The Florida (un)Fair Foreclosure Act of 2012

Everything BUT Fair!

September update - It's now HB-1191

I saw several blog posts about this new piece of proposed legislation and cannot believe this could be anything serious.  My first reaction was to see if it was April fools day or some other joke.  I was wrong.  It's real.

The number of foreclosure filings has been way off since the Robo signing "discovery" the end of 2010.  It seems every move the banks are making further demonstrates they simply don't have the paperwork.  The Courts caught on that banks actually do make up the missing paperwork so that approach is no good anymore.  What have they been doing in the mean time?

I heard several weeks ago at a conference that the banks were looking to sell a lot of the paper (real or imagined, you can only guess) to hedge funds.  You see, most Americans don't have a favorable opinion of hedge funds but the guys who run these fund are fairly smart and just care about the money.  This whole foreclosure mess is hurting the banks' reputations and thus, their share prices which bonuses can be tied to.  It might put a cramp in their style.   Banks would love to sell the paper to the hedge funds so they can foreclosure instead.  Since nobody really likes a hedge fund in the first place, their reputation is not really going to be damaged if they start foreclosing in mass.  I suspect the banks value the bad paper at a much higher price that it really is worth.  Like I said, these hedge fund guys are pretty smart and my guess is, that pesky paperwork problem will make it a "no-go" for the funds or at least at a price the parties can agree on.   I suspect the hedge funds aren't interested at the price the banks want to sell. Banks most likely won't be as successful at pulling the wool over these guys eyes like they have the Feds.   Mortgages without proper paperwork are probably not worth much and my guess is, there will be no deal between banks and hedge funds for those reasons.  If the public knew what the paper was worth (they have never disclosed what the value is), you would see another mess.  Time will tell.

So what have these banks been up to?  Well, here is an example of them trying to get their way through legislation.  It's called the Florida Fair Foreclosure Act of 2012.  Apparently, written by someone in the banking industry.  Here is what they are proposing:

  1. When the amount of principal exceeds 120% of the fair market value, the mortgage company can simply foreclose without going through the courts.  This sounds more like what happens with a car possession rather than taking a family's home.
  2. Repeal FS 57.105 allowing for attorney fees to defendants who successfully win in court but places the legal fees for the bank on the homeowner.  It looks like the banks are trying to take out the legal defense through economics.  Why would an attorney take a case if they feel they can win but can't collect?  Are we proposing to change all the rules about fees or is it just for the banks?  I think there is legislation out there for frivolous law suites...what are the banks worried about?
  3. A homeowner will loose the right to set aside a wrongful foreclosure.  In other words, if the bank got your home and made up the paperwork to do so, the homeowner has no recourse.  Sounds like a "get out of jail free" card for all the past frauds and probable ongoing ones too.

Banks and Wall Street created the securitized model and somewhere along the process, decided the paperwork really wasn't that important.  Enter MERS.  MERS is/was a cool way to buy and sell mortgages and notes without having to pay all those fees for creating legal assignments and then having to pay the clerk of court to record an assignment of mortgage.  Well, the note is as important as either having a $20 bill or not.  If you loose a $20, it's lost.  You can't photocopy it and explain to who you are pawning the copy off that I lost the real one so take this, it's good.  What are your chances of that happening?  A note for a home loan has the same significance that $20 bill has.   You have it or you don't.  There are already provisions for a lost note which many foreclosure cases are filed with.  A "lost note affidavit" but it is understand it is supposed to be the exception, not the norm.  People at a distance from the issue would say if the loan was taken out and the payments were not made, then the bank should get the house.  That's not the issue.  The issue is WHO is entitled to the house at foreclosure and who benefits from any payments. What happens if the bank, who probably is just a servicer, wins at foreclosure with a "lost note" case.  Then some number of years later, the real note holder shows up at the new owners house wanting payments or the house.  Then what?

What banks are trying to do is legislate their way out of the frauds they committed.  A foreclosure action is a legal case and you just can't manufacture paperwork you don't have.  Remember DOCX? Banks still don't seem to understand this simple concept.   If this bill were to pass, what I understand is that their frauds would be OK.  They took the TARP money and paid them selves record bonuses the following year.  Where there is smoke, there is fire. 

This is a bad piece of legislation that I cannot believe is getting any consideration in Tallahassee.

If you think this is a good bill, please take a look at CNBC's House of Cards to get a basic understanding of just how bad this was when it started.  You can see the whole program by clicking here.  It's the full 90 minute program so kick back and enjoy.  It's really well done.   If the banks hadn't wrecked the country like they have, it wouldn't matter.  It's almost comical that these bankers are in the position they are and have inflicted the amount of damage they have.  Now, the banks want to make a bigger fraud and make it legal.  If you still feel this is a good bill after watching this show and reading up on the news, then so be it.  But if this makes you as mad as it makes me, contact your state legislators at the links below.

Take a look at the entire bill here

I would urge you to contact your local state representative and voice your own opinion on this bill.  To find out who your representative is and call, fax, or email them. Here is the direct link to find your local Florida House Representative:


To locate your State Senator, this is the direct link to the Florida Senate search:


John Woodward, GRI, CRS
Sarasota Real Estate Group


DISCLAIMER : This is just an opinion and is not meant to be legal advise.  The writers intent is a call to action for legislation being contimplated in the Florida Legislature.  Foreclosure is a serious matter and if you are in foreclsure or facing some other legal matter, seek competent legal advise from someone licensed to do so.