Are you facing the possibility of Foreclosure in Florida?
Foreclosure can feel overwhelming. Owners need to deal with the foreclosure process, legal timelines, court hearings, and eviction if foreclosure isn’t stopped.
People struggling with foreclosure have similar questions:
- How does the foreclosure process work in Florida?
- How long does foreclosure take in Florida?
What does Florida’s foreclosure timeline look like? - How long do you have to get out of your house after foreclosure?
- Can I stop foreclosure?
- Is Florida a foreclosure redemption state?
Solving foreclosure problems begins with learning the details on what is the foreclosure process in Florida.
This blog by the House Heroes Team dives into everything you need to know about foreclosure in the Sunshine State.
General Legal Considerations
Let’s clarify precisely what foreclosure is before diving into the details on the Florida foreclosure process. According to James Chen at Investopedia:
Foreclosure is the legal process by which a lender takes control of a property, evicts the homeowner and sells the home after a homeowner is unable to make full principal and interest payments on his or her mortgage, as stipulated in the mortgage contract.
Foreclosure In A Nutshell: When you fail to pay your mortgage, the lender initates the legal process to take over the property and ultimately evicts whoever lives there.
Judicial Foreclosure: Courts Decide The Case
Once a lender begins foreclosure in Florida, the case is heard by a judge in the county courts.
Florida is a judicial foreclosure state. Judicial foreclosure means foreclosure must go through the court system, and the litigation completes when the home is sold at auction to pay off the mortgage balance.
Florida does not have non-judicial foreclosure. Every foreclosure goes through the courts, is approved by a judge, and the property is sold at a public auction conducted by the local county.
Lien Theory: You Own The Property!
Ownership of a house with a mortgage in Florida belongs to you!
This is called “Lien Theory”.
Upon giving you a mortgage, the lender files a “lien” on the property – a document recorded at the county describing amounts owed and your promise to pay. You (the buyer) are named as owner on the deed to the property.
This isn’t the case in all states. Most states outside of Florida are “Title Theory” states – the bank owns the house until the mortgage is paid off.
Florida Foreclosure Laws & Statutes
Brushing up on foreclosure laws, statutes, and procedures might not be a bad idea.
Florida has a procedure called “Fast-Track Foreclosure”.
Here’s how Robert Warren explained it:
“Fast-Track Foreclosure is designed to fast track home foreclosures and close out homeowner rights quickly. Mortgage companies can file a “show cause order” soon after the foreclosure case is filed. The show cause order shifts the burden of proof to the homeowner to show why the bank should not be allowed to take their home. Foreclosure cases are expected to process through the system with much greater speed.”
Here’s some other key points about Florida foreclosure law:
- Is Judicial Foreclosure Available? Yes.
- Is Non-Judicial Foreclosure Available? No.
- What secures the banks lien? Mortgage.
- Average Timeline? 180-Days
- Equitable Right of Redemption? Yes.
- Statutory Right of Redemption? Yes.
- Deficiency Judgments? Yes.
As noted above, Florida law requires foreclosures to go through the courts. Judges decide the case – no jury. Like most lawsuits,there is a complaint, answer, service of process, discovery, hearings, and court orders.
The court orders detail how the foreclosure must take place, including how the notice of the auction is made to the public (advertisements, publications, notice in newspaper). The lender is responsible for public notice. Florida permits deficiency judgments (if the foreclosure sale doesn’t amounts owed, banks may collect the balance from personal assets).
Florida has an “Equitable Right of Redemption” that gives owners the right to end foreclosure by paying all amounts due before the foreclosure auction. Florida also has a “Statutory Right of Redemption” allowing the owner to pay off the mortgage and restore their ownership in a short period following the foreclosure auction – usually about 10-days.
The Florida Foreclosure Timeline:
Losing your house is frightening – and it’s even worse if you’re not familiar with how long it takes to foreclose on a home in Florida.
Understanding how long the foreclosure process is in Florida will help you put together an actionable plan to stop the bank from taking your property.
The Florida foreclosure timeline has three “major phases”:
- Pre-Foreclosure: The time from missing a payment until the lender files a foreclosure lawsuit.
- Foreclosure Case: The time the foreclosure lawsuit is open before a judge before the foreclosure sale.
- After Foreclosure: After the foreclosure sale, rights of redemption, eviction, and deficiency judgemnt timelines begin.
Let’s get into the “nitty gritty” detail as to how the timeline works.
PRE-FORECLOSURE
What Happens After The First Missed Payment?
Most lenders in Florida allow a 15-day grace period after missing a mortgage payment.
Your mortgage is due on the first of the month, and is considered “late” after 15-days.
At the end of the grace period, you are normally charged a late fee about 5% of the amount of the missed payment. As an example, you will have to pay $50 late fee on a $1,000 mortgage payment if you go over 15-days’ late.
Resolve the late fee as soon as possible – you will incur it every month you remain late.
What Happens At 30-Days Past Due?
The bank may report your delinquent mortgage payment to credit bureaus after it is 30-days’ overdue.
At the 30-day delinquency mark, you will start receiving communications from your lender. The lender will inquire as to why you haven’t made your payments. Use this opportunity to be open and honest with your lender about anticipated payment problems.
Federal law requires the bank to contact you no later than 36 days after the delinquency. According to NOLO:
“If a borrower falls behind in payments, a servicer must attempt to contact the borrower to discuss the situation no later than 36 days after the delinquency. If appropriate, the servicer must tell the borrower about loss mitigation options—like a modification, short sale, or deed in lieu of foreclosure—that might be available to the borrower.”
By the time your mortgage payment is 45-days late, lenders must appoint personnel to help you with “loss mitigation”.
“Loss mitigation” is a process for a delinquent borrower and lender to work together to avoid the foreclosure process. The majority of loan servicer companies employ workout specialists who will tell you what documents to provide, receive your application, and provide information and answer questions. The lender has 30-days evaluate you for available loss mitigation options and advise you on eligibility.
The servicer must assign a person for the borrower to speak with via phone, available to respond to inquiries, and work with the borrower through the loss mitigation process. The appointed person must assist with:
- available loss mitigation programs available to you;
- steps complete loss mitigation application;
- updates on the review of your application;
- the procedure to appeal a denial of your application;
- when the delinquency will result in filing the foreclosure lawsuit.
What Happens At 90-Days Past Due?
Prior to 120-days past due, the bank could not file foreclosure against you.
Pursuant to the Dodd-Frank Act and Consumer Financial Protection Bureau, there is a “120-Day Loss Mitigation Period” that prevents lenders from filing a foreclosure lawsuit.
The relevant statute is 12 CFR Part 1024 (Regulation X):
“Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless: (i) A borrower’s mortgage loan obligation is more than 120 days delinquent; (ii) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or (iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder.”
You can extend the 120-day period by filing the “loss mitigation application” discussed above.
____________________________________________________________________________
THE FORECLOSURE LAWSUIT
Filing the Summons, Complaint, and Lis Pendens
Foreclosure lawsuits in Florida begin by the lender filing a Summons, Complaint, and Lis Pendens.
The Summons.
The “Summons” is legal notice of the foreclosure lawsuit. It demands that you appear before the foreclosure court at a certain date and time. The summons also specifies the time period to file your “Answer”.
Summons are issued to each defendant named in the Complaint. In foreclosure cases, summons are typically served to each borrower on the mortgage. Owners, other lien holders, and occupants of the property.
See the image below for a sample of how the Summons might look:
The Complaint.
The “Complaint” sets forth the legal and factual basis for the foreclosure lawsuit.
Foreclosure complaints describe the mortgage and promissory note, the property being foreclosed on, the circumstances of default, and amounts due. Complaints attach “exhibits” (a written copy of the mortgage) and specify the relief sought by the bank (foreclosure sale with the proceeds paying off the mortgage balance).
Lis Pendens.
“Lis Pendens” is written notice that the foreclosure lawsuit has been filed against your property. The purpose of lis pendens is to inform the public that there is a lawsuit concerning the property.
Banks foreclosing on Florida property must record the Lis Pendens with the local county. According to Florida Stat. 48.23:
“An action in any of the state or federal courts in this state operates as a lis pendens on any real or personal property involved therein or to be affected thereby only if a notice of lis pendens is recorded in the official records of the county where the property is located.”
Lis Pendens is several pages long and in Florida must include: names of the parties, filing date of the foreclosure lawsuit, the court hearing the foreclosure, description of the property, and the relief sought.
Service of Summons & Complaint (10 to 20 days)
The lender is required to “serve” you with the Complaint, Summons, and Lis Pendens concerning the foreclosure lawsuit.
Pursuant to Florida Rule 1.070, service must be issued “upon the commencement of the action authorized by law shall be issued forthwith by the clerk or judge judge’s signature and the seal of the court and delivered for service without praecipe.” Service of process must be made by an officer authorized by law, or the court may appoint any competent person not interested in the action.
You can expect to be served quickly in a foreclosure case – in 10 to 20 days.
The Answer (20 days)
After the lender serves you with the summons and complaint, Florida procedure allows you 20-days to file a response with the court called the “Answer.”
The answer includes responses to claims made by the lender in the Complaint. You typically admit, deny, or state there is insufficient knowledge to each alleged fact.
You also assert legal “defenses” in the Answer. For example, you might assert defenses such you aren’t actually delinquent, violation of laws like the Truth in Lending Act or Fair Debt Collections Practice Act violations, unclean hands, or lack of standing.
Once you file an Answer, a date for a “Preliminary Hearing” is set forth.
Filing an answer within the 20-day time frame is critical. If you miss the deadline, the lender may ask the court to issue a default Final Judgment of Foreclosure against you.
The Preliminary Hearing
Following submitting your Answer, attending a preliminary hearing is the next time in the Florida foreclosure process.
During the preliminary hearing, you make your case to the courts and the judge issues a decision was to the next. On some occasions, the court requests that the lender grant you a period of time to resolve the mortgage issues. In other cases, if the court does not view the Answer as sufficient, the courts will allow the matter foreclosure matter to go forward.
If you failed to submit an answer within the required 20-days, or if the judge rules against you early on in the case, the court may “Fast Track” the case to the Summary Judgment in under a month.
The Summary Judgment Hearing (45 days)
At the summary judgment hearing, the lender will present a case to the court to issue a legal ruling in its favor. The lender’s attorney will make this motion only based on non-disputed facts – so this is a time for you to challenge the lender’s factual assertions.
You can show proof of payment, or some other grounds that the foreclosure should go forward. If you aren’t able to put together a factual defense and the court deems the legal grounds sufficient, the judge will allow the cse to move forward to foreclosure.
As part of the summary judgment motion, the lender will input the total amount of financial damages, including the balance on the mortgage, interest, penalties, and other expenses.
Foreclosure Sale Date (75 days)
The court normally sets the foreclosure sale date 30-45 after the entry of Summary Judgment. At that time, the local county auctions the house at public auction.
The post How The Foreclosure Process Works in Florida appeared first on House Heroes LLC.
