Emergency Insight – HB 87 May Become Law!

Don’t Bet Your Investing Career on Short Sales – It May Be Coming to a Halt!

Is the absolute death of short sales looming in Florida?  If you haven’t been following recent legislation, HB 87 is in the hands of Governor Scott waiting to be signed into law. This Bill has been called the “Anti-homeowner” Bill and is the biggest threat ever to homeowners’ property rights.

The original intent of HB 87 was to substantially reduce the backlog of foreclosures in the court system and has been called Robo Legislation against homeowners.  Many of these pending cases are because of legal maneuverings of foreclosure defense attorneys and homeowners asking the court for extensions while they attempt loan modifications and short sales.

The proposed intent of HB 87 seems logical but to clean these cases out of the court system, the homeowner is being stripped of his legal rights to defend himself against his mortgage lender and HOA lien foreclosures.  The Bill will strip homeowners of the full judicial proceeding that’s required by Florida law.

Essentially, HB 87 allows third-party lien holders to route foreclosures through an expedited process rather than a typical court proceeding.  Essentially there could be no more delayed foreclosures that allow the property owner to stall in order to try a short sale or even do a loan modification.

The homeowner has the onerous responsibility of disproving any “false” claims  but any documents submitted by lenders will automatically be assumed to be “truthful” unless the homeowner can prove otherwise.

“This sounds a lot like what the lenders did to homeowners before with flagrant disregard for the law – i.e., robo signing documents and foreclosing on properties on which they didn’t even hold the mortgages.”

The rub is that homeowner has only 20 days to contest and challenge the lender’s claims which have already been deemed “truthful” by the court; otherwise the court will validate the lender’s claim.

The lenders will now have only one year to file a deficiency judgment against a homeowner instead of 5 years.  There is also a “finality provision” in the legislation that stops any future legal action by homeowners from getting their homes back even if the bank has wrongfully foreclosed.  This single provision exonerates the lenders for misconduct and rewards lenders for taking fast action against hapless homeowners.

Advocacy groups have stated they will immediately file a law suit against the Governor if he signs HB 87 into effect or allows it to become law by not vetoing it.  The House and Senate passed this Bill by wide margins so the precedent would be for the Governor to let it go into law.  The next few days will tell the tale of the next turn in the market or same old, same old.

Stay tuned for the outcome as it will have a dramatic effect on our business.  But always remember, for every adversity there is an opportunity!


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