The new foreclosure law in Florida designed to make sure banks prove they own the mortgages they are foreclosing on has led to a delay in foreclosure proceedings in the state. In addition to the law making sure lenders don't wrongfully foreclose on a home, it also allows banks to speed up the foreclosure process.
Despite the best intentions of the new law, new data shows that the law has actually slowed down the foreclosure process and has led to a lagging housing crisis in Florida. Reports show that after the law went into effect, Florida courts had 70 percent less foreclosures than the average month before the law was passed.
The law was supposed to allow lenders who adhered to new paperwork requirements to speed up the time between mortgage default and repossession of the home, which should lead to fewer foreclosures swamping the housing market.
Why has the law led to fewer foreclosures being processed by the courts? Defense attorneys argue that lenders are having a difficult time following the strict new guidelines for the foreclosure process, which includes making sure they track ownership of mortgages before they start foreclosure proceedings.
However, bank representatives said that the banks have been slower in foreclosure proceedings because they want to make sure they are following the new law correctly to avoid mistakes and lawsuits in the future.
Regardless of the why exactly the foreclosure process has slowed down, reports show that there are over 300,000 pending foreclosures in Florida and this number may only increase under the new law. The housing market in Florida will remain unstable and property values in distressed areas will continue to remain low until the backlog of pending foreclosures reduce.
Hopefully lenders in Florida can figure out how to abide by the new law and speed up the foreclosure process so homeowners are not sitting in limbo waiting for their home to be repossessed or not.
Source: Tampa Bay Times, "'Faster foreclosures' law unintentionally slows Florida filings," Drew Harwell, Sept. 10, 2013