There’s no polite way to put this. A growing cancer is infecting the backlogged legal process of foreclosing on hundreds of thousands of homes in Florida.
It’s endangering the legal and economic stability of this state. And it’s exposing an appalling lack of leadership, first for allowing such a breakdown in the legal system and, now, for failing to own up to this mess and get it fixed.
How bad is it? Laws governing who actually owns a foreclosed home are becoming so suspect a new buzzword is emerging: blighted titles. Even the tepid rebound of Florida’s economy may face crippling delays in resolving hundreds of thousands of foreclosures in the Sunshine State.
What’s wrong? The accuracy and truthfulness of an immense flood of legal documents and affidavits some lenders and their hired lawyers use to foreclose on homes have come under such critical attack that some major banks are suspending their court cases pending internal reviews.
“Sheer volume allowed perversions in the legal system to be overlooked,” says Mark Stopa, a Tampa lawyer who helps people fight foreclosures.
“This has long-term catastrophic consequences,” adds St. Petersburg lawyer Matt Weidner. He wants an intervention into what he considers a corrupted legal process.
At best, the foreclosure process in Florida is beyond sloppy. At worst, it may suffer from serious fraud. Left unchecked, a growing chorus of critics warns this cancer may have sweeping consequences.
Here’s a big one: Title insurance companies may be scared away from offering “clear title” guarantees on foreclosed homes. That would throw into doubt who actually owns many thousands of houses — those going into foreclosure and those purchased out of foreclosure — all across the state.
Who’s going to buy a home if they don’t have a guarantee that they will legally own it?
If the courts finally acknowledge that many foreclosure documents are inaccurate, people who have bought thousands of foreclosed homes may have to reassert their legal ownership. Some former owners already pushed out of their homes by foreclosure proceedings could find they still own their houses, only to face a second round of foreclosure just to get the ownership documentation right.
The impact of this mess is not limited to foreclosures, which make up a third of area home sales. It threatens Florida’s mainstream housing market by making it harder to reach any sort of price stability. Wary buyers will remain on the sidelines until they know the value of what they intend to purchase won’t collapse.
Even the credibility of the state’s court system could be questioned. Pressured by legislators (who control the court system’s budget) to clear Florida’s huge foreclosure backlog, many judges employ what derisively are known as “rocket” dockets. They speed foreclosures by minimizing legal arguments. But in the name of expediency, they bend the rules governing individual property rights.