Foreclosure process – the inside story. Why it takes so long for banks to foreclose.
The following article was authored and shared with our readers by Florida foreclosure expert, attorney Evan Rosen. I interviewed Evan on the foreclosure process, specifically: how banks and third-party groups foreclose on homes without proper documents – and ways you can stop them. Enjoy the audio and Evan Rosen’s insightful article below. ~ Dr. Joyce Starr
Understanding the Foreclosure Process
by Attorney Evan Rosen
We all regularly hear about the “foreclosure crisis” going on in our country but what you may not know is that the situation in Florida is far worse than in any other state. According to the latest statistics released by the Mortgage Banker’s Association, Florida accounts for 23.7% of all foreclosures nationwide; which correlates to 466,454 homes. Not only is this the largest number of any other state, it is larger than the total number of loans in 22 other states combined. The result is our courts are backed up with a caseload of 260,185 cases. Couple that with the termination of special court funding for foreclosure cases which took effect on July 1st and it appears the crisis in Florida is only getting worse.
So how did this backlog swell to such an enormous figure? Why does it take so long for a bank to foreclose?
This was not always the case, right? Well, we know that before Wall Street started selling shares of stocks in pools of mortgages through a process known as securitization, foreclosures could be handled within a few months. Now, in great part due to the banks’ rush to profit and lack of proper simple documentation required in any real estate or mortgage transfer, as well as the lack of complicated documentation required as a result of the securitization process, no one knows how long some cases will take because in many instances no one can properly prove who is entitled to foreclose.
Like every other plaintiff in any civil lawsuit, the plaintiff has the burden to prove all elements of their case by a “preponderance” or greater weight of the evidence. In a foreclosure action, the entity entitled to foreclose must successfully prove by this standard, among other things, that they are the proper party; the entity or person actually entitled to receive payments due under the terms of the note; and/or the party entitled to foreclose under the terms of the mortgage.
This is generally referred to as “legal standing” and often, the banks cannot prove they have it. What follows is a chart illustrating the time periods in the pre-foreclosure and foreclosure process in Florida.
Day 1 Payment due, no payment made
Day 7-1 Call from Lender/Mortgage Servicer
Day 16 Late charges begin to accrue
Day 20-25 Call and letter from Lender/Mortgage Servicer
Day 30 Default reported to Credit Bureaus; Lender/Mortgage Servicer sends second letter
Day 40 Lender/Mortgage Servicer sends letter with payment options
Day 60 Lender/Mortgage Servicer sends demand letter or “Acceleration Notice,” Credit Bureaus update their reports.
Day 90 Lender/Mortgage Servicer sends file to attorney, Credit Bureaus update their reports
Day 90+ Any time after 90 days the entity claiming their entitlement to foreclose can file suit. In a scenario in which the entity seeking to foreclose is not the same entity as the original mortgagee or lender, and with competent counsel, this process alone can take more than 12 months.
Day 1 Complaint and Lis Pendens are filed and served with a summons on the property owner.
Day 20 A responsive pleading is due. If not filed, plaintiff moves for default judgment. With competent legal counsel, there can be a multitude of legitimate issues raised via motions, hearings, and discovery requests which would extend this time period greatly.
Day 45 – 60 (If not represented by competent counsel) – Court schedules hearing for default judgment and at the hearing enters final judgment of foreclosure. By statute, the court should order the sale of the property on a specified day within 20-35 days of the order. However, sales can still lawfully take place later than 35 days and are sometimes taking many months after the order is entered.
Day 80 – 95 (If not represented by competent counsel) – Notice of Sale published once a week for two consecutive weeks in local publication, with last posting at least 5 days prior to sale; auction sale conducted; winning bidder applies 5% deposit from funds advanced electronically prior to sale and then pays the rest by noon the following day. Dade, Broward and Palm-Beach Counties conduct their auctions online. Certificate of Sale is filed “promptly” after sale and Right of Redemption ends when certificate of sale is filed.
Day 105 (If not represented by competent counsel) – Ten days after filing Certificate of Sale, Certificate of Title is issued – Title vests, no further action necessary unless property is still occupied.
Day 106 -119 (If not represented by competent counsel) – 1 -14 days after Certificate of Title issues, if property still occupied, sheriff issues Notice to Vacate.
Day 119 – 140 (If not represented by competent counsel) – 1 – 21 days after Notice to Vacate, sheriff vacates the property.
If, on the other hand, the entity seeking to foreclose is not the same entity as the original mortgagee or lender, and the owner has retained competent counsel, this process can take years, if the bank is ever able to foreclose.
The above is just an overview to help understand the current state of the foreclosure process. For more details or if you have any questions or comments, you are welcome to call or e-mail the author of this article for more information.
Evan M. Rosen
Rosen & Rosen, P.A.
4000 Hollywood Blvd, #725-S
Hollywood, FL 33021