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Pushing the clog through the drain

Pushing the clog through the drain

The Florida House of Representatives approved the fast-track foreclosure bill this week, bringing it only a vote in the Senate away from reality.

Stay tuned. The 2013 Legislative Session ends this week.

The bill is expected to make it easier for banks to use “show cause” orders on non-homesteaded properties. In those cases, homeowners would have to prove why the judge shouldn’t enter an immediate foreclosure judgment if the bank’s paperwork is properly documented.

But “properly documented” paperwork doesn’t prove that paperwork isn’t fraudulent, and the greatest harm is the removal for an owner to be able to examine and challenge the authenticity of that paperwork. The reality is that many homeowners may not even be able to hire a lawyer before a judge’s ruling.

So, will it assist the free markets in working through foreclosures? Not hardly!

Imagine the glut of foreclosure cases as a clog in a drain. The fast-track foreclosure bill would push a part of the clog out of the courts, but rectify nothing. Homes might become empty faster as courts issue judgments against the owners. But nothing in the legislation deals with the endless delays in setting sale dates. That allow more time in which a home is owned by no one. No one can be held responsible for taxes, HOA fees and maintenance.

Nor does it address the lenders’ practice of holding about half the foreclosed homes off the market in the “shadow inventory.” After all, as long as there isn’t a new sale at today’s price, the lenders can still pretend this is 2006 and the value of those homes is a half-million dollars or more.