A very hot potato is coming to town over the next several weeks, and you really need to pay attention. Who am I talking to? I'm talking to anybody who cares about property values in the State of Florida, but most importantly I'm talking to people who own their homes free and clear as well as those who are current on their mortgages.
You now have a target on your back, and the Florida Bankers Association has decided to spend a lot of money lobbying for your support on changing the laws in the State of Florida. And they don't mind being a little sneaky about it.
The Florida Consumer Protection and Homeowner Credit Rehabilitation Act
They just felt if they gave it a spiffy name, and told you that it would protect your home value against all of those foreclosures that they've been stalling on, then you would be all for it.
But I would recommend that you read up on it a bit before you fire-off a letter to your nearest and dearest politician asking for them to support it.
For our readers who would like to actually read the document that they have prepared, you can download the The Florida Consumer Protection and Homeowner Credit Rehabilitation Act right here. For those of you who don't have time to read 55 pages of "legalese" then I'll do my best to give you the broader picture in a much shorter summary.
The Bankers' Basis Of Deceit
The Florida Bankers Association says they want to help
"neighbors annoyed by abandoned houses next door; condo associations pursuing dues from properties in legal limbo; cities grappling with urban blight; and judges overloaded with thousands of foreclosure cases."
So why don't they? The current laws allow for them to push to foreclosure. The current laws allow them to settle short sales. But the fact is, most banks have been very slow in responding to this crisis. If they really wanted to "speed up foreclosures," they could have easily done so by pursuing the current, lawful, foreclosure process.
What they really want is to have total control over the ability to foreclose on a home. Here's one example they do not cite in their bill:
Let's say there is a homeowner who plans on living in his home for a long, long, time. And let's say that this homeowner is current on his payments, taxes, and insurance.
During this current downward housing cycle, this homeowner's house might have lost all of its equity ... it might even be "upside down." No big deal right, he is paying his mortgage on time. Right?
Wrong. Unfortunately for the banks, this becomes a troubled loan. The 20% equity he had in his house with his down payment has been consumed by the drop in market value. So guess what this Bill could allow the banks to do?
Under the very vague terms of most mortgages, the banks could require this home owner to pay off part of the loan so that the bank's position would be reduced to the beginning loan to value (imagine a $40,000 margin call on your $200,000 home!). If the home owner does not have a large amount of money lying around, the bank could start the foreclosure process! Yep, never miss a payment and still lose your home to foreclosure.
The Florida Bankers Association says
"We don't want the property. We're not into the property management business," Sanchez said of bankers. "We want to get a property out of the courts and sold to a productive Florida family."
The Florida Bankers Association Hopes You Don't See The Truth
Here is how you know there is not one bit of truth about their intent to change this law. The previous quote says they want to get the home sold to a productive family. Hmmmm, is this bill going to create jobs?
You see, Florida is in an economic crisis right now. There is no productive family to take that home! The rental market is flooded with homes and the "for sale" market is flooded with homes. The population of Florida has shrunk! They are misleading us to believe that they will do things differently because of this bill, but the truth of the matter is there are too many homes in Florida for the number of people who are here.
It is this very reason that the banks have been slow to foreclose. They don't want these houses, nobody does! Until Florida's population starts growing again, there will be plenty of vacancies around the State of Florida. The banks are happy to keep these properties in the hands of somebody else.
What they really want is the ability to FORECLOSE ON ANY PROPERTY AT THEIR OWN DISCRETION. They don't want some judge standing in the way of them foreclosing on a loan that is "current," they want to mitigate their risks and force families to pre-pay loans in homes that are over-leveraged. So don't think for a second that this bill is about Homeowner Protection, it is about Bank Asset Protection!
What Wise Homeowners Can Do About The Florida Bankers Association Bill
Contact your State of Florida Representative and tell them not to be fooled by the misleading name of this Bill. Ask them to first read the Florida Bankers Association Bill, and then to tell the Florida Banking Lobby to solve the problem, not pass the buck! Ask them to VOTE NO for the (choose new name) Bill:
- The Florida Bankers Association Bill
- The Florida Bankers Want To Remove Judges From Making Sure The Laws Are Enforced Fairly Bill
- The We Aren't Enforcing The Current Laws So Changing Them Will Make Everything All Better Bill
- The Banks Should Be Able To Foreclose If They Feel Like It Bill
- Save the Banks Bill (from Nic)
- Too Numerous to Fail Bill (from Nic)
- Bank Cashflow Bill (from Nic)
- The Refi Now and Send All Mortagage Payments Out of the State Bill (from Nic)
- The “Bend Over!!! Your Assets are Mine!!!” Bill (from 4closurefraud)
- Securing Credit Rehabilitation Even When You're Obviously Underwater (from Jeremy)
- The Florida Homeowners’ Mortgage Persecution Act (from C Wilson)
If you can think of a better name for this Bill, leave it below in a comment. Anybody that comes up with a good new name, I will modify the list above and credit them with the new name. As you can see, a few goods have already started rolling in ...
Please contact your State Rep and tell them to "just say No." A few extra voices from concerned homeowners could be all the difference in this issue!
Florida HB 1523 dies?
HB 1523, a bill allowing banks to foreclose on Florida homes without going to court, died in a House committee yesterday when the House's Criminal and Civil Justice Policy Council ended its Monday session without hearing it. It was the final committee stop for the bill, which is similar to the Senate's proposal in SB 2270. "We knew this was a big change in Florida law and we were asking a lot for it to happen in one session," said Anthony DiMarco, executive vice president for government affairs for the Florida Bankers Association. "When you have this kind of policy change, it can take more than one year." Under the House plan, the lender would be required to meet with a borrower, if requested, and the borrower would not be liable for the unpaid portion of the loan if he or she acts in good faith during the nonjudicial foreclosure.
House sponsor Rep. Tom Grady, R-Naples says there is a small chance the proposal could still be heard if the house speaker pulls it out of committee and brings it to a full House vote, or if the Senate's version is approved by the House. "It would require some procedural work," Pewitt said. "But there is a small potential for life."
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.