Different states have different laws when it comes to stopping a home foreclosure. Florida happens to be a judicial foreclosure state, which means that a judge must grant permission to a lender before a foreclosure can take place. If you are a homeowner experiencing financial hardship and struggling to pay your mortgage, you need to act quickly to avoid foreclosure.
Sometimes, life happens and you may find yourself unable to pay your mortgage. Whether due to job loss, illness, or another source of financial distress, falling behind on payments can put your home at risk. The good news is that between the first missed payment and the final auction, there are multiple stages where intervention is possible. The legal team at Handin Law is here to help you understand your options and prepare a strong foreclosure defense.
This guide covers everything Florida homeowners need to know: how the foreclosure process works in our state, what legal defenses are available, and the full range of options for avoiding foreclosure — including loan modification, reinstatement, short sales, deed-in-lieu, and bankruptcy.
How the Florida Foreclosure Process Works
Most homeowners enter into a mortgage agreement to buy their home and are required to make monthly mortgage repayments to their lender until the mortgage is fully repaid. If a homeowner (the borrower) fails to keep up with their mortgage payments, their lender has the right to commence foreclosure proceedings. Home foreclosure is essentially the process through which the lender attempts to recover the amount outstanding on the mortgage by selling the mortgaged property at an auction.
Florida Is a Judicial Foreclosure State
In order to successfully foreclose on a home, the lender must make his or her case in court. Florida law requires a court of equity to conduct the case. This means that a judge must apply principles of fairness when making the final decision. As the homeowner, you will have the chance to present your defense in order to stop the foreclosure, which your attorney can help prepare. There is no jury involved in making this final decision; only the judge determines the fate of the home.
Stages of Foreclosure: From Delinquency to Auction
There are different stages of the foreclosure process which lead up to the loss of your home. Being delinquent on a monthly mortgage or debt repayments is what starts the process. The process ends when your home is auctioned off, and someone else becomes the new owner of your (former) home.
Generally, lenders will commence foreclosure proceedings when the borrower has missed three mortgage payments, although some commence proceedings after a single missed payment. They may file a document called a “notice of default” at the county recorder, officially notifying the borrower that they are in default and setting out the timeframe they have to catch up on missed repayments before further action is taken.
If you have received a notice of default, you must contact an experienced attorney immediately. They will advise you on your options for avoiding foreclosure and arranging a more favorable solution to your financial predicament.
The Reinstatement Period
Between the first and the last stage of foreclosure, there is another stage which can be a saving grace. This is known as the reinstatement period. During the reinstatement period, there are two options available to you. The first is to enlist the services of an attorney, and the second is to immediately pay back the full amount owed to your lender. The latter option is not always a possibility, which is why it is important to get help from a professional foreclosure attorney.
Florida Foreclosure Defenses
There are a few different legal angles you can take when presenting your foreclosure defense in court. Not all of them may apply, but your attorney can help build a better case if you can prove any of the following:
Unclean Hands
“Unclean hands” refers to a legal defense strategy to prove that a lender engaged in unethical practices regarding foreclosure. As the homeowner, you will have to prove that there was fraud or an otherwise illegal transaction from your lender, or other types of unethical conduct. This tactic is one of the hardest because you will need to have evidence to present to the judge. But if such evidence exists, an experienced attorney will find it.
Conditions Precedent
Another foreclosure defense strategy involves proving that the lender failed to fulfill all conditions required to foreclose on a home. Perhaps the lender failed to notify the homeowner of default. Maybe other terms or conditions in the mortgage contract were unclear. If such conditions exist, an experienced attorney can help build this case.
Ensuring the Lender Follows the Rules
Your attorney will also ensure that your lender abides by the agreed-upon rules throughout the foreclosure process. In the legal world, the way things are phrased can be open to interpretation unless you have the necessary knowledge and experience. A licensed and experienced attorney may be able to stop the process or even temporarily halt it by identifying procedural errors or violations by the lender.
Options to Avoid Foreclosure in Florida
If you are facing foreclosure, you have several options available to you. An experienced foreclosure attorney can help you evaluate which strategy is best for your specific situation. Even if your lender does not agree to one approach, your attorney can help you negotiate an alternative arrangement that will avoid foreclosure.
Loan Modification
Your attorney can arrange to have your current mortgage or debt modified in a manner that enables you to pay off your monthly debt without worrying about losing your home. A loan modification changes the terms of your existing mortgage — whether through a lower interest rate, an extended repayment period, or a reduced principal balance — to make your monthly payments more manageable. This option allows you to keep your home while bringing the loan current.
Loan Reinstatement
During the reinstatement period, you may have the opportunity to bring your loan current by paying all missed payments, late fees, and any other costs that have accrued. If you are able to come up with the funds — whether through savings, assistance from family, or other means — reinstating your loan stops the foreclosure process entirely and restores your mortgage to good standing. Your attorney can negotiate with the lender on the exact amount required and the timeframe for reinstatement.
Short Sale: A Better Alternative to Foreclosure
If keeping your home is not a realistic option, a short sale is often a far better alternative than allowing foreclosure to proceed. As a homeowner, it is better to lose your property in a short sale than to foreclosure, because a short sale allows you to retain more control and causes less long-term financial damage.
What Is a Short Sale?
A short sale occurs when a homeowner, with the agreement of their lender, sells their property for an amount that is less than the amount outstanding on their mortgage — the sale falls “short” of settling the loan balance. For example, if you default on your mortgage and still owe $200,000, and you find a purchaser who agrees to buy your home for $170,000, your lender may agree to the sale and release you of your obligation to pay the remaining $30,000. The outstanding balance that the seller owes to their lending institution is often referred to as the “deficiency balance.” The lending institution may choose to forgive this outstanding debt, or the seller may be required to settle the debt over time.
It is important to note that a short sale always requires the lender’s approval, and homeowners who want to use this process must demonstrate their financial distress to their lender to obtain consent to proceed with the sale. Some homeowners also negotiate short sales when the value of their home has dropped and they want to sell the property quickly without waiting for property prices to recover.
How Is a Short Sale Different From Foreclosure?
Short sales and home foreclosures are similar in that they are used when a homeowner is in financial distress and is unable to make their monthly mortgage payments, but they differ in several important respects.
In the case of foreclosure, the bank (or other lending institution) places the property on auction, and it decides on the purchase price that it will accept. This means the seller has no control over how much their home is sold for, and cannot refuse an offer if they think it is too low. As a result, they may be left owing the bank a considerable sum after foreclosure.
In the case of a short sale, the seller retains control over the sale process, and decides on the offer they are willing to accept. Because short sales still involve the usual steps in a real estate transaction — finding a purchaser, negotiating offers and contracts, conducting due diligence, and processing the title transfer — it generally takes longer than a foreclosure auction, but the outcome is far more favorable for the homeowner.
Advantages of a Short Sale Over Foreclosure
Negotiating a short sale is one of the main ways that homeowners can avoid the worst consequences of foreclosure. The advantages include:
- You remain in control. As the homeowner, you will remain in control of the sale process, whereas during foreclosure, you lose all control to the lender. This gives you the opportunity to obtain the best possible purchase price for your home, minimizing the deficiency balance that is left for you to pay.
- Less damage to your credit. Short sales typically have a less severe impact on your creditworthiness than foreclosure. A foreclosure has a far more severe impact on your credit score and remains on your credit record longer than a short sale.
- Faster path to homeownership again. In many cases, homeowners who have had their homes foreclosed on must wait up to seven years to purchase another home. In contrast, those who have sold their homes through short sales are usually able to purchase a new home soon after the short sale — in some cases, immediately.
- Lower fees. Sellers typically end up paying fewer fees during a short sale than they would during a foreclosure. In the case of a short sale, the property is still owned by the lending institution at the time of the sale, so the lender becomes responsible for many of the fees.
However, concluding a short sale agreement takes legal finesse: there are several pitfalls to be avoided, and securing your lender’s agreement can be very challenging. Hiring a skilled foreclosure defense attorney is a must if this is an option you are considering.
The Short Sale Process
Short sales are complex, lengthy, and involve much more paperwork than most homeowners realize. Here is what to expect at each stage:
Setting a price and finding a buyer. The first step in the short sale process is setting a purchase price. Ideally, you should aim to sell your home for as close to the value of your mortgage as you can. When setting a purchase price, you will need to factor in the cost of the various fees and expenses you will incur throughout the transaction. When you market your home, you will need to make clear to the buyer that it is being sold by way of a short sale. This may be a deterrent for some buyers who are not willing to wait for the lender’s approval, but it may be seen as an advantage by others.
Gathering documentation to demonstrate your financial distress. Once you have found a buyer, you will need to start gathering documentation that demonstrates your financial distress, such as bank statements, pay stubs, bills, proof of any extraordinary expenses you have recently incurred (such as medical expenses), or a termination letter from your employer. This part of the process can be tricky to get right: you want to demonstrate financial distress to your lender, but you do not want the information you provide to be used against you at a later stage if the sale falls through and the bank forecloses on your home. A qualified attorney will help you gather the relevant documentation necessary to gain lender approval without jeopardizing your long-term interests.
Lender approval. Your attorney will put together a short sale package for your lender’s consideration, and negotiate the forgiveness of the debt remaining on your mortgage. Obtaining your lender’s approval is usually the biggest stumbling block to effectively concluding a short sale agreement, and it takes a seasoned negotiator to get a deal over the line. It may take several months for your lender to approve the short sale.
Closing. Once the short sale has been approved, the transaction can proceed to the closing stage. Usually, sellers appoint a real estate attorney to act as their closing agent: closing attorneys draft and review the final transaction documents, arrange title insurance, hold escrow funds, take care of the title transfer process, and release the proceeds of the sale once it is complete.
The Risk of Deficiency Judgments
If you conclude a short sale without your lender’s agreement to forgive the remaining debt, they are entitled to go to court and obtain something called a “deficiency judgment” against you. This means that you will still be liable to your lender for the amount outstanding on your mortgage after the short sale, and your lender may be able to execute against your other assets to recover the outstanding amount.
In some cases, lenders refuse to forgive the deficiency balance and may choose to initiate legal proceedings to collect the outstanding amount from the seller. If your lender attempts to obtain a deficiency judgment against you, it is crucial you hire an attorney to defend the proceedings. They may be able to negotiate a settlement with your bank, which will save you money and allow you to protect your credit score from the further damage that would be caused by a judgment being entered against you.
Deed-in-Lieu of Foreclosure
A deed-in-lieu of foreclosure is another alternative your attorney may suggest. With this option, you voluntarily transfer ownership of your property to the lender in exchange for being released from the mortgage obligation. This avoids the lengthy and costly foreclosure process for both parties. While you will still lose your home, a deed-in-lieu can be less damaging to your credit than a full foreclosure and may allow you to negotiate a release from the deficiency balance. Your attorney can negotiate the terms of a deed-in-lieu arrangement to ensure it is in your best interests.
Mortgage Workout
A mortgage workout is a general term for any negotiated agreement between you and your lender to resolve a delinquent loan. This may include a combination of approaches — such as a temporary forbearance, a modified payment schedule, or a partial claim — tailored to your specific financial situation. An experienced foreclosure defense attorney can negotiate a mortgage workout on your behalf to help you avoid foreclosure while keeping your home.
Last Resort: Filing for Bankruptcy
At Handin Law, we will do everything in our power to avoid this option, but nonetheless, it is an option. Once a homeowner files for bankruptcy, an automatic stay goes into effect, which successfully delays foreclosure. However, this stay is only temporary. It is intended to help you buy some time and prevent creditors from coming after you as you continue to assess your financial options and make new plans.
Of course, your mortgage lender will try to get rid of this injunction by filing a motion in court. The judge will still need to give consent to deny or proceed with the foreclosure. If the court allows the motion to go through, foreclosure can often still be delayed for several months. Bankruptcy should be considered a last resort because of its long-term impact on your credit and financial standing, but in certain circumstances, it may be the right tool to protect your home while you regroup.
The Role of a Foreclosure Attorney
Nobody wants to lose the roof over their head. Facing foreclosure can be a difficult time for many homeowners, but having a professional at your side to handle all the legal aspects can make all the difference. Before hiring just any attorney, make sure that they are licensed and knowledgeable to handle foreclosure law in the specific state that your home is in, since each state has differing legislation when it comes to foreclosures.
The most important thing your attorney can do is help you to better understand the foreclosure process. Hiring a lawyer with experience in foreclosure defense guarantees you will not be caught off guard. Here is what a foreclosure attorney does for you:
- Buys you time. Buying time gives you a chance to save your home. In this period, you will hopefully be able to save and put that money towards your home loan. A licensed and experienced attorney may be able to stop the process or temporarily halt it.
- Modifies your mortgage or debt. Your attorney can arrange to have your current mortgage or debt modified in a manner that enables you to pay off your monthly debt without worrying about losing your home.
- Ensures the lender follows the rules. Your attorney will hold your lender accountable and ensure they abide by every procedural requirement. If the lender has cut corners or acted unethically, your attorney will find it and use it in your defense.
- Negotiates with your lender. Whether pursuing a short sale, loan modification, or workout agreement, your attorney will handle all negotiations with your lender on your behalf, putting together the necessary packages and fighting for the most favorable terms possible.
- Handles complex documentation. Significant paperwork is involved in any foreclosure defense or alternative arrangement. Your attorney will take care of all contract drafting and preparation, file the necessary documentation, manage all correspondence with the lender’s attorneys, and ensure that the process progresses as quickly as possible.
- Explains the legal language. The entire process can be overwhelming. You will have someone who can explain all the legal speak into layman’s terms and someone who can catch all nuances in the paperwork. In the legal world, the way things are phrased can be open to interpretation unless you have the necessary knowledge and experience.
- Conducts risk mitigation. A skilled attorney will protect your interests by ensuring that any agreements are legally binding and favorable to you, that all transactions meet the strict requirements of Florida real estate law, and that your potential liability is limited. Your attorney should also advise you on the potential tax implications of any arrangement and refer you to a tax specialist if necessary.
- Advises you on all available options. An experienced foreclosure attorney will evaluate your entire financial picture and advise you on the full range of options — from loan modification and reinstatement to short sales, deed-in-lieu, and bankruptcy. Even if one approach does not work, your attorney can help you pivot to an alternative that will.
Frequently Asked Questions About Florida Foreclosure
How long does the foreclosure process take in Florida?
Because Florida is a judicial foreclosure state, the process must go through the courts, which means it typically takes longer than in non-judicial states. The exact timeline depends on your specific circumstances, the court’s docket, and whether you mount a defense. With an experienced attorney, you may be able to delay the process significantly while you explore alternatives.
How many missed payments before foreclosure begins?
Generally, lenders will commence foreclosure proceedings when the borrower has missed three mortgage payments, although some commence proceedings after a single missed payment. If you have missed even one payment, it is wise to contact an attorney to understand your options before the situation escalates.
What is a notice of default?
A notice of default (also called a “breach letter”) is a document filed by your lender at the county recorder, officially notifying you that you are in default on your mortgage. It sets out the timeframe you have to catch up on missed repayments before the lender takes further action. If you receive a notice of default, contact an attorney immediately.
Can I still buy a home after a short sale?
In many cases, homeowners who have had their homes foreclosed on must wait up to seven years to purchase another home. In contrast, those who have sold their homes through short sales are usually able to purchase a new home much sooner — in some cases, immediately after the short sale is complete.
What is a deficiency judgment?
A deficiency judgment is a court order that holds you liable for the difference between what your home sold for and what you owed on the mortgage. For example, if your home sold for $170,000 but you owed $200,000, the lender could seek a deficiency judgment for the remaining $30,000. An experienced attorney can negotiate with your lender to forgive this balance or defend you if they pursue a judgment.
Will filing for bankruptcy save my home?
Filing for bankruptcy triggers an automatic stay that temporarily halts foreclosure proceedings, giving you time to assess your financial options. However, the stay is only temporary — your lender can file a motion to lift it. Even if the court grants that motion, the foreclosure process can still be delayed for several months while you work with your attorney on a longer-term solution.
Foreclosure Defense and More in South Florida
For nearly half a century, the lawyer and experienced support staff at the Law Offices of Gary I. Handin, P.A., have served the residents of South Florida. We have helped hundreds of South Florida families avoid foreclosure and successfully negotiate favorable outcomes with their lenders. Our attorneys have several decades of experience in real estate law and foreclosure defense and represent clients facing foreclosure with compassion and care.
Our wide range of legal services include Wills, Trust, Probate, real estate, title insurance, business law, and much more. We are proud to work with a diverse range of clients, and our service is as expert as it is compassionate. Our attorneys always have your best interests at heart.
If you are in financial distress and need to speak to a trustworthy attorney to understand your options, we are your first port of call. If you find yourself facing a home foreclosure, or have other legal questions and concerns, call us today at 1-877-815-4560 or 954-796-9600 to schedule a consultation.