HB 87 – Florida Bill to Speed up the Foreclosure Process

As many of you already know, on Friday June 7, 2013 Governor Rick Scott signed HB 87 which significantly impacts the state’s foreclosure laws. One of the overriding aims of the bill is to speed up Florida’s foreclosure process. Its important to understand the bill and its effect, especially considering some of the provisions may have retroactive effect.

Deficiencies – Fla. Stat. 702.06 is revised to state that in the case of owner-occupied residential property, the amount of the deficiency may not exceed the different between the judgment and the FMV as of the date of the sale. There is also a rebuttal presumption that a residential property for which there is a homestead exemption is an owner-occupied property.

Finality of Mortgage Foreclosure Judgment – Fla. Stat. 702.036 is created to clarify the finality of mortgage foreclosure judgments. Specifically, any action to set aside, invalidate or challenge the validity of a final judgment of foreclosure or to re-establish a lien or encumbrance is relegated only to monetary damages if certain conditions were met: 1) proper service, 2) final judgment was to the property, 3) appeals’ periods have run and 4) a non-affiliated 3rd party bidder purchased the property. The statute then goes on to address the rights of the true owner/holder when that final judgment was received via a lost note affidavit.

Limitations on Deficiencies (Residential) – Fla. Stat. 95.11(5)(h) is created so that a plaintiff has 1 year in which to institute a deficiency claim on a residential property. This provision is particularly important for those loans that have a SBA or other Government junior, as the same may have a 1 year redemption period.

Lost Note Affidavits (Residential) – Fla. Stat. 702.015 is created to address a lost note affidavit for residential loans. First, the complaint must contain affirmative allegations as to it holding/owning the note and its entitlement to enforce them. Second, in the alternative, the complaint must contain allegations as to how the right to sue was delegated to the plaintiff if it’s now the owner/holder. Third, contemporaneously with the complaint a plaintiff must file a certification regarding the original note. Fourth, contemporaneously with the complaint a plaintiff must file its lost note affidavit.

Lost Note Indemnification – Fla. Stat. 702.11 is created to state lost note indemnification means 1) a written indemnification agreement, 2) a surety bond, 3) a letter of credit, 4) deposit or cash collateral or 5) other security the court deems appropriate.

Order to Show Cause – Fla. Stat. 702.10 is revised to enlarge the order to show cause provisions. The statute now expands the right to an OSC to all lienholders (i.e. condo/HOA). The statute also addresses the timing and responses to an OSC.

Rules of Civil Procedure – HB 87 concludes by requesting revisions to the Florida Rules of Civil Procedure to provide expedited foreclosure proceedings and develop additional forms to use.