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Saturday, January 30, 2010 4:28 PM

Quicker "Non-Judicial" Foreclosures and Evictions Coming to Florida

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Inquiring minds are interested in pending legislation to dramatically speed up the foreclosure process in Florida.

If bankers get their way, Floridians facing foreclosure could be kicked out of their homes in as little as three months.

The Florida Bankers Association, the 400-member-strong lenders' lobby, has presented state legislators with a bill to upend decades of Florida law and establish "non-judicial" foreclosures in Florida by July 1.

What's a non-judicial foreclosure? Banks would accelerate foreclosures against defaulting homeowners by bypassing the courts. Judges would no longer rule on foreclosure cases.

Some states — 37 in fact — already grant that fast-track foreclosure authority, including California, Georgia, Alabama and Texas. But Florida, with its plethora of vacation and retiree homes, has always been big on homeowner rights.

Non-judicial foreclosures must conclude in no less than three months and no more than a year. Most Florida foreclosures take a year to 18 months to work through the courts these days, longer if a lawyer fights a successful rear guard action. So in 90 days banks can theoretically auction the home out from under you.

Even after homeowners are evicted, banks can still pursue them for unpaid mortgage debt. But banks will waive that right if homeowners avoid trashing or stripping the house before the new owner takes over.
If banks must waive the right to pursue homeowners for unpaid mortgage debt provided the homeowner does not strip or damage the home, then the bill seems to be fair and balanced. The article does not say happens to second liens, but that debt should be legally discharged as well.


  • Freeloaders get kicked out of their houses and will then have to buy or rent.
  • It will bring some of the shadow inventory on the market where it needs to be.
  • The housing bottom will come quicker.
  • Homeowners have debt legally discharged.
  • Should banks agree to rent until a buyer is found, the banks would have some money coming in monthly instead of none.
  • Homeowners are given an incentive to not strip or damage the home.

Banks Wise To Rent

Having a tenant may make the houses more salable, especially to would-be landlords. If a buyer wants occupancy or does not want the current tenant for any reason, the tenant would have 30 days to move.

Moreover, until banks can find buyers, the banks would be wise to rent the homes to the current occupants. Otherwise, the homes would be subject to pestilence, mold, vandals, and illegal squatters.

The only open question is whether or not this bill would encourage more to walk away. If so, would that necessarily be a bad thing? The quicker bad debts are written off, and the quicker home prices bottom, the better off everyone will be in the long run.

Mike "Mish" Shedlock
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