Foreclosure Law Empowering Lenders Could Be 'Game Changer'

, Daily Business Review

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Tony Martinez
Tony Martinez

Under the new law, lenders can file foreclosures at the same time they submit these motions without waiting for the outcome of the first hearing. With real estate values rebounding, brokers say lenders now have a new incentive to use this tool.

But while the Fair Foreclosure Act empowered lenders, it also imposed new requirements that slowed filings.

"One game changer: Banks now have to prove they own the note and show how they came to own it and in what capacity they're foreclosing on it," Oppenheim said. "That's a problem for the banks. In the past the law firms didn't know in what capacity their clients were foreclosing. They used to keep it very ambiguous, but that's no longer working."

Pacing Thrown Off

Ice Legal founder Thomas Ice of Royal Palm Beach observed: "There's dual pressure on banks not to file cases. ... This was an environment created by the courts themselves to try all these cases come hell or high water."

Last year when state lawmakers allotted about $31 million to bolster Florida's foreclosure process by adding judges, support staff and technology, the move was meant to speed up the legal process.

It helped ease the backlog as property values pushed upward.

But the new focus on speed wasn't necessarily a good thing for bankers who had already timed the repossession process to avoid flooding the market with foreclosed properties they would have to maintain.

"Banks have lost control of the pacing of their own judgments," Ice said. "Before they could sit on the cases for years until they were ready for sale. But now cases are going to trial even though neither party wants them to go."

For property owners, brokers said, speed is key.

"The clock is ticking," Martinez said. "There's no doubt that it's going to lead to more inventory because people are going to have less time. Consumers have fewer options and are looking for the exit strategy that is least damaging to them in the future. Short sales are least damaging and are still a dignified exit to a difficult situation."

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