Florida Proposes Foreclosure Bill of Rights, Appraisal Requirements 

Legislation that would require an appraisal within 45 days on a property on which the homeowner has invoked their “Bill of Rights” has been introduced in the Florida House of Representatives. H.B. 653 would enact a “Foreclosure Bill of Rights” for homeowners, in which the lender or servicer would then have to order an appraisal.

 

The appraisal would be required to consider all recent comparable sales, including ordinary transactions, short sales, and other foreclosures in determining the current market value of the property. The intent of this provision is to verify the current market value of the distressed property so that the lender can make an informed decision whether to continue with foreclosure proceedings or negotiate a loan modification with the homeowner.

 

The legislation also requires that the lender make a good faith effort to renegotiate the loan at the appraised market value. In exchange, the lender would be entitled to a forbearance lien for the difference between the loan amount and the market value. The lien would be required to be paid by the homeowner upon the first sale, refinance, or transfer of the property, if any equity existed in the property.

 

Bill Garber, Director of Government and External Relations for the Appraisal Institute stated, “We are pleased to see that the sponsors of this legislation recognize the importance of the objectivity and independence that real estate appraisers provide to the foreclosure process, where questions of value are critical to protecting all parties involved.