Foreclosures Should Be Simple


A headline in the St. Petersburg Times asked: “What should foreclosure help cost?” While most foreclosure cases are simple and routine and should not cost very much, it is impossible to categorically determine the amount of attorney’s fees in every case, since some present unique issues that require more work than others. What can be said is the first hour or so of advice in nearly all cases is perhaps the most useful and worthwhile.

Defendants in foreclosures need some legal advice, so they can understand the process and intelligently decide what to do next. At a minimum, they should understand they gave the lender a note and mortgage, in consideration for a loan. A note is a contract in which they agreed to repay the lender, and a mortgage is an instrument that created a lien to secure the amounts due.

If a borrower fails to pay as agreed, they are deemed in default and the lender proceeds with a foreclosure. The case starts with a complaint, which alleges a breach of the note. A summons is also served with the complaint, commanding an answer.

In the vast majority of cases, the defendant does not bother to file an answer, because there is nothing to deny, and the bank takes a default judgment. If the defendant files an answer, denying some or all of the allegations, the case slows down, but not by much.

In most foreclosure cases, there is generally no need for a trial, because the facts are truly not in dispute. The bank seeks what is known as a Summary Judgment. Without a factual dispute, the court simply decides which side is correct, based on the law of the case. For example, a banker may swear in an affidavit $100,000 was loaned and the borrower failed to make payments as agreed. If the defendant files no counter-affidavit, because the banker is correct, there is no factual dispute, and no reason for a trial. The court simply enters a Summary Judgment for the bank.

In the Judgment of Foreclosure, the court sets a period of redemption, and orders the land sold, if the defendant fails to redeem by paying the entire judgment plus costs, within the time allotted. At a sheriff’s sale, the bank bids what they are owed. If someone outbids the bank, the bank is paid from the proceeds. If no one outbids them, the bank receives a sheriff’s deed. The sale process must then be confirmed by the court.

Many banks are now slow to complete the foreclosure process, because they do not wish to end up owning real estate they cannot resell. They do not want to be stuck owing real estate taxes, insurance, dues, upkeep, and other expenses on the property. Judges should force the banks to complete their foreclosure cases, or suffer a dismissal with prejudice, for a want of prosecution. The country needs to move all of the foreclosed properties through the system, so the nation can get on with a recovery in the housing market.

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