Rodney Walters and Terri Reese have lived in their Jacksonville area home since 2006. The couple and their four children were recently ordered out of the home by a judge in Florida's new so-called "rocket docket" foreclosure courts.
The New York Times reports that the couple faces a predicament common in Florida: they owe approximately twice as much on their house as it's worth.
Walters and Reese fell behind on their mortgage two years ago after property taxes jumped.
Something else that they have in common with other Florida homeowners facing foreclosure: they presented evidence in court that the bank attempting to foreclose on their home doesn't actually hold the mortgage. A bank cannot legally foreclose on a property without holding the mortgage for it.
Evidence Ignored
The judge hired by the state to push foreclosures through a new and accelerated court system ignored the evidence provided by Mr. Walters and Ms. Reese, instead granting the bank the right to foreclose upon and then auction off their home.
The stated goal of the Florida legislature when it set up the rocket docket was to reduce the foreclosure backlog clogging Florida courts by 62 percent in a year's time. The problem: the retired judges hired to blast out the backlog too often take the bank's side in disputes over who holds the mortgages on the properties, and thus the right to foreclose.
Lawyers interviewed by the New York Times said that Florida's foreclosure judges are simply ignoring conflicting or shoddy evidence, opting for expediency instead. After hearings that sometimes last just a few minutes, the judges hand properties over to banks that haven't definitively proven ownership.
From Bad to Worse
Homeowners like Walters and Reese must confront yet another problem: under Florida law, the bank or other lender can pursue from the borrower the difference between what is owed on a house and what price is garnered at auction (legally referred to as a "deficiency"). Mr. Walters and Ms. Reese owe approximately $264,000 on their home. The market value is currently only $138,000, so even if an auction does indeed bring in the full market amount, they are still potentially on the hook for $126,000.
To add insult to injury, the foreclosure judge ordered the couple to pay the bank's lawyers $10,000 in fees.
The couple is now reportedly considering bankruptcy as a way to stop the foreclosure. It's an option they probably should have considered before things got so far and the bills piled so high.
A Viable Solution
A Chapter 13 bankruptcy can stop a foreclosure on your home and help you to catch up on missed payments. A Chapter 13 bankruptcy can in some cases also enable you to strip away a second mortgage from your debts.
To learn more about the protections of both Chapter 13 bankruptcy and Chapter 7 bankruptcy, contact an Orlando, Florida bankruptcy attorney experienced in foreclosure defense. A bankruptcy lawyer explains the benefits and costs of bankruptcy and whether or not bankruptcy is appropriate for your unique financial situation.
