The Florida Association of Realtors published yesterday an article called The Basic Steps of Foreclosure, picked up from the Detroit Free Press. It lists the 7 stages of a typical foreclosure. Unfortunately, although these 7 steps may be valid somewhere – they are incorrect in Florida. In fact the last step does not exist in Florida. My thanks to Cheryl Link, Esq., General Counsel to Illustrated Properties Real Estate for pointing out the article to me with the heads up!
The news report is on the FAR Website, and appears below.
The report if read by a homeowner, would make them believe that even after their home has been sold on the courthouse steps (by the clerk of court – not the sheriff), there is a REDEMPTION PERIOD. In Florida there is essentially NO redemption period after the foreclosure sale! The Florida Law on the right of redemption is covered by Florida Statute 45.0315 as follows:
45.0315 Right of redemption.—At any time before the later of the filing of a certificate of sale by the clerk of the court or the time specified in the judgment, order, or decree of foreclosure, the mortgagor or the holder of any subordinate interest may cure the mortgagor’s indebtedness and prevent a foreclosure sale by paying the amount of moneys specified in the judgment, order, or decree of foreclosure, or if no judgment, order, or decree of foreclosure has been rendered, by tendering the performance due under the security agreement, including any amounts due because of the exercise of a right to accelerate, plus the reasonable expenses of proceeding to foreclosure incurred to the time of tender, including reasonable attorney’s fees of the creditor. Otherwise, there is no right of redemption.
The Certificate of Sale is filed by the clerk of the court the same day as the sale – usually immediately subsequent to the sale taking place, thanks to using computers instead of typewriters. So essentially if you don’t pay the judgment prior to the foreclosure sale (which in most counties takes place “on line” and no longer “live” at the courthouse), you have no redemption rights – contrary to paragraph 7 of the FloridaRealtors news article.
Other technical issues abound. Our experience and in discussions with lenders servicing FannieMae loans tells us that this is policy – not law. If a loan does manage to get foreclosed during the modification process, there is no obligation that the lender (or FannieMae) will set aside the sale, and in fact we tend to see that they don’t. They almost take a “what does it matter” attitude (see my article FORECLOSURE EXPRESS vs THE LITTLE ENGINE THAT COULD - IN COURT SHORT SALE SUCCESS).
Also, if the process of the loan modification stops (“lost documents” or untimely submissions by the borrower, missed trial payment, etc), the foreclosure will not be stopped.
Lastly, the “protected from losing their homes” does not mean the foreclosure process will slow down or stop – in fact it means that the foreclosure process will continue at all due speed, but no sale date for a foreclosure sale will be set or if set, it will be cancelled if the mortgage modification is still being timely processed.
Foreclosure procedure is governed by Florida Statute Chapter 702 and I just wrote an article on it at HOW LONG DOES A FORECLOSURE TAKE?. Foreclosure can proceed under the traditional foreclosure process or it can proceed under a not too new but seldom used (I don’t know why!) shorted procedure set forth in Section 702.10. These methods of foreclosure apply to both residential and to commercial foreclosures. The foreclosure sale process is set forth in Florida Statute Section 45.031. My November 2008 article on the process of the foreclosure was presented in A LAWYER'S EXPLANATION OF THE FORECLOSURE PROCESS.
Here is the FAR article:
The basic steps of foreclosure
WASHINGTON – Aug. 24, 2011 – In recent news, Fannie Mae has publicly assured homeowners going through foreclosure that they will be protected from losing their homes while applying for a federally funded loan modification. Homeowners can apply for a modification at any point before or during the foreclosure process.
If a modification is approved, homeowners can keep their homes if they make their adjusted payments. Absent that, here are the stages of a typical foreclosure:
1) In default: A loan is in default when a mortgage payment is 30 days late.
2) Warning: When a loan is 60 days past due, the bank, credit union or mortgage company warns that foreclosure is the next step.
3) Proceedings begin: After 90 days, the lender refers the loan to its foreclosure department, and hires a local lawyer to begin foreclosure proceedings.
4) Sale advertised: The lender's lawyer advertises the property for sale for four consecutive weeks in a local newspaper. The sheriff's sale date is listed in the advertisement.
5) Sale held: The sale is held on the published date. A sheriff's employee conducts a courthouse auction and the highest bidder wins, usually the bank that owned or serviced the mortgage.
6) Sheriff's deed: The winning bidder gets a sheriff's deed that lists the last date the homeowner can redeem, or take back, the property, usually six months from the date of the sheriff's sale. During this redemption period, the homeowner can live in the property or try to sell it.
7) Redemption period: To redeem a property, the homeowner must pay off the mortgage and all interest and late fees, court and attorney fees, title and appraisal fees, taxes and insurance. Otherwise, they will be evicted from the home.
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 RPZ99@Florida-Counsel.com - 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! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com
See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES.