The Foreclosure Process
In Florida, a lender must go to court to foreclose its mortgage. The lender files a lawsuit in the Circuit Court of the county where the property is located. The lender has no right to take your home until they obtain a judgment of foreclosure and writ of possession from the Court.Before the Foreclosure Begins
- The huge stack of documents borrowers sign at closing form the basis for many of the rights and defenses in a foreclosure. The most important are the promissory note and mortgage.
- The note is the contract which sets the terms for repaying money borrowed. The mortgage lets the bank take back your property and sell it if you fail to make payments on the note.
- If a borrower fails to pay, the Bank must declare you in default under the Note. This document is often called a Notice of Default and is usually delivered by mail.
- In most notices, the Bank demands the note be paid in full immediately. This is called an acceleration of the note.
- The borrower has rights under the Fair Debt Collection Practices Act (FDCPA), to dispute the validity of this mortgage debt.
- Once the borrower demands the Lender verify the debt, the lender must stop all collection actions until the debt is verified.
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- Expect to be Served with a Foreclosure Lawsuit After Receiving the Notice of Default. A foreclosure starts by filing a summons, complaint, and lis pendens with the Clerk of Court.
- As in any lawsuit, the borrower has the right to appear and defend against the lawsuit. Every borrower has the right to make the Bank prove its case.
- The Summons informs you that a lawsuit has been filed and gives you 20 days to file a response with the Court
- A “Lis Pendens” puts the public on notice that a foreclosure has been filed against your property. The Clerk of Court will record the Lis Pendens in the Public Records so it will appear in any title report.
- The Complaint sets forth that the Bank declares you in default and demands a foreclosure judgment unless the note is repaid in full.
- Service of Process
Once the foreclosure is filed, a process server (typically a County Sheriff) will hand-deliver you the Summons and a copy of the Complaint and Lis Pendens.
- It is NOT advisable to “hide” from the Sheriff. Service by publication is permitted where a foreclosure defendant cannot be located after a diligent search. There are much better defense strategies than playing hide and seek with the process server.
- Motion to Dismiss
An effective defense strategy is often to file a motion to dismiss the complaint. There are several legal and procedural grounds which may be raised. This is an excellent opportunity to question whether the bank can produce the Note and necessary paperwork to foreclose.
- The Answer
An Answer is the first opportunity to set forth your response to the complaint and any affirmative defenses you may raise. An affirmative defense effectively says to the court: “I haven’t paid my mortgage, but the Bank cannot foreclose because ….”
Any party to a lawsuit has the right to conduct discovery. You may request documents, question witnesses, and require answers to questions under oath. Discovery is the process used to develop the facts that support defenses to foreclosure. It is also an excellent way to create leverage that can resolve a foreclosure.
- At the Summary Judgment hearing, the Lender’s attorney presents sworn affidavits which establish the Bank’s case against you. The borrower has the right to provide sworn statements of its own. If the Judge finds questions of fact exist from the affidavits, the Motion should be denied. If the Court grants the Motion, it will enter a Final Summary Judgment that states the exact amount you owe including principal, interest, attorney fees, expenses, and court costs.
- Once a final judgment is entered, the Clerk of Court schedules as sale date. This is usually between 35 and 120 days from the date the judgment is entered. Unless there is an agreement with the bank, a bankruptcy filing, or some other procedural issue, the property will be sold on the Courthouse steps.
- The final judgment of foreclosure will specify how the foreclosure must take place. The foreclosure must take place in the manner set forth in the Judgment. It is the lenders responsibility to place a legal advertisement, publication, or notice of the foreclosure sale in a local newspaper. After the sale takes place, the sale terms must be confirmed by the court that ordered the sale. If the terms of the sale order are met, title in the buyer’s name can become complete by filing a certificate of title. If there are irregularities, you may file objections to the sale which will prevent a certificate of title from being issued
- Lenders who retake a property by a foreclosure sale will then try to sell it, usually at “fire sale” prices. If the Bank resells the property for less than the amount due in the Foreclosure judgment, the Bank can apply for a deficiency judgment. The Bank only needs to prove the resale price was commercially reasonable. If the Foreclosure judgment was for $300,000 and the property resold for $100,000, the Court would issue a deficiency judgment against the borrower for $200,000. This deficiency judgment is the same as any other judgment and may be enforced for up to 20 years.
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