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House Bill 87 and Fast Track Foreclosures

It’s been an interesting month here in Florida as Governor Rick Scott signed 34 new bills, one of which being House Bill 87. This bill, referred to as the “foreclosure fast track bill” pushed for the expedition of foreclosures through the court system. This has placed many homeowners in a difficult place - especially those who have lost their homes due to wrongful foreclosure.

 

Despite this truth, many people believe - Scott included - that the movement was necessary. The average time to complete a foreclosure in Florida is 631 days - between one and a half to two years - is the longest average time frame in the nation. Plus, the rate of foreclosure is presently more than three times the national average.

 

But before we delve into the pros and cons of the bill, and what impact it will have on Florida’s future, let’s take a step back and review the basics.

 

The Basics of Foreclosures

 

Foreclosure is a process which begins when a homeowner defaults on payments owed to a lender. To recover the balance, known as a deficiency, the homeowner forfeits the rights to the property, and the house will go up for auction. Foreclosure is a lengthy process which goes through four various stages before it is completed: 1) the homeowner defaults on payments, 2) after three to six months of missed payments the bank or lender will post a public notice of default on the property, 3) the grace period of pre-foreclosure, and 4) public auction.

 

What the Bill Means for Homeowners

 

As of March 2013, more than 350,000 foreclosure cases are yet to be resolved, and House Bill 87 was one of the solutions enacted to fix this growing problem. One of the key provisions of this bill is a reduction of the amount of time (statute of limitations) - from five years to one year - banks have to pursue property owners for the deficiency. It’s believed that this bill will help bolster Florida’s struggling housing economy and aid its continuing recovery.

 

So the good news is that the bill will help homeowners get back on their feet faster, in terms of credit, if they’ve faced a foreclosure in the recent past. Unfortunately, on the other side of the coin, if a homeowner has lost their home due to a fraudulent or wrongful foreclosure, they can sue for compensation, but they’ll never be able to get their home back.

 

However, the law does provide breaks for veterans who have been in active duty. For example, if a service member was paying a mortgage before he left for duty, foreclosure proceedings can’t begin until nine months after he or she returns - which is an extension from the previous period of ninety days.

What the Bill Means for Homebuyers

 

Despite the ill effects that HB 87 has for homeowners facing foreclosure, the bill brings some good news to future homeowners. The law provides a first-time homeowner tax credit of $7,500 to parties who haven’t owned a home for more than three years. However, it’s not “free money,” as the homebuyer will have to pay it back over the course of the next few years, but at least they won’t have to pay any interest.