Financial circumstances change all the time, and it is not unusual for
homeowners to fall behind on a mortgage. Whether it is a job loss or unexpected
bills, sometimes the money to make a mortgage payment just isn’t
there. When you fall behind on your mortgage, how long does a bank have
to file for foreclosure?
Foreclosure doesn’t happen immediately after a missed payment. Lenders
are required to give home owners a grace period of 10-15 days to catch
up on a single missed payment. After two missed payments, homeowners will
begin receiving phone calls and letters about the overdue mortgage. If
you cannot make your payments, it is important not to ignore these communications.
When you are only slightly overdue, it is a good time to talk to your
mortgagor about your options.
Once your mortgage payment is 120 days overdue, the bank may legally begin
the foreclosure process. The federal Consumer Financial Protection Bureau
enacted this rule beginning on January 10, 2014 in order to give homeowners
adequate time to discuss a loan modification or other plan to catch up
the delinquent mortgage. Once this 120-day period ends, the foreclosure
process may begin.
However, there is no rule that a bank must begin the foreclosure process
after the 120-day period is over. In some instances, mortgage lenders
have waited years before beginning a foreclosure. This occurred frequently
during the peak of the financial and foreclosure crisis, and many homeowners
spent years living in their homes without making payments.
The state of Florida does require creditors like a mortgage lender to file
a lawsuit over a debt within five years. This statute of limitations means
that if a mortgage lender fails to file for foreclosure within the five-year
deadline, it may not be able to institute foreclosure proceedings at all.
As a result, some courts have held a bank has no recourse against a homeowner
that missed five years of payments without facing a foreclosure proceeding.
However, the state of this law is in flux. The Florida Supreme Court is
currently deciding an appeal from the Fifth District Court of Appeals
that will determine when the clock begins ticking on the state’s
statute of limitations. The Fifth DCA, Fourth DCA, and Third DCA have
all issued conflicting decisions on when the statute of limitations begins
and when the statute of limitations forbids a bank from pursuing a foreclosure.
Some courts have held that the statute begins running as soon as the bank
accelerates the mortgage in anticipation of a foreclosure. Others have
held that each new missed payment starts the clock running again. Still
others have held that the five-year limit restarts from the date the first
foreclosure case was filed, allowing lenders to file additional foreclosure
cases after the initial case is dismissed without prejudice.
The Florida Supreme Court is expected to rule on the Fifth DCA’s
appeal soon. At that time, it will hopefully become clear when the statute
of limitations applies and when a mortgage lender is time-barred from
filing for foreclosure.
If your house is in danger of foreclosure, it is important to speak with
an attorney as soon as possible. At Loan Lawyers, our attorneys can help
you create a plan to save your house using tactics like traditional foreclosure
defense, loan modifications, or bankruptcies. Before you give up on your
home, schedule a free consultation today by calling (844) FIGHT-13 (344-4813).