The Florida Foreclosure Process
Florida has one of the highest rates of foreclosure in the nation. If you are at risk of losing your home, it is essential to understand the foreclosure process in the state.
Generally, when a person purchases a house or other property, there is a promissory note and a mortgage. The note is the statement that the purchaser owes money to the lending institution, and includes the terms of repayment. The mortgage provides security, making the property collateral for the loan.
Generally, when a borrower misses a mortgage payment there are a few days’ or weeks’ grace before a late fee is assessed. But if the borrower misses several payments, the mortgage company will generally notify the borrower of the tardiness and try to collect the delinquent payments. At this state, borrowers consult with their lending institutions about mitigation; a loan modification, for example, may be a possibility.
Filing a Foreclosure Action
A lender must wait until the homeowner is 120 days delinquent on payments to file a mortgage foreclosure action in court. Often, the mortgage will also require that the lender send a breach notice to the property owner before filing the action. The notice will tell the lender that he or she is in default; how to cure, meaning get up-to-date on payments; and that failure to cure may result in the debt being accelerated and the property sold at auction.
In order to foreclose a mortgage, the debt must be accelerated. Acceleration means that if a borrower is sufficiently delinquent, the lender can make the entire principal of the loan due immediately. This is so that a lender does not have to wait up to 30 years to slowly collect a debt from a borrower with no intention of paying.
Florida uses judicial foreclosure, which means that foreclosures proceed through the state courts. Thus, to initiate a foreclosure, the lender must file a complaint and send it to the debtor. If the debtor does not answer the complaint, the court can enter a default judgment, which means that the debtor loses without having the chance to speak in court. If the debtor does reply, there will be a hearing or trial, at which the court determines whether foreclosure should happen and enters a judgment.
The next step is for the court to set a date for the foreclosure sale, generally between 20 and 35 days after the judgment. The lender is required to publish notice of the sale in a newspaper for two consecutive weeks prior to the sale.
At the sale, the property will either go to the highest bidder, or go back to the lender and become a real estate owned property. If the debtor does not have a legitimate objection to the bid, the court will confirm the sale and give title to the purchaser.
If the property did not fetch as much as the balance owed on the note, then the lender can get a deficiency judgment for the rest and collect from the borrower personally. If the sale price was higher than what was owed, the debtor generally collects the excess.
If the borrower refuses to leave the property, the lender can get a writ of possession. After 24 hours notice, if the borrower still has not vacated the premises, the sheriff can then evict him or her.
If you are facing foreclosure, an attorney can help you defend your case. Please contact West Palm Beach real estate law attorney Larry E. Bray to schedule a free initial consultation.