As a homeowner, if you have recently fallen into financial distress, it is only natural to be curious on exactly what happens during the Florida foreclosure process. Knowing what to expect can ease the stress often associated with the prospect of losing a home. The proper preparation will be key in avoiding foreclosure and taking advantage of alternatives.
Step 1- You take out promissory note from the bank
Before you can step into foreclosure, you must first have a mortgage loan. Initially you took out a loan to purchase a residential property, signed a promissory note and a mortgage. By signing the promissory note you made a promise to the mortgage lender to pay back the home loan, based on agreed upon terms.
A mortgage loan will outline the amount of the loan, the interest on the loan, and the time allotted to pay it back.
Step 2- Your financial situation changes, no payment missed yet
You’ve never been late on a payment and always have the appropriate amount of money set aside. However, three months ago you lost your job, you thought you would have a new job by now, but as it turns out your savings are running low and you haven’t had a lot of luck finding a job. You haven’t missed a payment as of yet, but it is starting to look as though you might miss a payment soon. Before you miss your first payment you can go ahead and meet with a foreclosure attorney and discuss your situation, there might not be a lot of jobs in your industry that are paying the salary you once had, changing your ability to afford your existing home.
Step 3- You miss your first payment
If you have missed a payment for the first time, most loans offer a grace period. Ordinarily the grace period is ten to fifteen days after the due date. At this point, the only consequence will be an assessed late fee based on the terms of your promissory note.The loan servicer who is responsible for collecting and processing your mortgage payments will go ahead and assess the late fee and will bill you.
The late fee is generally 5% of the overdue payment of principal and interest based on the terms of your note. If you are unsure go ahead and check the promissory note you signed.
At this point, you may or may not know whether you can or cannot afford your mortgage payment. You might be able to make payments if you had a loan modification, if you are unsure it is a good idea to consult with a foreclosure attorney.
Step 4- You’ve missed a few of your mortgage payments
By now, if you have missed a few mortgage payments, your loan servicer will likely have sent a letter or two advising of overdue payments. The loan servicer will also attempt calling you in an effort to collect payments.
At this point, you can discuss loss mitigation options and attempt to work out an agreement, including the following: loan modification, forbearance, or a payment plan. Every situation is different, and depending on your circumstances it might be wise to seek different alternatives.
If you have not already, this would be a good time to get legal advise. An experienced foreclosure attorney will be able to provide you with the best course of action depending on your particular situation and your objectives.
Step 5- You are now in your pre-foreclosure waiting period
At this point, if you have not attempted to discuss loss mitigation with your loan servicer you will enter what is known as the pre-foreclosure loss mitigation review period. Under the federal Consumer Financial Protection Bureau rules that went into effect Jan 10, 2014, the mortgage servicer must wait until you are 120 days delinquent on your mortgage payments before filing the case and commencing the foreclosure process.
This gives homeowners the opportunity to thoroughly explore alternatives to foreclosure. The goal of this rule is to avoid having more foreclosures filed. During this time the mortgage servicer will attempt to reach you and provide you with loss mitigation options. At this point, it is still best to discuss with a foreclosure attorney who has experience in dealing with the banks.
Alternatives to foreclosure aren’t always easy to obtain and may require the experience of a foreclosure team. As foreclosure attorneys we have experience submitting applications for loss mitigation and following up with the banks, we know that it is not always easy and can be quite time-consuming. It requires a lot of follow-up and due diligence to avoid foreclosure.
Step 6- Depending on your mortgage contract you might receive a breach letter
In Florida, mortgage contracts often contain a clause that requires the lender to send a notice, it is commonly called a breach letter or demand letter. This letter informs you that your loan is in default before the loan servicer can proceed with the foreclosure.
It will usually specify an amount that must be paid to bring your account current, which will avoid foreclosure, and a date by which the lender or servicer must received payment.
Step 7- The plaintiff in your case files a lawsuit
Florida is one of the few states where the foreclosure process is judicial. This means that the plaintiff, the lender or servicer, will need to file a foreclosure suit. The homeowner should receive notice of the complaint filing, with a summons which will subsequently provide the borrower 20 days to file an answer.
It is imperative that you file a response, if you have obtained an attorney for foreclosure defense, this is when they will begin filling documents with the court. There are resources available to file answer pro se, where you represent yourself, but it is advisable that you seek assistance from an attorney since these cases are quite complex.
Step 8.A- Plaintiff files a Motion for Default Judgment
If you don’t file an answer with the court in the allotted time, the plaintiff may file a Motion for Default Judgment. By not responding to the claim, you technically forfeit your right to defend the case. The Default Judgment would mean you automatically lose the case.
Step 8.B- The plaintiff files a motion for Summary Judgment
If you are actively defending your foreclosure case, there will come a point when the lender files for a Summary Judgment. From the plaintiff’s standpoint, this is preferred than going to trial because there are less expenses, it’s quicker, and requires less preparation.
Summary Judgments in foreclosure cases are often granted because most cases are clear cut, the only rationale for taking the case to trial is if the defendant has something substantive to testify at trial. This is where the Graham Legal team excels, many of our cases either end with a judgment in favor of our client or we proceed to trial.
Step 9- Foreclosure trial date is set
If the Summary Judgment is denied, the foreclosure case will continue onto trial. If the judge rules in favor of the bank, a final judgment of foreclosure against you will be entered.
Step 10- Your home will be set for foreclosure sale
If the judgment is entered in favor of the lender, the property will be scheduled for foreclosure between 20 to 35 days from the judgment. Defense attorneys may come to an agreement with the plaintiff’s counsel to move the sale to a later, specified date, such as 60 days from the judgment date. This is used to give the homeowner extra time to prepare for their move.
Step 11- There will be a legal notice that your house has been placed on sale
Legal notice of the sale will be published in a local newspaper for two consecutive weeks.
Step 12- Your house is sold at the Foreclosure auction
This is how the lender recoups some of the money from the loan, by selling the home to the highest bidder. Of course, they aren’t always offered the minimum they are willing to accept for the home, if the home doesn’t sell it will revert to the lender and become REO. At this point, the lender will still own the property and may choose to rent it or sell it at a later time.
If the property is sold, the original borrower has ten days after the sale to file an objection to the amount of the bid. After ten days the clerk confirms the sale and issues a certificate of title to the new owner.
Step 13- A deficiency judgment could be filled
The deficiency is the remaining balance of the loan after the foreclosure sale. Suppose your original loan was for $150,000, you paid $50,000 throughout the life of the loan, and then the property sells for $75,000 during the auction, there is still a deficiency of $25,000. The lender could file a judgment to collect the remaining balance.
As your representing attorneys, we prepare for this in advance and attempt an agreement with the plaintiff where their right to collect the deficiency is waived. This is one of the advantages to working with a Miami foreclosure defense attorney, even if you choose to surrender the property.
Step 14- You will officially be evicted from your home
Eviction is included in the foreclosure process. After the certificate of title is issued, the plaintiff files a motion for a writ of possession. Once the motion is granted, the clerk issues the writ, which gives you 24 hours to move out. The sheriff will post the writ to the property, making it your official 24-hour notice.
Alternative Process: Expedited Foreclosure
A foreclosure in Florida has two potential paths, the one described above is the more traditional path. In an effort to speed up foreclosures an expedited process has been put in place and we have noticed a significant rise in applications of the expedited foreclosure process.
Please keep in mind that this procedure may run simultaneously with the standard foreclosure procedure.
The expedited foreclosure process is as follows:
Following the filing of the foreclosure complaint, the lender may request an order to show cause why the foreclosure should not proceed.
The court will immediately review the request and determine if the complaint satisfies specific requirements. If the court believes that it does, it will issue an order directing the borrower to show cause why a final judgment should not be entered.
The borrower will have the opportunity to show cause at the hearing, which will be set no later than 20 days after defendant is served with the order or 45 days after service of the original complaint.
During the hearing, the court will consider the defendant’s argument. If a legitimate or legal defense to foreclosure is raised at the hearing, the court will not enter a final judgment at that time.
Alternatively, if the borrower waives the right to be heard or does have a legitimate defense, the court can enter a final judgment and order the clerk of the court to conduct a foreclosure sale.
As you can see, the expedited process is much quicker than the traditional foreclosure process. However, our team has plenty of experience with both the traditional and expedited foreclosure process, thus we know how to effectively prepare for either situation.
If there is one thing that can be taken away from this, it is that the foreclosure in Florida follows a fairly direct path and the sooner a foreclosure defense attorney enters into the case, the more opportunities there are for a settlement or judgment in the borrower’s favor.