Florida Supreme Court Ruling on Foreclosure

Florida Foreclosure Homes

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​Florida Supreme Court’s latest ruling is destined to influence the Florida foreclosure homes and real estate market. The Court’s bank-friendly ruling on Bartram v. US Bank National Association has made many lenders happy while creating a new sense of uncertainty for homeowners.  The ruling allows lenders to simply circumvent the statute of limitations rules set by the State and refile on some dismissed cases from years back.  In the past, the banks had 5 years to foreclose on homeowners who defaulted on their mortgages but the new ruling is giving another lifeline to the lenders to refile the foreclosure process on the delinquent homeowners.  This is regardless of the possibility that the cases began over five years ago, passing the statute of limitations.

Although, it is difficult to predict the exact effects of this ruling on the number of the new Florida foreclosure homes, but experts believe the outcome could introduce noticeable new cases to the courts.  The spokesman for the Florida Supreme Court has pointed to the possibility of only a minimal increase in the number of the foreclosure filings, while the real estate experts think otherwise.  Most real estate attorneys and other professionals think the Bartram ruling will eventually result in a massive increase in foreclosed homes through refilling of the old cases by the lenders.

The problem started in aftermath of the 2006 real estate crash, which resulted in the hundreds of thousands of delinquent mortgages.  Banks struggled to process the unexpected workload caused by the widespread number of unpaid loans.  Since lenders weren’t prepared to face such a huge problems, the cases dragged out and some thrown out of courts.  After the 5 years of the statute of limitations expired, the delinquent cases fell into a black hole of uncertainty.  The homeowners occupied their homes, most without making their mortgage payments and banks could not refile the dismissed cases because of the statute of limitations.

Effects of The Supreme Court Ruling on Florida Real Estate Market

In our opinion, since the Florida real estate market facing a constant shortage of inventory, the Florida Supreme Court ruling and its aftermath will not have any negative effects but perhaps it will even help the market.   Most of Florida real estate markets have been facing rising prices and lack of homes for sale, creating a solid sellers’ market.  Adding foreclosed properties will only fuel the market and bring more buyers to the State.  The number of the new inventory is unpredictable at this time pending the lenders’ position on modifying the loans and homeowners ability on repaying the unpaid balance.  So far, the signals from lenders indicate their willingness to negotiate instead of going through the costly and time-consuming foreclosure process.  But, it is very difficult to predict what the homeowners will do since each has their own financial challenges and cannot be analyzed as a group.  Our understanding is that the lenders, due to the statute of limitations, could only demand the unpaid balance of the last 5 years, which could be beneficial for homeowners whose foreclosure cases were dismissed prior to 2011.  The question remains if those homeowners will be able to pay the delinquent amount even if a big chunk is dismissed.

The number of the new inventory is unpredictable at this time pending the lenders’ position on modifying the loans as well as the homeowners’ ability on repaying the unpaid balance.  So far, the signals from the lenders indicate their willingness to negotiate instead of going through the costly and time-consuming foreclosure process.  But, it is very difficult to predict what the homeowners will do since each person faces their own financial challenges and cannot be analyzed as a group.  Our understanding is that the lenders could only demand the unpaid balance of the last 5 years, due to the statute of limitations, which could be beneficial for homeowners whose foreclosure cases were dismissed prior to 2011.  The question remains if those homeowners will be able to pay the delinquent amount even if a big chunk is dismissed.