What is Foreclosure and What is the Florida Foreclosure Time Line?

Many Bradenton, Florida homeowners are struggling with mortgage payments.  Some are faced with the threat of foreclosure.  What exactly is the foreclosure process for Bradenton, Florida real estate? 

A Foreclosure is when the Borrower is behind on their payments and the Lender takes legal action against them in order to seize the property.  The Lender becomes distressed when a borrower gets behind in making their payments.  They are in the business of making loans and are not in the business of repossessing properties.  When a borrower defaults, the loan becomes a nonperforming asset, at which time it is no longer earning interest.  If a loan is not earning interest, it is not producing income for the lender. 

In addition to not generating interest income, nonperforming loans actually cost the lender more money because of the lost earning power of the assets and the legal and administrative costs associated with collecting the loan or repossessing the property. 

Example:  (If the lender has a $200,000 nonperforming asset, then they are required to keep 6 to 8 times that amount in reserves which is $1,200,000 to $1,600,000.)  Therefore if the lender would take a discount of $160,000 for the $200,000 loan, it allows them to put back into circulation the $1,200,000/$1,600,000 allowing them to collect interest making up for the $40,000 short sale that they took on the $200,000 loan.

What is the Florida Foreclosure Time Line?

When you buy a house in Bradenton, Florida with borrowed money, your lender will place a lien against your property by using a Mortgage or a Deed of Trust.  The Deed of Trust or the Mortgage is recorded at the courthouse telling the public that you owe them that amount of borrowed money.  You will sign a Note, which you personally guarantee that you will pay the borrowed money back to the Lender. 

FIRST MONTH:  Sellers get behind on their first payment.  They receive a letter from the lender advising them that they did not receive their payment.

SECOND MONTH:  Sellers get behind on their second payment.  They receive a letter from the lender advising them that they did not receive their payment and they need to remit a payment promptly.

THIRD MONTH:  Sellers get behind on their third payment.  They receive a letter from the lender advising them that they did not receive the payment and that the lender has forwarded this file to the Attorney.  The Attorney will start foreclosure proceedings if the seller does not pay.

FOURTH THROUGH EIGHT MONTH:  A Complaint for Foreclosure Summons and a Notice of Lis Pendens is filed with the Court advising the public that the Sellers are in foreclosure.

• Lis Pendens notice served followed by 20 days to file an answer. The serving could be immediately because they are easy to personally serve or it could take some time if they have moved and cannot be found.  If the Plaintiff/Lender cannot find the Defendant/Sellers to serve, they will have to publish in the newspaper for a period of a month or more depending on the statute of law.  Once service is made on each party, they have 20 days to answer the Complaint from the date they are served.  Most Sellers do not answer the Complaint. 
• Answering the Complaint may delay the time period for the foreclosure but with no guarantee.  When ALL PARTIES (they serve husband, wife, tenants, all other occupants, other lien holders) are served, there is a hearing date scheduled. 
• After the answer period ends (and sometimes even before) the lender’s attorney will file a motion with the court to declare summary judgment.  There is an additional 20 day answer period before the hearing can be held. Defendants are allowed to attend the hearing and speak.  It is recommended that an attorney speak for the borrower if they so desire.
• At the hearing the judgment is entered and a sale date is set (usually in 30 days). Then the property is sold at auction to the highest bidder.

After the sale, there is a 10 day waiting period after the foreclosure sale before Clerk issues Certificate of Title.  At that time the new owner can have the Sheriff show up and set the old owner’s possession out on the curb.  The lock’s can be changed and old owner would be tresspassing if they go back into the house.

(Disclaimer: The author is a real estate broker and not an attorney or tax professional. Nothing herein should be considered legal or tax advice. You should consult your attorney or accountant for such advice. In other words, my advice might be wrong, so verify it yourself. That’s what disclaimers are for.)

(Copyright © 2007 By Dan Forbes, All Rights Reserved. This material is excerpted from Everything You Need to Know About Short Sales, by Dan Forbes)