Florida is one of the top foreclosure states in the nation and many homeowners are facing the prospect of losing their homes. Foreclosure laws are often complicated with long timelines. The following will explain each step in the Florida foreclosure timeline, beginning from the first missed payment to an eventual eviction notice.
To begin, when a person buys a house and obtains a mortgage on the house, a promissory note must also be signed. Both of these are separate legal instruments. The Promissory Note details the homeowner’s promise to pay and the due dates for those payments. The Mortgage gives the property as collateral, thus securing the promissory note. It allows the property to be recouped if the agreement in the promissory note is breached. Payments on a mortgage are usually collected by a servicer for the loan. This servicer may actually be different from the true owner of the loan.
The First Missed Payment
A missed payment is the first step in the Florida foreclosure process, although it does not have to be if the homeowner immediately makes up the payment. The loan servicer usually allows for a 10 to 15 day grace period on a missed payment and after that, a late fee may apply. The late fee is usually calculated around five percent of the overdue payment using both principal and interest. The late fee is typically detailed in the promissory note. Once the grace period expires, the servicer may begin notifying the homeowner through phone, mail or email to find out why the payment has been missed.
The homeowner, at this point, can choose to speak with the servicer and explain why they have fallen behind or were unable to pay. Drawing up a loss mitigation plan is important at this stage to stave off further damage.
30 Days Past Due and Multiple Missed Payments
Once the account becomes 30 days past due, the delinquency is usually posted to the homeowner’s credit report. Depending on what other payments might be being missed, the initial late payment posting might not affect the person’s report too drastically. If the loan servicer has not called or sent out contact yet, they typically will at this point. Even if they call or email, they will also send out notices via mail to each person on the loan. The homeowner should attempt to work with the servicer at this point. Testing other options such as a modification, payment plan or forbearance agreement might, at the very least, put the foreclosure process on hold. The homeowner may also wish to get legal advice at this point as well. A foreclosure attorney can help advise on actions to take and options available. If the homeowner is struggling with other debt due to a lost job or unforeseen expenses, they may also wish to contact a bankruptcy attorney and explore their options that way.
Pre-Foreclosure and Loss Mitigation
A loan servicer generally waits until at least 120 days of delinquency have passed before filing a state court case to begin the foreclosure process. This is due to a ruling that came down in 2014 by the Consumer Financial Protection Bureau that requires servicers to wait at least this long to give homeowners a chance to pay. Throughout those 120 days, the servicer typically sends out several notices about late payment and opportunities for loss mitigation. This is another opportunity for the homeowner to find a solution to the delinquency with the loan servicer. If the homeowner has responded to the servicer and finds their requests being ignored or they end up in a circle of providing paperwork, then it is advisable to consult a foreclosure attorney who has experience in dealing with servicers and banks. Trying to find options and avoid foreclosure can be a time consuming process.
The Breach Letter
Florida mortgage contracts usually have a clause that lenders follow called a breach letter. They are required to send out this letter before officially beginning the foreclosure proceedings. The letter will inform the homeowner of default, as well as any action need to resolve the default, and then a due date for this resolution. The last part of the letter explains what happens if the default is not resolved by the due date, which is usually debt acceleration and property sale. The due date is usually about 30 days from the day the letter is received by the homeowner. If that grace period expires and the homeowner does not resolve the default, then the servicer usually refers the file to their attorney to start the foreclosure process.
Once the homeowner receives the breach letter and knows that they will not be able to resolve the default in the stated time period, they should contact a foreclosure attorney to ascertain the next steps. Sometimes homeowners do not receive this letter and attempt to use it as evidence against the lender. Unfortunately, the contract does not stipulate that the letter be received by the homeowner, only that it is sent. If the lender can prove that they sent the letter and that it complied with the mortgage clause in question, then most Florida courts will accept that evidence to start a foreclosure.
Florida Foreclosure Process
Florida is considered a judicial foreclosure state, which means that the lender has to file a lawsuit in order to foreclose on a home. They start by filing a complaint in court, which is then served to the homeowner. Along with the notice is a summons giving the homeowner 20 days to return an answer. If the homeowner does not answer in that time, then the court can deliver a default judgement in favor of the lender. The lender might also file suits against junior lien holders, co-borrowers, or others with interest in the property. If the homeowner does deliver an answer, then the lender can choose to either go to trial or file affidavits supporting its evidence and position and refute anything the homeowner may have offered in defense. They can also file a motion for a summary judgement, which is when the court rules in favor of the lender if there is no evidence to dispute the important facts. Most often, lenders do file a motion for summary judgement. One reason for this is that it usually ends a case quickly without having to go to trial. Another reason is that such judgments are usually granted because the homeowner generally has no defense or evidence to present in a trial. Unless the homeowner has some strong evidence to excuse not paying their mortgage, the lender will win the motion and the final judgment will go against the homeowner. If the court does deny the lender’s motion for some reason, then the case will go to trial. If the homeowner loses the trial, then the final judgment of foreclosure will be rendered.
The Discovery Period
Before filing the motion for a summary judgment, the lender’s attorney and the homeowner’s foreclosure defense attorney, if they have one, may engage in a discovery period. This is where both sides put out requests for documents, responses, admissions and depositions among other items. For the lender, they want to make sure that the important facts in their case are not disputable. For the foreclosure defense attorney, they want to find out if there’s anything the lender has done that would give the homeowner a case if it can be brought to trial. In general, the discovery deposition is not common in foreclosure processes in Florida.
Motion for Summary Judgement
If the lender was not granted a default judgement against the homeowner, and after a discovery period, they will usually file a motion for summary judgment. As long as they have proof that the case is clear cut and there is no substantial evidence to be provided at a trial, this usually ends the foreclosure case. In some instances, a very good foreclosure defense attorney might be able to find some issue to challenge the lender’s side. If the court decides that there are legitimate issues with the lender’s case, then judgement may be precluded and the foreclosure case will continue to trial.
The Foreclosure Trial
If the motion for a summary judgement is denied, then a foreclosure trial date is set. There are a few different trial types for Florida foreclosures. One such trial is known as the bulk trial. This type of trial sees several cases in a very short time frame. Most of the time the different parties come to agreements during this trial, or judgement is rendered when one party does not appear. A more thorough approach does not work in this sort of trial. The other main type of trial is longer with only one case during a set time period. Both parties can then make their cases to the judge and thoroughly flesh out any issues or defenses. Sometimes cases are dismissed before the trial and if that happens, lenders usually have the case re-filed. If the lender wins at trial, or with the summary judgement, then the court will set a sale date for the foreclosed property. Usually the sale date is 30 days from the final judgement date, but sometimes it is extended to 60 or even 90 days from the final judgement. It may also be as little as 20 days from the judgement date.
Foreclosure Sale or Auction
The notice for a foreclosure sale is required to be published in a newspaper two weeks before the sale date. It must remain in the paper for the entire two weeks. The lender must also file a proof of publication or it is possible that the court will not allow the sale to proceed. Sometimes the foreclosure sale can be canceled due to other situations, such as modification, short sale, bankruptcy delay or other options. The sale is typically an auction wherein the property is sold to the highest bidder. Sometimes the bidder is the lender. Bidders other than the lender have to make a deposit with the court before the sale to prove they have funds, but a lender can bid up to the judgement amount. Sometimes when the property does not sell or otherwise reverts to the lender, it becomes an REO, or real estate owned, property. It then belongs to the lender and can be sold by the lender. The homeowner can file an objection within 10 days of the sale, but after 10 days, the court will confirm the sale and the title will be transferred officially to the buyer.
Another possibility after the foreclosure sale is a deficiency judgement. When the total amount owed by the homeowner exceeds the sale price of the property, the lender can pursue a deficiency judgement in some states. In Florida, the lender can do so separately from the foreclosure action, or as a part of it. The amount granted is up to the court and it cannot be more than the difference between fair market value of the property and the judgement.
In the rare event that there is a bid in excess of the judgement amount rendered by the court, then the excess will first go to pay off any other lien holders on the house. Any remainder after these payments would then revert to the homeowner.
Once the property is officially under new ownership, then the homeowner is obligated to leave the property. Lenders or new owners typically go about this one of two ways. One way is to offer what is known as a “cash for keys” deal. Simply put, the new owner offers the previous owner money to move out. The second action is an official eviction process. Eviction is usually worked into the foreclosure action and judgement. Once a new title is issued, the new owner or lender can file a motion for writ of possession. This gives the homeowner 24 hours to vacate the house. The sheriff then posts the notice on the property. If the homeowner does not leave, then the sheriff is authorized to force them to leave.
Florida Expedited Foreclosure
The Florida foreclosure process as detailed above is extremely long. It is one of the longest in the country with the average one taking up to 893 days, which is about two and a half years. However, Florida law does have rules for an expedited process when the homeowner has no defense or does not hire an attorney to help prolong it. That process follows the six steps detailed below.
1.Once the foreclosure complaint is filed, the lender and any other lien holder can request an order showing any reason why the foreclosure action should not proceed.
2.The court reviews the request and makes sure the complaint is valid and meets certain criteria, and then they send an order to the homeowner to prove any reason why the final judgement of foreclosure should not be rendered.
3.The court sets a date for the hearing, which is usually about 20 days after the order requesting proof of defense. The homeowner needs to show a defense 45 days after the first foreclosure complaint.
4.Before the hearing, the homeowner can file a response to indicate any evidence in their defense.
5.The court will then hear the homeowner’s defense at the hearing and if it is legitimate, no final judgement will be rendered at that point.
6.If the homeowner does not file any response, or does not show up at the hearing, or loses the hearing, then the court can immediately grant a final judgement in favor of the lender.
Sometimes this expedited process runs concurrently with the regular foreclosure proceedings.
A legal term that homeowners may find during the foreclosure process is called lis pendens. This is the term for the formal process that begins the action of foreclosure. It is a written notice that litigation concerning real estate has been filed. It can involve either the claim of ownership in a property or a title claim. It serves notice to the homeowner that a claim has been filed against their property, and it also notifies the public that a particular piece of property has a potential claim on it. Within the foreclosure process, a lis pendens tells the homeowner or anyone else with interest in the property, that it is facing foreclosure. This can affect anyone researching the property such as a lender involved in refinancing or a title company researching it for a sale or other reason. The lis pendens stipulates that the homeowner has 30 days to stop the legal process by paying what they owe. Once a lis pendens is filed, the property is considered to be in the process of pre foreclosure until it is sold at auction or the process is halted. Even though this is technically a pending lawsuit, as long as the homeowner retains ownership to the property, they can still refinance or sell it. The lis pendens is essentially a warning to anyone with interest in the property that ownership is disputed. Anyone who eventually buys the house, refinances it or rents it will have to abide by the resolution of the lis pendens. Title companies typically will not insure a property title with a lis pendens.
Sometimes homeowners choose bankruptcy as a method to avoid or put off foreclosure. In a Chapter 7 bankruptcy, there is an automatic stay that keeps debt collectors from collecting on debts. This also automatically pauses the foreclosure process and any sale date will be canceled. However, this is only temporary. Once the bankruptcy is discharged, usually within three to six months, the foreclosure proceedings continue. The stay can still give homeowners a chance to short sale the house or make other plans to leave. A Chapter 13 bankruptcy is usually filed when the homeowner does want to keep the house and is able to afford the comprehensive payment plan. Debts are reduced under this bankruptcy type and the homeowner is protected from foreclosure as long as they continue making the prearranged payments. Unlike a Chapter 7, the filer can expect to be in the process for up to five years. Legal fees also range higher for a Chapter 13 vs a Chapter 7. However, Chapter 13 bankruptcies can be filed repeatedly while Chapter 7s can only be filed a second time if eight years passes between the first filing.
Foreclosure Complications and Defense Strategies
The primary thing that complicates a foreclosure proceeding is when the homeowner mounts a legitimate defense, usually with the assistance of a foreclosure defense attorney. Obviously defending against a foreclosure has several benefits for the homeowner. If they are living in the property, they can continue to do so. If the property has renters, they can continue to collect the rent. They can also continue to explore options for modifications or a sale. The other reason homeowners may choose to defend against a foreclosure is fear of the deficiency judgement. When there are real questions about a foreclosure, it can also help convince the bank to settle or come to an agreement about a modification or other option.
Foreclosure defense attorneys use a variety of strategies to delay foreclosures or force banks to settle. Some questions they pursue include looking at dishonest lending practices, lenders that are unwilling to work with clients, lenders that do not get back to clients in an appropriate time to halt the process, and other strange or illegal conduct by the lender.
The key to getting an attorney involved is to do it as early as possible in the process. Whether a homeowner knows they will be unable to pay the loan as it currently stands, or if they attempt to work with the lender and the lender does not respond. The sooner an attorney is involved, the better the outcome usually is for the homeowner.