Florida Fair Foreclosure Act Becomes Law on July 1st

On Friday, June 7, 2013, Florida Governor Rick Scott signed the Florida Fair Foreclosure Act (also known as House Bill 87). Here's "the skinny" on the Act, which goes into effect on July 1, 2013.  The new law does or will:

1. Reduce the statute of limitations for deficiency judgment on foreclosure actions from five years to one year;
2. In some cases it will limit the amount of the deficiency;
3. Requires the plaintiff in a foreclosure action to provide information to the court upon filing of the case regarding a lost, destroyed or stolen promissory note (instead of filing the affidavit of lost note after the foreclosure is filed,  the lost note affidavit will be required to be filed at the time the complaint is filed);
4. Provide finality of mortgage foreclosure judgment for certain purchasers of a property at a foreclosure sale while allowing for monetary damages (the Finality Clause);
5. Allow any lien holder, instead of just the mortgagee/plaintiff, to utilize the statutory expedited procedure under Fla. Statute 702;
6. Define adequate protection where there is a lost, destroyed or stolen note;
7. Applies to existing mortgages and  to pending cases;
8. Believed to be used to decrease the length of time it takes to foreclose (average days in Florida is 853);
9. Believed  will result in short term increase in the court workloads (just in time for the county fiscal year to end/begin);
10. Believed to increase revenues from filing fees;
11. Likely increase the time it takes to foreclose under Fla. Statute 702, when an aggressive Association files the motion for order to show cause, when the plaintiff is not yet ready to proceed to foreclosure (for example: if the foreclosure is on hold for DOJ review [under the National Mortgage Settlement Act] or loss mitigation review and the Association files the Motion for order to show cause);
12. Specifies the allegations for a foreclosure complaint to include allegations of specificity relating to the factual basis by which the plaintiff is entitled to enforce the note under Fla. stat. 673.3011  (no longer will it be deemed sufficient under 702.10 to have the typical general allegation stating the plaintiff is the holder or otherwise entitled to enforce the note) ( I foresee trouble with defense counsel arguing this applies to all foreclosures actions regardless of whether the 702.10 section is utilized versus the Motion for Summary Judgment or plaintiff plans to take the matter to trial);
13. Provide backup documentation to show the plaintiff is entitled to enforce the note on behalf of a third party (Servicer where  the investor is a GSE- most of which are not allowed under federal law to sue in their own name) (opens the door for the leaking of confidential proprietary information or other information which is deemed confidential under the terms of the contract between the servicer and the owner of the note);
14. Further requires the plaintiff to certify under penalties of perjury the plaintiff has physical possession of the note at the time the complaint is filed (problematic because if strictly construed the lender usually stores the note at a different location than where the person signing the complaint is located, furthermore, at the time the referral is sent to  plaintiff’s counsel, the lender will typically make an internal request to the documents custodian to send the note and mortgage directly to the plaintiff counsel. It is sent directly from the document custodian to the plaintiff attorney in order for the attorney to review the actual documents at the time title is reviewed prior to filing the complaint; may also conflict with the language verification required of the complaint under the Fla. R. Civ. Pro.);
15. Most if not all of these changes will cause the plaintiff (and perhaps some defense attorneys) to change all the documents—for the same fee;
16. Applies a new standard of review for chapter 702 – the same standard under MSJ;
17. May also violate the Fla. R. Civ. Pro. and Circuit Administrative Order relating to the Form of final judgment—by allowing the form of the final judgment to have blank spaces (blank spaces may also provide more ammunition for quick witted defense counsel who appear at the last minute at the order to show cause hearing to argue if the court alters the proposed FJ then Defendant does not have the notice as required under the Statute of the proposed final judgment.);
18. It provides the court a standard in which to apply to defendants who appear at the Order to show cause hearing and raise for the first time a response. The standard is the same used for the plaintiff (or in some cases defendants) that is applying for a motion for summary judgment. (no genuine issue of material fact);
19. The finality of judgment clause seems to violate the exclusive authority of the Florida Supreme court to create rules of practice and procedure, by ignoring Fla. R. Civ. Pro. 1.540. (but allows the safe guards lobbied for by title underwriters- I have to wonder if there have been that many innocent buyers losing their property they purchased after a fraudulent foreclosure?);
20. The finality provision, could for a  very aggressive firm which takes up the cause (for the single mother who bought the property with her life savings) that this is an “inordinate burden” on the use of real property by depriving the property owner the right to recover fraudulently-foreclosed property (Fla. Stat. Chapter 70-Bert J. Harris, Jr. Act);
21. Because it applies retroactively ‘to all mortgages encumbering real property and all promissory notes secured by a mortgage, whether executed before, on or after the effective date”  will likely violate Ex Post Facto laws; and
22. Impact or just outright violate Article I, Section 10 of the Florida Constitution by interfering/impairing contracts between parties to the contract.

So, "the skinny" turns out to be pretty fat.  Ultimately, the new law adds additional requirements while at the same time reducing the timeline that plaintiffs and their attorneys have in a foreclosure case.