Regina Corcoran's - "Pursuing the American Dream"
Sunday, January 24, 2010
Legends, folklore and fairy tales

By Regina Corcoran Special to The Citizen

Researching the foreclosure process in Florida, I retrieved scores of pages. Some were just plain wrong. Others hopelessly mangled the process. It began to seem like the procedures were a matter of opinion, or stories handed down generation after generation.

Even in foreclosure, it is critical to seek the advice of an experienced expert: an attorney.

Let's take it from the top. The buyers get a loan to finance the home they decided to buy. On closing day, among the dozens of documents they sign, two are very important.

The short one, often only one page long, is the promissory note. On signing that one, the borrowers promise to repay the money.

The other document is the mortgage. That is a long document, perhaps 18 pages. It establishes the house as collateral for the note.

In other words, I promise to repay the money. If I don't, you can get a judgment against me and you can sell the house to recover the money.

The buyers sign the mortgage and they give the mortgage to the lender. Being the givers of the mortgage, they are the mortgagors. That makes the bank the getter (made up word) of the mortgage, or the mortgagee.

In Florida, the new happy owners clutch the warranty deed in their hands as they leave the closing. The lender never gets the title to the home unless they default.

The lender, however, is the lien holder. They filed that mortgage at the courthouse to establish that lien. They get to hold the note, so they are the note holders. After the clerk of the court's office records the mortgage, they return it to the bank. Thus, the bank is the mortgage holder.

The who gives and who gets are simpler once you think about who is clutching what original document.

These points were shuffled in all possible combinations in the research papers I collected.

Time passes. Sad to say, but the owners get behind on their mortgage payments.

These days lenders are as vigilant as a rottweiler that missed a meal. They may call the borrowers before the current month is even up. They will send late notices.

After a couple months, the mortgage holder may send a letter threatening to call the note. That message will serve as notice that they intend to implement their acceleration clause. That means, "Mr. and Mrs. Homeowner, you've been bad. If you don't bring your account current, we won't accept your $1,200 per month anymore. Instead, send us back the whole remaining balance of $125,000."

Then the lender raises the stakes. They file a lis pendens at the courthouse in the county where the property is. A process server tries to deliver a copy to the owner. If the owner receives a copy, the mortgage company can have their "day in court" 20 days later. Otherwise, they have to wait at least 30 days.

Often the process takes longer than that. One example I retrieved for the Monroe County records showed the lis pendens was recorded Jan. 5, 2009, and the final judgment occurred April 21, 2009.

The next step in the process is the auction of the property at the courthouse steps (or the up-and-coming Internet sales).

Before the sale takes place, the date of the sale must be published weekly at least three times, the last one not less than five days prior to the auction. The case I followed had a courthouse sale on June 26, 2009.

I followed three of these proceedings from the start to current date. What was interesting (okay, not interesting like "Avatar," but shall we say noteworthy) was that all three lis pendens were filed Jan 5, 2009. Only one of the three properties has been sold at the courthouse steps. The bank is the same on all three. The bank has been awarded a judgment on all three. But one year later, the bank has only ordered the sale of one.

Contrary to existing myths, the bank doesn't "get your house." More often than not, the bank, having the greatest interest in the property, is the winning bidder at the auction.

What do you think?

Regina E. Corcoran, SRA, is a Florida real estate broker, state-certified residential appraiser and residential contractor. She is president of AmeriRealty Corp. and vice president of AmeriMortgage Corp. She can be reached at ReginaECorcoran@cs.com. Corcoran writes her column exclusively for The Citizen. It appears every other Sunday.