People who take out a loan to purchase residential property in Florida typically sign a promissory note and a mortgage.
A promissory note is the borrower's promise to repay the loan and the terms for repayment.
A mortgage is a document signed by the owner of the home. It is recorded at the county courthouse and gives the lender a security interest in the property.
If you miss a payment deadline (i.e., the first of the month), most loans include a grace period of five to ten days to make your payment. If you don’t pay by the end of the grace period, the lender will charge you a late fee. Lenders generally wait until you miss three payments before beginning their pre-foreclosure process.
Federal law requires most mortgage lenders to contact, by phone and in writing, borrowers who have missed one or more payments. You can find the text of the law here: 12 C.F.R. § 1024.39. In most cases, federal law requires the lender to wait until you're more than 120 days delinquent on payments before filing a complaint in foreclosure at the courthouse.
Most Florida mortgages contain a clause that requires the lender to send the borrower a breach letter. The letter must inform the borrower that the loan is in default and specify the default, the action required to cure the default, a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.
Acceleration of the debt means that the entire balance that you owe on the mortgage is due immediately. Sale of the property won’t occur for several months, at the earliest, or, if you defend the foreclosure, perhaps several years – or maybe never!
In Florida, foreclosures are judicial, which means the lender (the plaintiff) must file a lawsuit against the borrower (defendant) in state court. The lender's attorney initiates the foreclosure by filing a complaint with the court in the county where the property is located and serving the borrower's complaint, along with a summons that provides 20 days to file an answer.
If you don't respond to the lawsuit by the deadline, the lender can ask the court for a default judgment. On the other hand, if you file an answer, the lender can't get a default judgment. At this point, the lender usually files a motion for summary judgment.
If you file a defense to the foreclosure or a counterclaim against the lender, and the court denies the lender’s motion for summary judgment, the foreclosure will proceed to discovery and trial. If you lose at trial, the court will enter a final judgment of foreclosure against you.
Florida law provides a procedure designed to speed up the foreclosure process in uncontested cases or cases where the homeowner does not have a genuine defense. This is bad news for a borrower who is trying to prevent or delay foreclosure.
For this reason, it is critical for a borrower to file an answer to the complaint in foreclosure, file replies to any motions by the lender, and actively participate in the entire legal process until it is concluded – whether by settlement with the lender or sale of the property as ordered by the court.
If the lender gets a judgment of foreclosure, the court schedules a sale of the property not less than 20 days, but no more than 35 days, after the judgment (unless the plaintiff or plaintiff’s attorney consents to additional time). See the Florida statute here: Fla. Stat. § 45.031.
At the foreclosure sale, the property will be sold to the highest bidder, often the foreclosing lender. The lender usually makes a bid at the foreclosure sale that is equal to the amount owed. If the lender is the highest bidder, the property is deeded to them.
In Florida, a lender may obtain a deficiency judgment as part of the foreclosure action or in a separate action within one year.
A deficiency judgment is a judgment against the borrower for an amount of money that is equal to the total amount due from the borrower on the day of the foreclosure sale (including costs and other amounts due to the lender), minus the amount the lender received at the sale from a third party buyer, or the market value of the property if the lender was the highest bidder at the sale.
A borrower can redeem their home any time before the filing of a certificate of sale by the clerk of the court or the time specified in the judgment, whichever is later. This is accomplished by the borrower paying the amount of money specified in the judgment, or, if there is no judgment, by paying all amounts due to the lender, including all of the lender's costs and expenses.
If the foreclosed borrower doesn’t vacate the property following the foreclosure sale, the new owner (often the foreclosing lender) may either pay the borrower to leave or begin eviction proceedings.
The eviction process is typically part of the foreclosure action, with the right to possession included in the judgment. After the lender gets title to the property, they file a motion for a writ of possession. When the motion is granted, the clerk of the court issues the writ, which gives you 24 hours to move out. The sheriff posts the writ to the property and, if you don't move out, the sheriff physically removes you from the property.
Fortunately, you have options. You can negotiate with your lender for forbearance, which means they will suspend foreclosure for an agreed-upon amount of time. During this period you can renegotiate the terms of your loan, sell the property and pay off the mortgage, sell the property at a short sale, where the lender accepts less than the full amount as the payoff of the mortgage, or deed the property to the lender (deed in lieu of foreclosure) and walk away.
An experienced attorney will guide you through the process, making it smoother, easier, and more likely to achieve your personal goals. I can file an answer to the complaint in foreclosure, slow the foreclosure process, and use that time to negotiate with your lender while you continue to live in your home.
WARNING: Some lenders will negotiate with you, leading you to believe that the ongoing foreclosure proceedings are “just a formality.” But the truth is that the lender’s attorneys will continue to move toward a default judgment as quickly as the law allows. Once this happens, your home will be sold and you will have to move.
But you have options – if you act now. To discuss how I can assist you, click the Contact Tom button below and schedule your free 30-minute consultation.