Q: I have fallen behind in my mortgage and suspect foreclosure is imminent. Can you explain the foreclosure process?
A: Foreclosure is affected by the type of mortgage. Special procedures apply to VA and FHA government-insured mortgages. Other mortgages, particularly those involving commercial property, may have specific provisions addressing foreclosure. Most residential mortgages in Florida use a uniform instrument created by Fannie Mae/Freddie Mac. My answer will assume your mortgage uses the uniform instrument.
Paragraph 22 of the uniform instrument requires the mortgage holder to provide the debtor with 30 days written notice of default and that the lender will accelerate the entire amount due unless the default is cured. This is a precondition to filing foreclosure suit. Although it is a precondition, some lenders fail to comply with the notice requirement and sue anyway. This can be a defense, but only if the debtor raises the failing in a pleading filed with the court.
Most lenders do not refer a mortgage to foreclosing counsel until the mortgage is at least 90 days delinquent. If the property encumbered by the mortgage is in a bad neighborhood, is in bad condition or has liability for substantial assessment to homeowner associations or governmental entities, the mortgage holder may not want to foreclose at all. But, once it is referred to an attorney for foreclosure, the process begins.
The foreclosing attorney is usually directed to begin foreclosure as soon as possible. The attorney will search title to determine who should be joined in the foreclosure action. Parties to be joined will include all owners, anyone holding a lien against the property that is inferior to the mortgage (such as second mortgage or equity line) mechanics lien holders, and even the tax man. The mortgage holder will join any person or entity that has an interest in the property inferior to the mortgage lien.
After determining proper parties, the attorney will prepare a complaint, in which the mortgage holder requests the court enter a judgment for the total amount due (including attorney fees and costs of litigation). If the judgment is not satisfied, the complaint asks that the property be sold to pay the debt.
If the note has been lost, the complaint may also seek to reestablish the lost note. The original note must be filed with the court or it must be reestablished in accordance with Florida statutes so that it has the effect of an original note. After filing, the complaint is served on all parties with a summons. Service is general by a sheriff deputy or a process server, who will be handing it to the defendant or to a person residing in the defendant’s residents who is at least 15 years of age.
After service, the defendant has 20 days to serve a response to the complaint. The response must be filed with the court and copy sent to the attorney for the foreclosing mortgage holder.
If no response is served, the foreclosing attorney will ask the court to enter default. A default means the defendant admits the well pled allegations in the complaint. After a default is entered, the attorney may seek a default judgment. That is rare, because a default judgment can only be entered based upon the facts alleged in the complaint. Certain facts, such as the amount of attorney fees, title search costs, cost of serving the complaint and other items are usually not capable of being pled with specificity in the complaint. In that case, the foreclosing attorney will generally move for summary judgment.
Even if a response to the complaint is served, the attorney can move for summary judgment. In a summary judgment motion, the attorney claims there are no issues in the case and that liability is clear. The motion is supported by affidavits as to the amount due, reasonableness of attorney fees and costs and other matters required to prove the case. If nothing is filed in response, or if the response to the motion is little more than a general denial, a judgment will be entered.
Trial may be required if the defendant has raised an issue that will require a true evidentiary hearing. Issues may include claims that the foreclosing mortgage holder does not actually own the note or claims of violation of federal or state law with respect to the mortgage or collection.
Assuming defense is unsuccessful, a judgment will ultimately be entered by the judge. The judgment will determine the total amount due from the debtor. The judgment will require the clerk of court sell the property if the judgment is not paid. By statute, sale date can be no less than 20 no more than 35 days after date of the judgment. Notice of the sale is published once a week for two consecutive weeks in a newspaper published in the county where the sale is to be held.
If the judgment is not paid, the clerk auctions the property to the highest bidder. The mortgage holder does not automatically take title. It must actually bid part or all of its judgment, as if it is money. It can be outbid by third parties.
A certificate of sale is issued after payment, but a certificate of title is delayed for 10 days. Opportunity of the debtor to redeem the property by paying the judgment ends when the certificate of sale is issued.
Depending upon court calendars and actions of the parties, foreclosure cases can taken as little as 90 days or years for completion. In most cases, the debtor gives up, raises no defense and the foreclosure is completed quickly. In some cases, the debtor hires an experienced attorney who raises good defenses and forces the mortgage holder to prove its case. Often, that case cannot be proven. Since you believe foreclosure is imminent, you should consult an experienced attorney without delay.
Questions for this column can be sent to William G. Morris, e-mail: email@example.com or by fax, 642-0722 or The Marco Island Eagle, attention, What you can expect in foreclosure. Other articles of interest can be viewed at wgmorris.com.
William G. Morris is an attorney with offices at 247 North Collier Boulevard. His practice covers a broad range of subjects, including civil litigation, real estate, business and corporate law, estate planning and probate, domestic relations and contracts. He writes this column periodically with respect to legal matters that frequently affect non-lawyers. The information contained in this column is not intended as legal advice and, of necessity, is generalized. For questions about specific circumstances, the reader should consult a qualified attorney.