Florida Foreclosure Process, Vacancy & Blight

One interesting news item for those interested in the Florida foreclosure process and the Florida foreclosure timeline comes to us from Los Angeles, where Deutsche Bank settled a lawsuit alleging that Deutsche allowed large numbers of foreclosed properties to become blighted.  Paying $10 million dollars, Deutsche admitted no wrongdoing as part of the settlement.

This leads us to advocate, again, against the mindless rush we’ve seen in the foreclosure process in Florida to accelerate Florida foreclosures and to get foreclosure cases to trial.  Several Florida municipalities have been forced to enact foreclosure registries, whereby banks and lenders have to publicly register with the state or city which properties are bank-owned.  In this way, cities can more easily enforce code violations.  Thus, given that banks have already been forced to pay millions for blighted properties that have been foreclosed, and given that Florida municipalities are forced to deal with such blight as well, can anyone say that rushing cases to judgment and auction is a solution to the foreclosure crisis and its externalities?

Further, consider this recent news out of Miami, which clearly shows that it is vacant properties that are “choking” supply in the housing market.  This should lead us to a solution whereby vacant and blighted properties are taken care of first by courts.  However, all too often remedies aimed at speeding up the foreclosure process in Florida are painted with a wide brush, such as the recent bill passed by the legislature allowing for certain accelerated procedures.  When considered in tandem with empirical data that shows that it is vacancy, and not foreclosure itself, that causes spillover effects such as crime and reduced property values (Dustin Zacks compiled much of this data in his recent Article in the Loyola Law Review), we have to wonder why court administrators and legislators insist on processing all foreclosures similarly – whether a family of 4 is residing in its primary residence, or whether an international investment conglomerate is letting a dilapidated property decay.  Clearly, then, empirical data proves that any expedited Florida foreclosure timeline goals should be geared towards eliminating vacancy.  This, of course, would preclude any uniform grouping of contested foreclosure cases together with undefended cases.  

So whether through rocket docket procedures (where hundreds of foreclosure trials are set for one day, regardless of whether any party has requested trial), or through case management conferences where judges force banks and lenders to proceed with their cases, the goal should always be to alleviate vacancies – not to blindly seek foreclosure judgments regardless of the consequences.  Modifications and settlements to keep families in homes will accomplish this goal, and we believe that courts should encourage settlement and seek to avoid trial, just as they do in routine civil litigation in all other practice areas.  Finally, we think that vacant properties – and not all properties under threat of foreclosure – should be the target of any accelerated court procedures.  This, unlike many broad brush approaches to accelerate the Florida foreclosure process, is supported by empirical evidence.