The housing crisis remains one of the biggest drags on the nation’s economy, with millions of Americans mired in the foreclosure process or delinquent or underwater on their mortgages. Few places have been hit as hard as Florida, the state with the fourth-highest foreclosure rate in the country.
In what has been billed as an effort to mitigate the economic impact of the high rate of foreclosures, the Florida state Senate Banking and Insurance Committee passed a measure (over the objections of consumer advocates and homeowners) that would speed up the foreclosure process, SaintPetersBlog reports:
One of the most contentious provisions would reduce the time in which a bank could try to go after a foreclosed-on homeowner for a “deficiency judgment,” which is a court order that requires the former homeowner to pay the bank for the outstanding amount on the loan over the value of the property.
The bill would reduce the time that a bank has to get such an order on a homeowner from five years to one year.
Cutting the time for banks to foreclose on properties to one year would force the process to move much faster than it does now. Nationally, homeowners with mortgages worth less than $250,000 are in default an average of 611 days before they go into foreclosure; for borrowers with $1 million mortgages, the average wait is an average of 792 days. The waiting period in states with high volumes of foreclosures, including Florida, is often even longer.
Such efforts to speed up the foreclosure process, meanwhile, could have widespread negative ramifications for homeowners. In their own efforts to speed up foreclosures, banks have propagated fraudulent techniques like using robo-signers to forge foreclosure documents. As a result, major banks have foreclosed on homeowners who shouldn’t have been in foreclosure (some over mere pennies), attempted to foreclose on homes they don’t even own, or foreclosed on homeowners who were attempting to modify their loans.
If anything, the foreclosure process needs to slow down. In California, another high-foreclosure state, Attorney General Kamala Harris has called on federal housing authorities and Wall Street banks to suspend foreclosures. With big banks and business advocates cheering them on, Florida seems poised to do just the opposite.