In May 2013, Florida’s foreclosure rate was the highest in the nation. Backlogs with both lenders and the courts means that many homeowners will continue to face the scary prospect of losing their home for the foreseeable future. Don’t be caught off guard if you are facing a potential foreclosure. Read on to find out each step in a Florida foreclosure from missing your first payment all the way to eviction.
(For more articles on foreclosure in Florida, visit our Florida Foreclosure Law Center.)
Florida Mortgage Loans
When you take out a loan to purchase residential property in Florida, you typically sign a promissory note and a mortgage. A promissory note is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment. The mortgage provides security for the loan that is evidenced by a promissory note.
Find out more in our article What’s the Difference Between a Mortgage and a Promissory Note?
To learn more about mortgage terminology, see our Glossary of Foreclosure Terms.
What Happens When You Miss a Payment
If you miss a payment, most loans include a grace period of ten or fifteen days after which time the loan servicer will assess a late fee. (Loan servicers collect and process payments from homeowners, as well as handle loss mitigation applications and foreclosures for defaulted loans.)
The late fee is generally 5% of the overdue payment of principal and interest based on the terms of the note. To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement.
Learn more about fees that the lender can charge if you’re late on mortgage payments.
What Happens When You Fall Behind in a Few Payments
If you miss a few mortgage payments, your mortgage servicer will probably send a letter or two reminding you to get caught up, as well as call you to try to collect the payments. Don’t ignore the phone calls and letters. This is a good opportunity to discuss loss mitigation options and attempt to work out an agreement (such as a loan modification, forbearance, or payment plan) so you can avoid foreclosure.
Learn the difference between a loan modification, forbearance agreement, and payment plan.
To get information about these and other options to avoid foreclosure, see our Alternatives to Foreclosure area.
Pre-Foreclosure Loss Mitigation Review Period
Under the federal Consumer Financial Protection Bureau servicing rules that went into effect January 10, 2014, the mortgage servicer must wait until you are 120 days delinquent on payments before filing the case in state court to start the foreclosure. This is to give you sufficient time to explore loss mitigation opportunities. (The servicer can still send you notices informing you that you are late in payments and/or that explain what your loss mitigation options are within this pre-foreclosure period.)
Mortgage Contracts Often Require a Breach Letter
Florida mortgages often contain a clause that requires the lender to send a notice, commonly called a breach letter or demand letter, informing you that your loan is in default before it can accelerate the loan and proceed with foreclosure. (The acceleration clause in the mortgage permits the lender to demand that the entire balance of the loan be repaid if the borrower defaults on the loan.)
The letter must specify:
- the default
- the action required to cure the default
- a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and
- that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.
If the 30-day time period expires and you haven’t paid the specified amount to bring the loan current, the loan servicer will refer your file to an attorney to begin foreclosure proceedings.
In Florida, foreclosures are judicial, which means the lender (the plaintiff) must file a lawsuit in state court. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
The lender initiates the foreclosure by filing a complaint with the court and having it served to the borrower, along with a summons that provides twenty days for the borrower to file an answer. If you do not respond to the court action within the specified amount of time, then the lender can get a default judgment from the court. This means you automatically lose the case.
On the other hand, if you file an answer, then the lender cannot obtain a default judgment. Instead, the lender will either:
- file a motion of summary judgment (where the court grants judgment in favor of the lender if there is no dispute as to the important facts of the case), or
- go to trial.
Motion for Summary Judgment
Most lenders file a motion for summary judgment, which is a way to more quickly end a case without a trial. In foreclosure cases, summary judgment is often granted because the court determines that the homeowner has no defense and would not have anything substantive to testify to at trial. Unless you have some defense or counterclaim that would justify or excuse your non-payment, the lender will win the motion for summary judgment and the court will render a final judgment against you.
However, if the judge denies the lender’s motion for summary judgment, the foreclosure proceeds to trial. If you lose at trial, the court will enter a final judgment of foreclosure against you.
Expedited Foreclosure Process in Florida
Florida law provides a procedure designed to speed up the foreclosure process in uncontested cases or in cases where the homeowner does not have a genuine defense. (Florida has one of the longest foreclosure timelines in the country, with the average foreclosure taking 893 days.)
The process is as follows:
- After the foreclosure complaint has been filed, any lienholder (such as the lender or a homeowners’ association) may request an order to show cause why the foreclosure should not proceed.
- The court must immediately review the request and, if it finds that the foreclosure complaint is proper and satisfies certain requirements, the court issues an order directing the defendant (the borrower) to show cause why a final judgment should not be entered.
- The court will set a date and time for a hearing, which will be no sooner than the later of 20 days after the defendant is served with the order to show cause or 45 days after service of the initial complaint (or no sooner than 30 days after the first publication).
- Prior to the hearing, the defendant can file a response raising any genuine issues of material fact or legal defenses to foreclosure.
- The court will hear and consider the defendant’s arguments at the hearing. If the defendant raises a legitimate or a legal defense to foreclosure, the court will not enter a final foreclosure judgment at that time.
- However, if the defendant waives the right to be heard (by failing to file a response, filing a response that does not contest the foreclosure, or not showing up at the hearing) or loses at the hearing, the court can enter a final judgment of foreclosure and order the clerk of the court to conduct a foreclosure sale.
The expedited procedure may run simultaneously with other court foreclosure procedures.
Setting the Foreclosure Sale
If the lender is granted judgment, the court schedules a sale of the property not less than 20 days, but no more than 35 days after the judgment (unless the plaintiff or plaintiff’s attorney consents to additional time).
Notice of Sale Posting Requirements
A notice of sale must be published in a newspaper for two consecutive weeks with the second publication at least five days before the sale.
The Foreclosure Sale
At the foreclosure sale, the property will be:
- sold to the highest third-party bidder, or
- revert to the foreclosing lender and become REO.
The borrower has ten days after the sale to file an objection to the amount of the bid. After ten days, the clerk confirms the sale and issues a certificate of title to the purchaser.
Deficiency Judgment Following Sale
When a lender forecloses on a mortgage, the total debt owed by the borrower to the lender frequently exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.” In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.
Learn about methods that creditors can use to collect judgments.
In Florida, a lender may obtain a deficiency judgment as part of the foreclosure action or in a separate action. The court has flexibility regarding the amount of the deficiency, which cannot exceed the difference between the judgment amount and the fair market value in the case of an owner-occupied residential property.
Eviction Following Foreclosure
If you don’t vacate the property following the foreclosure sale, the new owner will likely:
- offer you a cash-for-keys deal (where the new owner offers you money in exchange for you agreeing to move out), or
- evict you.
The eviction process is typically part of the foreclosure action with the right to possession included in the judgment. After the certificate of title is issued, the lender files a motion for a writ of possession. When the motion is granted, the clerk of court issues the writ, which gives you 24 hours to move out, and the sheriff posts it to the property. If you do not leave, the sheriff will make you leave.
To learn more about foreclosure in general, ways to defend against foreclosure, and programs to help struggling homeowners avoid foreclosure, visit our Foreclosure Law Center.