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FAQ About Bank-Owned and Foreclosed Properties in Florida

Posted by Melissa McNeil on Jan 15, 2014 2:56:00 PM


Q: I understand Florida recently amended its laws concerning foreclosure. Can you tell me what’s changed?

A: HB 87, the “Florida Fair Foreclosure Act” took effect in June. It’s intended to speed up the process of foreclosing on residential mortgages. Among other things, the Act:

- Shortens from five years to one the time within which a lender must sue to collect any money still owed after the foreclosure (called a “deficiency”)
- Requires the lender to prove it owns a loan before foreclosing          
- Allows some third parties other than lenders (e.g., homeowners associations) to bring a foreclosure action.
- Here’s a link to a recent ALAW client alert with more details about HB87.

Q: How can ALAW help me more effectively manage the sale and closing of my bank’s REO?

A: There are two distinct approaches managing and disposing of residential REO:

1.  Dispose of all properties as quickly as possible through aggressive pricing and an “as is” sale

2.  Retain the property until market conditions improve, carefully managing maintenance and repair expenses.

At ALAW, however, we believe that successful lenders and servicers don’t follow a “one size fits all” approach. Instead, they quickly and carefully assess each property’s unique potential value and the state of the market or sub-market and identify known problems and issues before deciding on the best approach.

ALAW has the knowledge, experience and resources necessary to provide “cradle to grave” service in each step of the REO disposal process, including:

  • ordering and reviewing title searches and surveys and working to resolve any issues they may disclose
  • reviewing or preparing contracts
  • preparing settlement and transfer documents 


Q: What is an “REO” property?

A: “REO” means “real estate owned”. When a borrower stops making mortgage payments, the lender will file a foreclosure case. At the end of the case, the home is put up for sale to the public. Many times, however, the bids are not high enough to pay off the loan, and the lender winds up as the owner of the property.

Q: Is it true that I can buy an REO home for next to nothing?

A: Lenders must cover expenses such as property taxes and maintenance on REO properties, so they are anxious to dispose of these properties quickly, and the sale price may often be lower than a private seller would ask. However, the lender generally will want to recover as much of the unpaid loan balance as possible.    

Q: How can I find REO properties for sale?         

A: As with most things today, the Internet is a good place to

 start. There are a number of established websites that keep up-to-date lists of REO properties, and many banks also have an REO page on their sites . Also, just like any other seller, the lender will often hire a real estate agent to market its REO properties and closings.      

-     ALAW's Florida based firm has extensive knowledge in the foreclosure process.  For more information please contact us here.



Topics: Florida, Foreclosure


See all posts written by Melissa McNeil


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