.
The first-sale doctrine allows one who lawfully buys a product to then sell that same product however they want without violating the copyright law.
Florida Supreme Court Limits Economic Loss Rule to Products Liability Cases. Previously, tort causes of action, such as negligence, were barred in matters where there was contractual privity between the parties and the losses were solely economic. Defendants were able to claim the economic loss rule in these situations to bar tort claims against them. Now the Florida Supreme Court has limited the economic loss rule to products liability cases where, for example, the only injury is to the product itself. The result of this ruling should be more causes of action claiming negligence in contractual actions.