Florida’s New Foreclosure Legislation, Secret Star Chamber Proceedings….

In the final hours of the 2013 Legislative Session, Florida’s elected leaders snuck through foreclosure legislation that is ill-conceived, poorly executed and which is an impermissible intrusion into the authority and independence of the judicial branch.    This legislation was driven by an entirely false assertion: that our courts and our existing laws are not functioning properly.   Then, throughout the entirety of the legislative session, one false statement more than any other was repeated over and over to support the alleged need for this new foreclosure legislation: the allegation that it takes more than 857 days to complete a foreclosure in Florida.   That statement is false and misleading, but was repeated over and over again by staff and supporters of this bill.   Legislation founded on falsehoods should never pass and it certainly should not be permitted to stand, but Florida’s elected leaders don’t seem to have any concerns at all with such issues.

Like so many of the laws made by Florida’s Republican-controlled legislature, the foreclosure reform sells out families and voters in favor of the corporations and special interests that own our state’s lawmaking process.   The bill benefits the corrupt banks and institutions that recently admitted gross and systematic wrongdoing in two nationwide settlements.   Florida’s elected leaders, rather than using the admissions of wrongdoing in those settlements as the basis for demanding more protection for Florida consumers instead passed legislation that rewards their wrongdoing.

There are four aspects of this new law which are particularly problematic and which the Defenders of Consumer Justice will seek appellate court review:

1)           Finality of Foreclosure

The most troubling section of this new law is the so-called, ” finality of foreclosure” provision.   This section provides that if a home is lost to foreclosure, even if the foreclosure was the product of gross fraud, complete error or total mistake, the innocent consumer can never, ever get their home back.     Throughout all of American law, with the notable exception of the death penalty, judges have the power to quickly and completely undo any order or decree that they have entered.   But in Florida’s flawed version of foreclosure reform, the legislative branch took the unprecedented step of unilaterally eliminating this essential power from our state’s elected judges.

This unprecedented invasion into the judicial branch’s inherent authority is a gift delivered by Florida’s Republican legislators to the shadowy title insurance industry who have been more than happy to collect title insurance premiums from Florida consumers for decades knowing full well that that their agents”¦the foreclosure mills”¦were engaging in improper practices that would eventually result in claims.       If the finality section is allowed to remain law, they will have both collected those premiums and eliminated nearly any of the risk associated with the premium they collected.   Chalk this up to yet another legislative coup from the insurance industry.

We are hopeful the appellate courts will work to quickly restore this power to the elected circuit court judges who serve across the state.

2)           Pay Your Accuser

The next objectionable section of the bill is the, ” pay to defend” provision. This section requires the defendant in a foreclosure lawsuit to make payments to the plaintiff from the outset of the litigation”¦ and to make regular payments to the party suing each month.   This section too is virtually unprecedented in American jurisprudence–forcing  a litigant in a civil case to pay the party that’s suing him”¦this done under threat of the ability to seek punitive orders from the court for failing to comply.  This section is especially troubling in the current context of foreclosure cases where, in 2012, nearly as many foreclosure cases were dismissed as judgments were entered.   It’s also important to recognize that in most foreclosure cases the defendant has no contractual relationship with the plaintiff that’s suing him.

3)           Get Out NOW!

The ” Immediate Possession” provisions of the new law allows the plaintiff to demand that a court terminate a defendant’s right to remain in possession of a property upon written motion to the court.  This section is not just procedurally objectionable, eliminating as it does important due process protections, it’s also in direct conflict with federal law. Specifically, the Protecting Tenants in Foreclosure Act, a law which protects tenants in properties from precisely the kind of surprise evictions that are contemplated by Florida’s new law.

4)           Secret, Star Chamber Proceedings

Finally, this bill directs that our state’s judges are to hold secret hearings in their chambers and that they are to enter judgments against citizens without notice and without the opportunity to be heard.   Secret Star-Chamber proceedings, where evidence is considered outside the presence of the accused, is one of the primary characteristics that our founding forefathers fought to change when our nation’s legal system was established.   In fact, open, accessible legal proceedings where the accused have the absolute right to be heard is the cornerstone, the   very foundation upon which the entirety of the American legal system is grounded.  This new legislation ignores this most important foundation.   It is our sincere hope that no judge would hold such a hearing and render such a Constitutionally repugnant judgment until such time as an appellate court weighs in and formally finds such proceedings impermissible.

This Ill Bill And the Delusion of Support

Florida’s condominium and homeowner’s associations were deluded into supporting this ill-executed legislation based in part on the entirely false representation that the legislation would give them tools to move bank foreclosure cases along more quickly.   The law that passed will do nothing of the sort because there is not a single word in the bill that will force the banks to move cases forward if they choose not to.   It is likely in fact that this bill will have profoundly negative consequences for condominium and homeowner’s associations by destroying market forces that made investing in their liens worthwhile.

Worse still, there was apparently little attention paid to the financial impact this ill-conceived legislation will have on our state’s judges, court system and Sheriffs, each who were given expensive mandates in this new legislation.   The legislative trick played at the last minute was this bill was ” waived out” of the committees that would have examined these financial impacts.   Tricks are fine for magic shows, but they have no place in lawmaking.

It should be noted that this misadventure called “foreclosure reform” is entirely a Republican supported endeavor.   Florida’s Democrats, led by Senator Darren Soto fought hard to protect Florida families, both with amendments in this legislation that failed and with other legislation that the Republicans roundly rejected.   It should also be noted that Republican Representative Mike Fasano remained a consistent voice of moderation and sanity…but his voice was drowned out…..

We are confident Florida’s appellate courts will quickly and decisively strike this new legislation down”¦