Florida Legislators Preparing Home Swindle: The Problems with House Bill 87

The Problems with House Bill 87
Feb 17, 2013 | Mark Stopa

As you may have read on the front page of today’s Bradenton Herald, I’ve joined Florida Consumer Justice Advocates, a group that is fighting against the passage of House Bill 87, a proposed piece of legislation being touted by some of Florida’s congressmen as a solution to the logjam of cases pending in Florida’s courts.  Frankly, I’m concerned about what a small handful of legislators are trying to do to consumers in Florida – hence my involvement – and it’s probably past time that I explain what’s going on here.

According to some misinformed Florida legislators, the Florida court system is unable to adjudicate foreclosure cases quickly enough.  Proponents of such a position point to the number of days – something like 850 – which they say it takes to prosecute a foreclosure case in Florida.  These individuals love to blame the judges and the court process, acting as if the system is broken and needs to be fixed.  House Bill 87 is the proposed “fix” of these misinformed few.

Before I go any further, please realize this is merely *proposed* legislation.  I’m confident we can and will defeat the bill (and that’s why I’ve joined a group fighting against it).  That said, we all need to take action and talk to our congressmen to ensure our collective voice is heard.

House Bill 87 has two enormous problems, but before I address this disgraceful piece of proposed legislation, let’s get something out of the way right off the bat.  Judges are not the problem.  Court resources are not the problem.  The court process is not the problem.  The biggest reason foreclosure cases go slowly in Florida is because banks want them to go slowly.  That bears repeating.

The biggest reason foreclosure cases go slowly in Florida is because banks want them to go slowly.

Sure, foreclosure cases often go slower when lawyers like myself are involved.  However, even with the increasing number of lawyers defending foreclosures nowadays, the vast majority of foreclosure cases in Florida remain unopposed.  Think about that for a minute … advocates of this proposed legislation complain about how long it takes to adjudicate a foreclosure case, yet most cases are unopposed.  Let me be frank … there is absolutely no excuse for banks to be unable to finish a foreclosure case in, say, less than a year when a case is unopposed.  Yet, somehow, it’s rare for any foreclosure to be finished that quickly, even when nobody is putting up a fight on the defense side.

Those considering this proposed legislation should think about this dynamic and ask themselves this …

Why are we working to change the law in a manner that’s adverse to consumers when banks are able to prosecute foreclosures under the current system but refuse to do so?

If you don’t agree or don’t understand, go read Florida Statute 702.10.  This statute has existed for many years, since long before the foreclosure crisis began.  I’ll spare you the legal jargon and summarize the statute this way … if a bank wants to get a quickie foreclosure against a homeowner, it can obtain a “show cause” hearing under the current statute.  If the homeowner doesn’t defend that hearing and “show cause,” then the bank gets the quickie foreclosure.  One hearing and that’s it - case over.

So why do foreclosure cases in Florida take so long despite such a statute?  Simple.  Banks can use Florida Statute 702.10, but they choose not to do so.  In fact, I’d say the banks use this statute in less than 1% of foreclosure cases in Florida.  Yes, fewer than 1% of cases utilize the accelerated foreclosure process that’s been in place for years.  (I acknowledge I don’t have hard data to support that estimate, but I’m comfortable it’s accurate based on my vast experience over the past few years.  And lest you think my estimate is off because the banks don’t use the quickie procedure on my cases (but do on others), please understand that banks make the decision whether to utilize the quickie procedure before I am ever retained.  The banks are choosing not to utilize the quickie procedure across the board, not merely on cases that are defended with counsel.)

Hence, for anyone involved in the process of considering House Bill 87, I reiterate my initial question:
Why are you changing the law to make the system faster when the banks don’t utilize the accelerated procedures already in place?

If the banks’ conscious decision to forego the accelerated procedure in Fla. Stat. 702.10 isn’t enough to convince you, then go ask a judge.  I could give examples (of the many Florida judges who have lamented how banks don’t prosecute their own cases), but there’s no need – go ask ANY Florida judge.  I’m quite confident that ANY and EVERY Florida judge will tell you the reason foreclosure cases go slowly in Florida is because banks file the cases then don’t set hearings, don’t set trial, and don’t try to win.  In fact, many of the disagreements foreclosure defense attorneys such as myself have had with Florida judges is when the judges set trials or hearings in cases when the banks have failed to do so.  Yes, it’s often the judges, not the banks themselves, who set hearings and trials in foreclosure cases whcih the banks themselves refuse to prosecute.

If you don’t me (because you think I’m biased) and don’t believe the judges (because you think they don’t want to accept the blame), or if you just can’t believe a bank wouldn’t try to win a foreclosure case, go sit in a courtroom for a day. Or go check out a few court dockets online.  As you do, you’ll see how foreclosure cases often languish in Florida because the banks who filed them don’t prosecute them quickly.  Everyone involved in the process knows this is how it works in Florida.

Foreclosure cases languish because the plaintiffs who filed them don’t prosecute them.

My initial point, hence, is this … there is no need for new legislation to make foreclosures go faster, as the system itself isn’t the problem.  The banks are the problem.

Now that we’ve established how House Bill 87 is being proposed to address a problem that doesn’t exist, let’s address the two big problems with the language of the bill.

First, under the current version of Fla. Stat. 702.10, if a homeowner defends at a “show cause” hearing, then the judge “shall” not enter a final judgment of foreclosure via the accelerated procedure.  In other words, as the law currently exists, if the homeowner doesn’t defend the case, then the bank gets a quickie foreclosure, but if the homeowner defends, then the bank has to go through the normal court process, i.e. summary judgment or trial, to prevail.

Even as a consumer advocate and defense attorney, I understand the rationale of the statute as it presently exists.  If a homeowner isn’t going to defend a foreclosure case (as many don’t), then why drag out the process?  Just give that bank a judgment (presuming compliance with the statute and the proper, verified pleadings).  But if a homeowner defends the case, then the bank should have to prove its entitlement to foreclosure as any plaintiff in any court case would, i.e. at summary judgment or trial, after the case is litigated like any other court case.

The first, huge problem with House Bill 87 is that it completely changes Fla. Stat. 702.10 with one small word – “may.”  Under the current statute, if a homeowner defends the case and files the appropriate paperwork at that quickie hearing, then the judge “shall” preclude the final judgment from being entered at that hearing.  As a consumer, if you show up and defend, you at least know you’ll get your day in court, just as you should, and just as you’re entitled in any court proceeding.

Under the proposed House Bill 87, the statute would be changed so the judge “may” preclude the final judgment from being entered at that quickie hearing.  The problem with “may” instead of shall” is that “may” implies ”may not.”  Hence, a homeowner could defend the case and file the appropriate paperwork at that “show cause” hearing, yet the judge could allow a final judgment to be entered anyway.  No day in court, no trial, no discovery, no due process - the judge could simply rule in the bank’s favor, without a trial and without summary judgment, simply because he/she wanted to do so.  Perhaps worse yet, the proposed change to the statute provides no guidance as to why/when a judge should allow the quickie foreclosure even when the case is being defended and why/when the judge should not … it would simply be up to each judge to decide when to allow a foreclosure case to proceed like a normal case and when to allow a quickie judgment.

If this statute were enacted in this format, it would be a complete and total disgrace.  Consumers would be deprived of trials and discovery and due process simply because the judge preferred that the bank win the case quickly, even where that homeowner was presenting legitimate defenses.  With all we’ve learned about bank fraud and robosigning and the legitimate defenses homeowners have to foreclosure, it’s absurd anyone has to even advocate against such a draconian piece of legislation.

Another glaring problem with the proposed change to “may” is that there is no guidance given as to why/when a quickie judgment should be entered and why/when it should not.  There would be no uniformity in the rulings of judges, as some would allow the quickie foreclosures while others would not, with little rhyme or reason for the disparate rulings.  Public confidence in the judiciary would further deteriorate, as those who allowed the quickie foreclosures would be viewed as “pro bank” while those who did not would be viewed as “pro homeowner.”  Lawsuits simply aren’t adjudicated this way.

The second glaring problem with House Bill 87 is that it authorizes judges to require mortgagors of properties that are not owner-occupied to make monthly mortgage payments into the court registry during the pendency of a lawsuit, failing which the homeowner loses possession of the property as a sanction, even without the bank proving its standing or its entitlement to foreclose.

Yes, House Bill 87 would make homeowners who don’t live in the property pay on a monthly basis for the right to defend the case.  No payment = no right to defend.  And the payments wouldn’t be based on current market rates, but based on the original loan amount.  Miss one payment and down comes the hammer – loss of possession – even if the bank didn’t prove its standing or its entitlement to foreclose.

Is that really what Florida has become, a state where one must pay for the right to defend?  Silly me, I thought the right to due process was a right enjoyed by all, not just those who can afford to pay for it.

There are many other problems with House Bill 87.  Frankly, I could go through it line by line and point out problems all day long.  That said, these are the things that get my ire.  Why are we changing the law in a way that harms Florida consumers to “fix” a court process that isn’t broken, one which enables banks to prosecute cases quickly even as they refuse?  How can we possibly allow any judge to deprive homeowners of their day in court, particularly without any set guidelines in place?  And how can anyone justify forcing homeowners to pay on a monthly basis for the right to enjoy due process?

I firmly believe we will defeat this bad bill.  Just don’t take my word for it.  Join me in the fight.  Talk to your friends, family, and neighbors.  More importantly, call your local Congressman.  Tell him/her House Bill 87 is bad and should not become law.