Update: On April 2, 2020, Florida Governor Ron DeSantis signed Executive Order 20-94 suspending all foreclosures and evictions in Florida for 45 days because of the coronavirus (COVID-19) pandemic. Also, the federal government has imposed a foreclosure moratorium for federally backed mortgage loans for 60 days, starting March 18, 2020.
Not only is a home one of the biggest investments most people will make during a lifetime, but facing a foreclosure after a financial setback, like a job loss or illness, can be devastating. Fortunately, thanks to a federal law that went into effect in 2014, homeowners usually have sufficient time to recover financially and get caught up on the loan or pursue a foreclosure alternative, like a loan modification, because a servicer normally must wait until the loan is more than 120 days delinquent before starting a foreclosure.
Even after a foreclosure starts, you’ll have some time to, hopefully, get back on your feet financially before the foreclosure sale happens. Foreclosure takes a long time in some states, including Florida.
Here's how the process typically works.
Preforeclosure Period: Time to Get Caught Up or Work Out an Alternative
During the Great Recession, the federal government recognized that too many homeowners were losing homes because they didn’t have adequate time to seek alternative options. In response, the federal government passed a new law, the Dodd-Frank Act, that ensured struggling homeowners would have a chance to get back on their feet before losing their house.
Now, under federal law, in most cases, the servicer must postpone starting a foreclosure until the loan is more than 120 days delinquent. This preforeclosure period gives a homeowner sufficient time to apply for loss mitigation (a way to avoid foreclosure) or reinstate the loan (see below).
After the 120-day preforeclosure period expires, assuming a loss mitigation application isn't pending, the servicer can initiate a foreclosure under state law.
Foreclosure Procedures in Florida
To start a foreclosure in Florida, the foreclosing bank files a lawsuit (a “complaint”) and serves it to you. You’ll get 20 days to respond by filing a response with the court. If you don’t file an answer, then the bank will win by default and get a foreclosure judgment from the court allowing it to proceed with the foreclosure sale. (To learn more about what happens if you don’t answer a foreclosure lawsuit, see Nolo’s article What’s a Default Judgment in a Foreclosure?)
If you file a response that raises defenses to the foreclosure, then the bank might file a motion for summary judgment. In this kind of motion, the bank asks the court to rule in the bank’s favor without holding a trial or any further legal proceedings. (To learn more, see Nolo’s article What Is Summary Judgment in a Foreclosure?)
If the court denies the bank’s motion because you've raised some potentially legitimate defenses, the case will proceed and likely go to trial. The outcome of the trial will determine whether the bank can sell the home in a foreclosure sale. If the bank wins the case, the court enters a judgment in favor or the bank and orders the home sold at a foreclosure sale.
Reinstating the Mortgage
Some states have a law that gives a borrower in foreclosure the right to reinstate the loan by paying all missed payments, fees, and costs in one large payment. Reinstating the loan stops the foreclosure.
While Florida doesn’t have a state law providing a right of reinstatement, most mortgage contracts allow for it—often until the court enters a judgment. Review your mortgage contract to verify how much time you get to reinstate, if any. Also, the bank might agree to allow a reinstatement. Call your loan servicer if you want to find out how to reinstate your loan.
After you reinstate, you resume making your regular monthly payments.
Redeeming the Home
A Florida homeowner in foreclosure can arrange to keep a home by “redeeming” it—in other words, paying off the entire loan, not just the overdue amounts. Not only will you need to pay the balance, but you’ll be responsible for any other costs, as well, such as interest, late fees, and attorneys’ fees. Most homeowners don’t have the resources to redeem a property.
Still, in case you want to consider this option, be aware that under Florida law, you can redeem the home any time before:
- the filing of the certificate of sale (the court clerk files the certificate shortly after the foreclosure sale), or
- until the redemption period stated in the judgment of foreclosure expires, whichever occurs later.
The Foreclosure Sale
At the foreclosure sale, the foreclosing bank will bid on the property, typically with a credit bid, which means the bank does not bid cash. Instead it bids your debt as a credit. Sometimes a bank bids the total amount the borrower owes—or sometimes less. In some states, including Florida, when the bank is the high bidder at the sale, but bids less than the total debt, it can get a deficiency judgment against the borrower. (To learn more, see Can the Bank Get a Deficiency Judgment After a Foreclosure in Florida?)
In most cases, the bank will be the high bidder at the sale and become the new owner of the property. At this point, the property becomes what’s known as REO (Real Estate Owned).
Eviction
Usually, the bank gets a right to possession in the foreclosure judgment and, after the clerk files the certificate of title (which confirms the sale), will file a motion for a writ of possession. When the court grants the motion, the clerk of court issues the writ and the sheriff executes it. (If you’re unable to keep your house, read Foreclosure: How Long Before I Have to Move Out of My House?)
Getting Help
While this article provides an overview of a typical Florida foreclosure, keep in mind that federal and state foreclosure laws are complicated and timelines vary. If you want to learn more about the process or find out if you have any defenses to the foreclosure, talk to a foreclosure lawyer. If you need help applying for a loss mitigation option or need more information about foreclosure alternatives, a HUD-approved housing counselor is a good resource.
If you’re unable to reinstate your mortgage, redeem your home, or qualify for a loss mitigation program, you might be able to catch up on your missed payments by filing for Chapter 13 bankruptcy. To explore this option, contact a local bankruptcy attorney. You’ll find details in Secured Claims in Chapter 13 Bankruptcy: Can I Catch Up on My House or Car Payment?
