Foreclosure bills face uphill climb

MANATEE — A trio of early bills filed in Tallahassee aim to provide more protections to Florida homeowners and tenants in foreclosure cases, but it’s unlikely any will be passed.

The bills, all filed by House Democrats, likely will have an uphill battle next year in the Republican-controlled Legislature, which didn’t act on similar proposals in 2009. All three measures also face resistance from the state’s banking industry, which remains politically influential despite the economic beating it has taken.

And, foreclosure experts say, some of the bills’ provisions might be undercut by state and federal laws and mortgage-relief efforts.

“I doubt any will get passed, but we’ve got to do something about this crisis,” said Rep. Darren Soto, D-Orlando, who filed two of the bills.

Florida ranks second nationally in foreclosure activity, with one in every 140 homes receiving a foreclosure-related notice in August, according to RealtyTrac, a tracking firm in Irvine, Calif.

One of Soto’s bills would prohibit deficiency decrees in final foreclosure judgments against homesteaded property. A deficiency decree is a judgment against a borrower for the balance still owed if his property is auctioned for less than the final foreclosure judgment amount.

The other would, among other things, allow borrowers to invoke mediation in foreclosure cases involving homesteaded properties.

A third bill by Rep. Hazel Rogers, D-Lauderhill, would force lenders to provide greater notification and financial assistance to tenants involved in foreclosures or short sales.

Mediation bill has tough road

Soto’s “Foreclosure Bill of Rights” appears to have the steepest climb to passage, as an identical bill never got a committee hearing during the 2009 session.

It would let homesteaded borrowers invoke mediation in foreclosure suits still pending as of July 1, 2010, or filed between that date and July 1, 2015. In preparation for mediation, lenders would have to conduct an updated appraisal and furnish copies of the mortgage, note and closing papers to borrowers. Lenders also would be required to negotiate in good faith, with a judge making that determination.

In turn, borrowers would have to provide up to three years’ worth of personal financial information.

If the mediation results in a reduction in the mortgage principal, the lender would be allowed to file a forbearance lien for the amount of the reduction — basically postponing the foreclosure. That allows the lender to recoup any loss if the mortgage is later refinanced or the home is sold for excess funds. If there are no excess funds, the lender can seek to foreclose on the lien.

Soto, a lawyer who has represented borrowers in foreclosure cases, says the bill would force lenders to bargain in good faith. It also would encourage lenders to do more in mediation than just offer lower mortgage payments without reducing principal despite the property’s drop in value, he says.