Foreclosure 101

It’s no secret Florida has the largest inventory of backlogged foreclosures in the country. Although the market has improved somewhat, 2014 is going to be another record year for residential foreclosures in the Sunshine State. The process takes on average an excruciating 900 days to complete. In an effort to clean up, expedite and streamline the foreclosure process, the Florida Fair Foreclosure Act was signed by Governor Rick Scott in July of 2013.

So how does this impact you? What is the process if you find yourself caught in the foreclosure fray? Below are some points for homeowners to consider if faced with foreclosure:

1.Foreclosures are judicial in nature, meaning if the lender is foreclosing on the borrower, the lender will serve the borrower with at a minimum the summons and complaint. The new Florida Fair Foreclosure Act requires the bank to provide the note with the lawsuit. A very sensitive timeline must be abided by whenever one is involved in litigation, it is extremely important you contact an attorney immediately upon receiving any legal paperwork.

2.The borrower generally must make good on the total payoff amount to be back in good standing with the lender. Oftentimes homeowners are confused as to why the mortgage company will not accept payments after initiation of the lawsuit. This issue may be brought to the judge’s attention, who may enter an order dictating the payment obligations of the borrower during the pendency of the lawsuit.

3. Lenders are tough to deal with. Homeowners will find that, more often than not, the banks will not negotiate; they want their money, period. Representation by an experienced attorney will proof to be the most effective way to negotiate.

4. During the foreclosure process, it is important to stay on top of all other bills such as credit cards and car loans, however keep in mind dealing with a foreclosure takes precedent. An attorney may be able to help you stay in your home and renegotiate other financial aspects of your life.

5. When a lender forecloses, the amount owed to the lender for the mortgage usually exceeds the value of the home or the foreclosure sale price. The difference between this sales price and the amount owed is known as the “deficiency.” If, after the house is sold, the bank does not recover the entire loan amount, the bank may sue the borrower for the deficiency amount. This is known as a deficiency judgment. The new Florida Fair Foreclosure Act has shortened the deadline for banks to seek deficiency judgments from 5 years to 1 year after the foreclosure sale.

6. Foreclosure judgments are final. This means the homeowner has no chance of recovering their home after entry of a foreclosure judgment. This provision protects the new owner of the property once its rightfully transferred from the bank.

7. There are many, many other considerations and every property owner’s situation is different, so be savvy and consult with a lawyer.

The foreclosure process moves quickly and does not favor the homeowner. Based on the final nature of these judgments, it is essential to contact an attorney to assist in the process from start to finish. Options may range from short sale to bankruptcy to refinancing the existing loan.

So protect your nest and stay above the foreclosure fray by communicating with your bank at the first sign of financial hardship. You may just end up sending a candy gram to your banker…

Vanessa Braeley, Associate Attorney with NeJame Law, contributed to this article.