Written by attorney Richard Paul Zaretsky


PART 2 --

The Timing of Pleadings:

The HOLDER's attorney's procedure for a foreclosure is usually pretty much standard: file and serve the complaint, then wait for the statutory time to answer (usually 20 days), then file a motion for summary judgment of foreclosure with the necessary affidavits and schedule the hearing, then have the hearing with the judge on the motion for summary judgment of foreclosure (which hearing usually takes less than 10 minutes), then have the judge enter the order of final judgment of foreclosure and schedule the foreclosure sale date (sometimes the Clerk has to first give the date to the judge) which date is usually no less than 30 and no more than 45 days from the hearing; then the sale date comes and the public auction of the property occurs. It is this final event that ends the owner's ability to repay the loan. Ok, so that is the procedure rule timeline – pretty fast and if you take into consideration appeal time and time to schedule the sale – all within the minimum statutory time requirements – it comes to a total of about 100 days start to finish.

Now reality. In most Florida jurisdictions a residential foreclosure is taking about 1 year to run through the courts. To get this timeline a borrower probably needs an attorney, but amazingly plenty of cases go this long and longer without the borrower filing any pleadings! And remember, this 1 year plus timeline is AFTER they bank files the foreclosure. As stated above, the time from default of the borrower to the default letter could also be a year more or less. So now you are talking about two years total. The unpredictable part is that no one could have told you two or three years ago that these timelines would be commonplace today – and no one should expect that they will stay this way going forward. Therefore borrowers should be prepared for the fast timeline. It is sort of like preparing for hurricane season. You expect the worst and don’t know what will happen until it is past hurricane season.

The Short Cut Method of Foreclosure

Remember that reference I made to Florida Statute 702.10? The procedure under this short cut method of foreclosure – when understood by the judge – is very fast. The premise, without going into detail, is that the foreclosure complaint, lis pendens and an Order to Show Cause is provided to the judge BEFORE the complaint is filed upon the borrower. Then the judge signs the Order to Show Cause and the three documents are served on the borrower. The Order to Show Cause says that the borrower must explain why the foreclosure judgment should not be entered. No beating around the bush! However, defenses can be filed, but they must be verified, which gives a higher degree of “you better have a good faith intention of being able to prove the defense", or sanctions could be ordered against the borrower or the borrower’s attorney. If the foreclosure is not for a residential property, the court can also order that pending the outcome of the foreclosure that the borrower must make the usual payments on the mortgage to the clerk of the court (sort of like in a tenant eviction matter where the tenant is fighting the eviction) until the foreclosure action is decided.

Is the House Lost for Good?

After the sale has occurred there is sometimes a period of redemption where you can still reacquire the house not withstanding it having been sold a public auction. This period of redemption varies from state to state. In Florida it effectively ends when the bidder at the foreclosure sale pays the full amount of the bid to the Clerk of the court. There can be legal objections to the sale based on irregularity or other technical infirmities and in Florida this must be brought to the attention of the Court within 10 days of the sale of the property at foreclosure. The judge then has a hearing on the issues and either sets the sale aside and orders a new sale or the judge confirms the sale and orders the Clerk of the Court to issue a deed to the successful bidder.

The REO Sale Delay: This Certificate of Sale and then Certificate of Title issue has created quite a bit of REO sale delay – when the lender has sold the house and must deliver marketable and insurable title to the property. If there Certificate of Title has not yet issued by the Clerk of Court because an objection has been made regarding the foreclosure sale auction, the Court usually has to have a hearing on the matter before the objection can be determined. This could cause delays of many months and delay the ability of the lender to sell the property they thought (because of the presumptive method lenders use to determine if they “should own the property" as opposed to the reality of them “actually owning the property". This issue is the angst of many an agent handling REO sales for lenders.

Attacking Errors in the Procedure:

An appeal can be taken from a judgment of foreclosure but it must be timely. In Florida the time to take the appeal is 30 days from when it is rendered.

Deficiency Judgment or Surplus Funds?

After the foreclosure sale, if the Lender got less than it was owed it can file a motion to have the court award a deficiency judgment against you as the borrower. How this amount of the deficiency is determined is usually the difference between the foreclosure judgment amount and the market value of the home at the time of the foreclosure public sale. An in-depth discussion on the procedure is covered in ** Foreclosure Deficiency Judgment Compared to Deed In Lieu and Short Sale Scenarios**.

After the foreclosure sale, if the Lender got what it was owed there is probably more money left over. This occurs when the amount of the foreclosure judgment is less than the amount bid at the foreclosure sale. This excess money or "overbid" is called the "surplus" and it very well may belong to the borrower! To get this money the borrower must file a motion to the Clerk (sometimes the Court) to get the money. If there are other creditors that have judgments or liens on the house (like a second mortgage holder) those people could have a superior claim to the surplus money. Usually you can apply for these monies without an attorney, but if there are other claims or if you are uncomfortable with the process an attorney should be able to get the matter resolved with just a few hours of work.

Most reports even from the lenders are saying that the bulk of foreclosures that were to be filed in 2011 have been pushed to 2012 to be filed. I would tend to agree. The amount of those delayed foreclosure filing? Industry experts say it is over 1 million!!! This would explain the failure of borrowers to get timely notices of default – or for the lender law firms to process the defaults by filing the foreclosure action.

Most important for borrowers – if you are in default of your mortgage or expecting to be in default of your mortgage, GET AN ATTORNEY that represents YOUR interests (which means YOU are paying them under a written retainer agreement that YOU and the ATTORNEY sign)! See WHAT IF I DECIDE TO DO NOTHING AND JUST LET THE BANK FORECLOSE? and ITS NOT THE JUDGE'S JOB TO BE THE DEFENDANT'S ATTORNEY .

Copyright 2011 by Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 ** [email protected]** - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! ** [email protected]** New Website


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