New Rule Requires Explanation for Last-Minute Cancellation of Foreclosure Sales in Florida

posted on February 16th, 2010 filed under: Real Estate News

Banks seeking to postpone foreclosure sales will be required to explain why the postponement is necessary, under a new rule adopted by the Florida Supreme Court.  (For details, go to the online docket and search for case number SC09-1460.)  Will this help solve the blight caused by vacant and abandoned foreclosure homes in Miami and (to a lesser extent) Coral Gables?

Theoretically, the rule could affect banks’ notorious practice of postponing repossession as a way of avoiding property taxes, maintenance costs and recognition of losses on balance sheets.  Hard to imagine, however, that bank attorneys will be at a loss for words when concocting the required note for why Johnny can’t come to school that day.  Indeed, bank attorneys don’t even need to make things up; the form serves up such softball boxes to check as “Plaintiff and Defendant are continuing to be involved in loss mitigation” and “Plaintiff has ordered but has not received a statement of value/appraisal for the property.”

Bottom line: Don’t expect the new rule to meaningfully reduce the number of vacant, unkempt foreclosure properties in Miami or Coral Gables.  Residents and real-estate values around foreclosure properties will continue to suffer the ill effects.

The new rule implements a recommendation in the August 2009 Final Report and Recommendations on Residential Mortgage Foreclosure Cases produced by the Task Force on Residential Mortgage Foreclosure Cases, a group assembled by the Florida Supreme Court to study the glut of foreclosure cases in the Florida court system.  The task force found that “many foreclosure sales set by the final judgment and handled by the clerks of court are the subject of vague last-minute motions to reset sales without giving any specific information as to why the sale is being reset.”  Requiring an explanation for the requested postponements is supposed to help “determine when [sales] can properly be reset, or whether the sales process is being abused.”

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posted by // This entry was posted on Tuesday, February 16th, 2010 at 9:59 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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