Foreclosure Law Empowering Lenders Could Be 'Game Changer'
The following article was published in the Daily Business Review and written by Samantha Joseph for the DBR. The South Florida Law Blog has republished select exerpts with quotes from Roy Oppenheim, Oppenheim Law.
New Wave of Short Sales
A new wave of short sales could be part of the fallout from Florida’s Fair Foreclosure Act as property owners move to mitigate losses under the law that gives both new powers and new responsibilities to lenders, real estate brokers say.
The law took effect July 1, months after state lawmakers allotted millions of dollars to accelerate cases clogging court dockets.
South Florida has been a hotbed for distressed properties for years since the housing crash. Miami ranked among the top 10 metro areas in the country for foreclosures in 2013, according to Irvine, Calif.-based RealtyTrac. Broward County foreclosure filings rose 11 percent in 2013, while December’s count was 30 percent higher than November’s numbers, public records show.
The Florida statewide foreclosure average is 944 days, or about 2.6 years. It is is the third-longest timeline in the country, behind New York (1,029) and New Jersey (999).
With more than 350,000 cases on dockets across Florida, the state ranks third in the nation behind New York and New Jersey for longest foreclosure timelines, according to RealtyTrac.
Among the changes is a provision that allows lenders to collect rental income on residential properties—a strategy previously available only for commercial buildings.
“What was happening in commercial is now happening in residential,” said Roy Oppenheim, co-founder and senior partner at Oppenheim Law in Weston. “It might accelerate the foreclosure process because if people can’t collect the rent, they might not continue to defend the case.”
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.
2014 Game Changer
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
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.
Click here to read the entire DBR article by Samantha Joseph, Daily Business Review