Editorial: Should Florida do a foreclosure favor for lenders?

January 15, 2013 | Palm Beach Post

Five years after the housing market crash saw thousands of Floridians lose their homes — fraudulently, in many cases — state legislators are poised to consider yet another bill designed to expedite foreclosures through the court system, where cases often languish for more than a year.

Meanwhile, consumers most affected by the foreclosure crisis continue to wait for relief, despite billions appropriated to federal programs and billions more in settlements from the banks who bear so much responsibility for the housing bubble and for the resulting financial crisis.

hough Florida leads the nation in the number of foreclosures, the Legislature has done little, save for emergency appropriations to assist courts with the overwhelming number of cases. Courts received a one-time, $4 million stipend in the 2012-2013 budget to hire extra judges and case managers to deal with a foreclosure backlog that stood at 377,272 cases as of the end of October. That was only 435 fewer cases than when the courts got the money last July.

The reason? More than 69,000 new foreclosure cases were added during the same period. “It seems,” said Palm Beach County Chief Judge Peter Blanc, “like we’re just treading water at this point.”
State Rep. Kathleen Passidomo, R-Naples, hopes that House Bill 87 will provide relief. It would allow for speedy foreclosure hearings, but it’s unclear what help the legislation would offer.

One good thing is that the measure would require lenders to have all paperwork certifying their standing to foreclose before filing a lawsuit. Palm Beach County Circuit Judge Diana Lewis, who coordinates foreclosure cases, said banks too often come to court unprepared. They don’t have the mortgage notes or other affidavits required to determine the indebtedness of the borrower.

Lost notes and other missing paperwork led to the “robosigning” scandal — lenders faking documents — that, in turn, led to a pair of recent settlements with the nation’s largest banks. Nearly a year ago, Florida received $8 billion as part of a national $25 billion settlement over allegations of foreclosure fraud. Last week, 10 lenders said they would pay $8.5 billion to end a program that required them to hire consultants to review foreclosures for improper practices and provide restitution to homeowners.

But banks were allowed to hire their own consultants. No wrongdoing has been uncovered, and no money has gone to consumers. The settlement requires the banks to pay $3.3 billion equally to more than 3.8 million eligible borrowers. The rest will be paid out in loan assistance.

These settlements will not hurt any bank’s bottom line. No lending executive has faced criminal charges for fraudulent foreclosure practices. That’s why any legislation that makes it easier for banks to foreclose should undergo scrutiny.

HB 87 would allow lenders to ask for an expedited hearing. Borrowers would have to prove that they have a defense against foreclosure. Lenders are often behind the delays in processing foreclosure cases. So how would allowing them to expedite cases help?

That’s just one question legislators should ask. Another should be: Would this foreclosure favor do more for the lenders or for Florida?

Rhonda Swan
for The Post Editorial Board