Our guest blogger is Andrew Jakabovics, the Associate Director for Housing and Economics at the Center for American Progress Action Fund, and Alon Cohen.
The Florida Bankers Association has been pushing hard in that state’s legislature for passage of the cynically named Homeowner Relief and Housing Recovery Act. The Act is pure doublespeak; it speeds up foreclosures, reduces the homeowner’s involvement in the process, and circumvents Florida’s burgeoning foreclosure mediation program and replaces it with an optional informal meeting of the parties. Luckily, the bills have been tabled for this session, but homeowners, housing counselors, and community advocates — who have all vociferously protested the bill — should expect them to reappear.
Attempting to Move Foreclosures Outside the Court
The Act seeks to radically change the foreclosure process in Florida, which is currently a judicial foreclosure state, meaning servicers must file a case in court to foreclose on a property. This gives homeowners the opportunity to appear, present evidence, and – most recently – negotiate with the servicer in a mediation session. The Act would create a new option in Florida – nonjudicial foreclosure, in which the servicer sends notice to the homeowner that it is foreclosing on the property and can do just that around 90 days later.
Worse, even before they actually take possession of the house, the new law would allow servicers who wish to sell the foreclosed property at auction or to market it for sale on the open market to enter the property and put up a “FOR SALE” sign or its equivalent.
Homeowners could shift the foreclosure back to court by submitting a request within 45 days of receiving the notice of sale, but there is solid evidence that opt-in programs reach far fewer people than opt-out ones. (Under the current judicial process, a borrower can opt-out by simply failing to appear in court.) Philadelphia’s foreclosure mediation program sees a participation rate of 75 percent while Connecticut’s program, saw participation rates of 36-39 percent while it was opt-in. (They have since changed to automatically schedule mediation sessions.)
Circumventing Foreclosure Mediation Read more