Florida Foreclosure Facts

Judicial Foreclosure

Under Florida foreclosure laws, a Judicial Foreclosure is when the Lender must seek legal action in order to take back a property in default.

Foreclosure Timeline

90+ Days Late:  Your mortgage company sends you a Notice of Default.  This is a warning that they could start legal proceedings against you to collect what you owe.

120+ Days Late: It could take much longer than this depending on the lender but now they can file a lis pendens at the court house. Your foreclosure is now on public record which can be easily found online.

You will be served with the lawsuit and have 21 days to respond.  If you don't respond, the lender could get a default judgment against you.

A legal defense could delay the foreclosure for a lengthy period during which time the amount you owe the bank keeps increasing.  Eventually most people will have to do either a short sale or file bankruptcy.  A very few people may have been able to win the suit against the lender but this is rare.  Be careful of a lawyer who gives you false hope so they can keep charging you legal fees.

Right to Redemption

After the foreclosure sale, there is a short period of time during which the homeowner can redeem the home, but only if they can pay off the lender.

Deficiency Judgment

Under Florida foreclosure laws, a lender can seek a deficiency judgment when the proceeds from the sale are less than the amount owing the bank. Many people are worried about this and think they need to file for bankruptcy, however, this is one huge benefit of a short sale.  In most cases, a good short sale negotiator can usually get the bank to show the account paid in full, avoiding a deficiency judgment if it is your primary residence.  This is called a deficiency waiver.

1099s

This is the other big area of concern.  Will you receive a 1099 from the lender for the amount forgiven and have to pay tax on that as income?  Many people like to scare homeowners with that, however, if it is your principal place of residence, you will probably not receive a 1099 under The Mortgage Forgiveness Debt Relief Act. Check the information on the IRS website or ask your accountant.  However, this act expires at the end of 2012 so don't delay too long.

The Florida Foreclosure Process (Legalese)

Below are the Florida statutes on foreclosure (Florida foreclosure laws).

702.10 Order to show cause; entry of final judgment of foreclosure; payment during foreclosure.--

(1)  After a complaint in a foreclosure proceeding has been filed, the mortgagee may request an order to show cause for the entry of final judgment and the court shall immediately review the complaint. If, upon examination of the complaint, the court finds that the complaint is verified and alleges a cause of action to foreclose on real property, the court shall promptly issue an order directed to the defendant to show cause why a final judgment of foreclosure should not be entered.

(a)  Under Florida foreclosure law, The order shall:

1.  Set the date and time for hearing on the order to show cause. However, the date for the hearing may not be set sooner than 20 days after the service of the order. When service is obtained by publication, the date for the hearing may not be set sooner than 30 days after the first publication. The hearing must be held within 60 days after the date of service. Failure to hold the hearing within such time does not affect the validity of the order to show cause or the jurisdiction of the court to issue subsequent orders.

2.  Direct the time within which service of the order to show cause and the complaint must be made upon the defendant.

3.  State that the filing of defenses by a motion or by a verified or sworn answer at or before the hearing to show cause constitutes cause for the court not to enter the attached final judgment.

4.  State that the defendant has the right to file affidavits or other papers at the time of the hearing and may appear personally or by way of an attorney at the hearing.

5.  State that, if the defendant files defenses by a motion, the hearing time may be used to hear the defendant's motion.

6.  State that, if the defendant fails to appear at the hearing to show cause or fails to file defenses by a motion or by a verified or sworn answer or files an answer not contesting the foreclosure, the defendant may be considered to have waived the right to a hearing and in such case the court may enter a final judgment of foreclosure ordering the clerk of the court to conduct a foreclosure sale.

7.  State that if the mortgage provides for reasonable attorney's fees and the requested attorney's fees do not exceed 3 percent of the principal amount owed at the time of filing the complaint, it is unnecessary for the court to hold a hearing or adjudge the requested attorney's fees to be reasonable.

8.  Attach the final judgment of foreclosure the court will enter, if the defendant waives the right to be heard at the hearing on the order to show cause.

9.  Require the mortgagee to serve a copy of the order to show cause on the mortgagor in the following manner:

a.  If the mortgagor has been served with the complaint and original process, service of the order may be made in the manner provided in the Florida Rules of Civil Procedure.

b.  If the mortgagor has not been served with the complaint and original process, the order to show cause, together with the summons and a copy of the complaint, shall be served on the mortgagor in the same manner as provided by law for original process.

Any final judgment of foreclosure entered under this subsection is for in rem relief only. Nothing in this subsection shall preclude the entry of a deficiency judgment where otherwise allowed by law.

(b)  Under Florida foreclosure law, The right to be heard at the hearing to show cause is waived if the defendant, after being served as provided by law with an order to show cause, engages in conduct that clearly shows that the defendant has relinquished the right to be heard on that order. The defendant's failure to file defenses by a motion or by a sworn or verified answer or to appear at the hearing duly scheduled on the order to show cause presumptively constitutes conduct that clearly shows that the defendant has relinquished the right to be heard. If a defendant files defenses by a motion or by a verified or sworn answer at or before the hearing, such action constitutes cause and precludes the entry of a final judgment at the hearing to show cause.

(c) Under Florida foreclosure law,  In a mortgage foreclosure proceeding, when a default judgment has been entered against the mortgagor and the note or mortgage provides for the award of reasonable attorney's fees, it is unnecessary for the court to hold a hearing or adjudge the requested attorney's fees to be reasonable if the fees do not exceed 3 percent of the principal amount owed on the note or mortgage at the time of filing, even if the note or mortgage does not specify the percentage of the original amount that would be paid as liquidated damages.

(d)  Under Florida foreclosure law, If the court finds that the defendant has waived the right to be heard as provided in paragraph (b), the court shall promptly enter a final judgment of foreclosure. If the court finds that the defendant has not waived the right to be heard on the order to show cause, the court shall then determine whether there is cause not to enter a final judgment of foreclosure. If the court finds that the defendant has not shown cause, the court shall promptly enter a judgment of foreclosure.

(2)  In an action for foreclosure, other than residential real estate, the mortgagee may request that the court enter an order directing the mortgagor defendant to show cause why an order to make payments during the pendency of the foreclosure proceedings or an order to vacate the premises should not be entered.

(a)  Under Florida foreclosure law, The order shall:

1.  Set the date and time for hearing on the order to show cause. However, the date for the hearing shall not be set sooner than 20 days after the service of the order. Where service is obtained by publication, the date for the hearing shall not be set sooner than 30 days after the first publication.

2.  Direct the time within which service of the order to show cause and the complaint shall be made upon the defendant.

3.  State that the defendant has the right to file affidavits or other papers at the time of the hearing and may appear personally or by way of an attorney at the hearing.

4.  State that, if the defendant fails to appear at the hearing to show cause and fails to file defenses by a motion or by a verified or sworn answer, the defendant may be deemed to have waived the right to a hearing and in such case the court may enter an order to make payment or vacate the premises.

5.  Require the mortgagee to serve a copy of the order to show cause on the mortgagor in the following manner:

a.  Under Florida foreclosure law, If the mortgagor has been served with the complaint and original process, service of the order may be made in the manner provided in the Florida Rules of Civil Procedure.

b.  If the mortgagor has not been served with the complaint and original process, the order to show cause, together with the summons and a copy of the complaint, shall be served on the mortgagor in the same manner as provided by law for original process.

(b)  Under Florida foreclosure law, The right to be heard at the hearing to show cause is waived if the defendant, after being served as provided by law with an order to show cause, engages in conduct that clearly shows that the defendant has relinquished the right to be heard on that order. The defendant's failure to file defenses by a motion or by a sworn or verified answer or to appear at the hearing duly scheduled on the order to show cause presumptively constitutes conduct that clearly shows that the defendant has relinquished the right to be heard.

(c)  Under Florida foreclosure law, If the court finds that the defendant has waived the right to be heard as provided in paragraph (b), the court may promptly enter an order requiring payment in the amount provided in paragraph (f) or an order to vacate.

(d)  Under Florida foreclosure law, If the court finds that the mortgagor has not waived the right to be heard on the order to show cause, the court shall, at the hearing on the order to show cause, consider the affidavits and other showings made by the parties appearing and make a determination of the probable validity of the underlying claim alleged against the mortgagor and the mortgagor's defenses. If the court determines that the mortgagee is likely to prevail in the foreclosure action, the court shall enter an order requiring the mortgagor to make the payment described in paragraph (e) to the mortgagee and provide for a remedy as described in paragraph (f). However, the order shall be stayed pending final adjudication of the claims of the parties if the mortgagor files with the court a written undertaking executed by a surety approved by the court in an amount equal to the unpaid balance of the mortgage on the property, including all principal, interest, unpaid taxes, and insurance premiums paid by the mortgagee.

(e) Under Florida foreclosure law,  In the event the court enters an order requiring the mortgagor to make payments to the mortgagee, payments shall be payable at such intervals and in such amounts provided for in the mortgage instrument before acceleration or maturity. The obligation to make payments pursuant to any order entered under this subsection shall commence from the date of the motion filed hereunder. The order shall be served upon the mortgagor no later than 20 days before the date specified for the first payment. The order may permit, but shall not require the mortgagee to take all appropriate steps to secure the premises during the pendency of the foreclosure action.

(f)  Under Florida foreclosure law, In the event the court enters an order requiring payments the order shall also provide that the mortgagee shall be entitled to possession of the premises upon the failure of the mortgagor to make the payment required in the order unless at the hearing on the order to show cause the court finds good cause to order some other method of enforcement of its order.

(g)  Under Florida foreclosure law, All amounts paid pursuant to this section shall be credited against the mortgage obligation in accordance with the terms of the loan documents, provided, however, that any payments made under this section shall not constitute a cure of any default or a waiver or any other defense to the mortgage foreclosure action.

(h) Under Florida foreclosure law,  Upon the filing of an affidavit with the clerk that the premises have not been vacated pursuant to the court order, the clerk shall issue to the sheriff a writ for possession which shall be governed by the provisions of s. 83.62.

History.--s. 14, ch. 93-250; s. 3, ch. 2001-215.

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