Why do Florida Foreclosure Laws Become Threatened Practically Every Year?
Nearly every year, banks and their advocates and lobbyists attempt to change the foreclosure process in Florida. This year is no different, as a bill has recently been filed threatening current due process protections for homeowners. Banks, lenders, and servicers have a vested interest in speeding up the Florida foreclosure process. Our attorney Dustin Zacks’ Loyola Law Review Article cites several empirical sources proving that an extended foreclosure process costs lenders and servicers thousands of dollars per loan. Clearly, it is worth it for banks and lenders to spend large amounts of money on lobbying to try and short circuit the foreclosure process.
The continual appearance of such proposals proves that the banking lobby is strong and influential in Tallahassee. In an attempt to make such changes appear benevolent, however, some argue that speeding up the foreclosure process is going to “clear the market” and accelerate the housing market recovery. Unfortunately, none of these arguments claim robust empirical support.
Why is it Wrong to Arbitrarily Shorten the Florida Foreclosure Process?
1. Bankers and their advocates argue that speeding up the foreclosure in Florida will hasten a housing market recovery; yet they have no empirical evidence that this is the case. All they can cite is some weak correlations between judicial foreclosure supervision in certain states and their slower market recovery. Lobbyists and commentators making this argument ignore the fact that judicial states may have a less robust present housing uptick simply because many judicial states saw a bigger housing downturn than other non-judicial states. (In other words, it is silly to compare the current real estate market of a judicial foreclosure state like Florida with a state that permits non-judicial foreclosures, like say, South Dakota, which presumably had a less volatile and cyclical housing market to begin with. Of course South Dakota might be doing better than us – they didn’t have as big of a boom and bust.)
Some opinion pieces, like a recent Wall Street Journal editorial, randomly compare some judicial foreclosure states’ housing recoveries with non-judicial ones. Don’t take the arguments for shortening the foreclosure process at face value: correlation does not equal causation, and the bankers have not shown a convincing case that housing markets will recover faster simply by speeding up the foreclosure process.
2. Even if bankers and their mouthpieces could empirically prove that speeding up foreclosure processes would hasten the housing market recovery in Florida, it would still not be worth the loss of due process and the right to meaningful judicial review. No one can conclusively argue that the economic goal of a quick housing recovery trumps the social, moral, and constitutional right to meaningful due process and judicial supervision.
Furthermore, recall that the discovery and exposure of the pervasive robo-signing and fraudulent documentation scandal was largely due to robust discovery procedures homeowners are afforded in judicial states. If your industry had been as thoroughly embarrassed as bankers and lenders have been these past few years, wouldn’t you try to lobby for less transparency? Can any legislator say with a straight face that we should trust banks and servicers with more autonomy and less regulation in the foreclosure process?
3. Finally, don’t be convinced by nonsensical arguments that lengthened foreclosure processes only benefit distressed homeowners themselves. As Dustin Zacks’ Loyola Law Review Article conclusively demonstrates, each prevented foreclosure benefits society at large. Every time a lender is incentivized to modify a loan or accept a short sale due to the expense of completing the foreclosure process, the community at large does benefit: prevented foreclosures reduce crime, reduce spillover effects of reductions in home values, and reduce strain on local municipalities who have to monitor vacant and blighted properties.
Put simply, every time someone tells you that robust judicial oversight of foreclosures only benefits “deadbeats” or “immoral” defaulters, they are either uninformed or they are purposefully demagoguing the issue. Reasonable minds can disagree about the best way to conduct foreclosures; but it is empirically false to claim that meaningful judicial review of foreclosures only benefits individual homeowners.
How is King, Nieves & Zacks Leading the Way on This Issue?
Enrique Nieves and Dustin Zacks, our Florida foreclosure attorneys, are consistently quoted in the national and local media on foreclosure issues and on the need for strong judicial review of foreclosures. Our work in precedential cases regarding bank and servicer misconduct proves the need for meaningful judicial oversight of foreclosures. Further, as a member of the Consumer Law Committee of the Public Interest Law Section of the Florida Bar, Dustin Zacks will be assisting the Committee in opposing the proposed changes to the Foreclosure process in Florida.
We need your help: to get involved, share your story, or to see how you can help oppose draconian changes in Florida foreclosure laws, contact us.