Thousands of Florida foreclosure cases have for years been dragging on at a snail’s pace. As banks sort through mountains of muddled paperwork, borrowers have been left in a kind of financial purgatory that bars them from moving forward.
However, our Miami foreclosure lawyers understand some may soon be finally catching a break, as many are nearing the five-year mark.
It has to do with a Florida statute that relates to common contracts. The law says that a person or entity has five years during which he or she has the right to sue for debt. After that five years is up, the right to collect that money also expires.
In theory, it seems this is applicable to foreclosure cases as well. In some cases, borrowers have been successful in essentially getting a “free house” due to the expiration of such deadlines. One high-profile example involved a multi-million-dollar mansion in Boca Raton.
Courts can’t keep these cases open indefinitely. The system recognizes that at some point, there must be an end to the litigation, an end to the fighting. When the bank files a case and then does virtually nothing to move that case forward for five years, it seems logical that the bank gives up its right to pursue the case.
These cases reaching the deadline were filed at the beginning of the housing crisis. It’s unclear exactly how many still-pending cases this might affect, but there are estimates ranging from a few hundred to several thousand.
We know that for example in Palm Beach County, there were more than 30,000 foreclosures filed in 2008. Of those, nearly 1,600 are still pending after more than 5 years.
There are other circumstances under which a bank may forfeit its right to pursue these cases. One particularly common scenario involves a bank filing a foreclosure, dismissing the case and then failing to refile during that five-year window. Cases that are in the system right now that are older than five years have the possibility of being dismissed because time has run out.
The biggest question mark is when the clock started ticking. The general consensus is that it starts at the time of acceleration, which is when the bank, after a number of missed payments, attempts to collect on the entire loan amount via a foreclosure action filed in court.
However, inaction could hurt homeowners. If the lender files documents after the passage of the deadline, it could still win by default if the homeowner fails to respond – regardless of that deadline.
Still, that timeline has, in some cases, resulted in homeowners being allowed to keep homes with filing deadlines that were missed by just two weeks. In one case, a homeowner hadn’t made a payment since 1997, and yet was given ownership of the home because, according to the judge, the bank and its representatives were “stumbling, bumbling and generally inept.”
It will be critical for borrowers running up on this deadline to consult with an experienced foreclosure lawyer who can review the case file to determine your next move.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
How to get your house for free: Rare but possible, Aug. 19, 2013, By Kimberly Miller, Palm Beach Post
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