Gov. Rick Scott signed the controversial fast-track foreclosure bill into law Friday, surprising opponents of the plan who thought he would quietly let it become law without his support.
The bill is the first substantial change to Florida foreclosure laws since the state’s epic real estate crash pushed hundreds of thousands of homeowners into default and overwhelmed the court system.
Scott said he supports the bill, one of 34 he signed Friday, because he believes it will add to Florida’s economic recovery by “placing abandoned homes, caught up in the foreclosure backlog, back onto the market.”
“This bill expedites an existing and voluntary alternative court process for defaulted home loans in uncontested cases when the borrower and the bank both seek a more speedy finality,” he wrote in his transmittal letter to the Department of State.
Homeowner advocates and foreclosure defense attorneys waged a high-profile battle against the bill, which even ignited a rare public brawl within the Florida Bar between lawyers opposed to the proposal and the Bar’s Real Property, Probate and Trust Law Section. Both sides hired powerful lobbyists to push their interests and hurled accusations about ulterior motives for their positions.
Roy Oppenheim, a South Florida real estate and foreclosure defense attorney and member of an opposition group called Florida Consumer Justice Advocates, said he’s already had discussions about challenging the law as unconstitutional and asking the courts to delay its implementation until it receives judicial review.
“There will be a half dozen appeals attacking a half dozen parts of the law,” Oppenheim said. “This bill is going to clog up the system to a point that it will be one of the governor’s biggest boondoggles.”
A chief concern of opponents is a retroactive provision that gives homeowners only monetary damages if their home is foreclosed on fraudulently. The measure is meant to protect third-party buyers from losing the home after purchase, bill sponsors said. But defense attorneys say the measure erodes time-honored property rights.
The law will also allow any lienholder, including community associations, to request a so-called “show cause” order that would require a homeowner to muster a defense more quickly and give the judge the ability to make a faster ruling.
Rep. Kathleen Passidomo, R-Naples, sponsored the bill with Sen. Jack Latvala, R-Clearwater. Passidomo had tried for two previous years to get similar legislation passed and said Friday the resulting bill was a compromise that protects homeowners and allows for faster foreclosures on undefended properties.
One provision in the bill that both sides like is that banks can only pursue a homeowner for unpaid debt for one year instead of five.
“I’m just glad to get it done,” Passidomo said Friday. “We can start getting the properties back into the stream of commerce and jumpstart the economy.”
Florida’s courts have grappled with foreclosures since the housing crisis began, and cases quickly logjammed. As of March, there were 352,890 foreclosure cases in the court system statewide, including 30,272 in Palm Beach County.
Passidomo said she’s not concerned about challenges to the new law.
“If they want to file litigation saying the bill is unconstitutional, go ahead,” she said. “I worked with 200 lawyers who weighed in on this bill and I made one change after another.”
Scott’s position was unclear until Friday, and calls to his office were almost evenly divided. As of May 31, 632 people had expressed support for the bill with 563 in opposition.
Oppenheim said he doesn’t believe the law will help the housing market and doesn’t believe Scott signing it bodes well for a reelection bid.
“It’s more important to the governor and the banks to clear up the backlog than protect homeowner rights,” Oppenheim said. “I think he will pay a price politically for this.”
Real estate attorney and foreclosure defense attorney, Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law along with his wife Ellen in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title and creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel. Follow Roy on Twitter at @OpLaw or like Oppenheim Law on Facebook.