We've heard all types of questions from our clients, but one question that we're hearing often is this: "can my mortgage be canceled if I don't make my mortgage payments for 5 years?" Some foreclosure defense lawyers and "foreclosure rescue" companies have been advertising that Florida homeowners can get out of foreclosure by not paying on their home for 5 years, and homeowners aren't sure whether to believe these claims or not.
In fact, Florida law does state that there's a 5 year statute of limitations on foreclosures (technically on promissory notes). Although this may seem straightforward enough, it gets a bit complicated when you delve into the specifics of the law.
What Does Florida Foreclosure Law Really Say?
Florida foreclosure law states that a lender has up to 5 years after a home goes into default to enforce a promissory note. If a mortgage has an acceleration clause (a clause which allows the lender to ask for the full balance of a mortgage under certain conditions, such as default), then that 5-year period starts after the acceleration clause is activated. If the lender doesn't file a foreclosure lawsuit within this 5-year period, then the homeowner can keep their home for free.
There's also a rule in Florida -- known as the "Failure to Prosecute Within One Year" rule -- that states that a lawsuit can stay open for up to one year without activity. After one inactive year, then the lawsuit can be dismissed by the court. If a foreclosure lawsuit is dismissed in this way before a bank asks for a deficiency judgment, then the bank can't attempt to enforce a promissory note, and the homeowner can keep their home for free.
The Truth About Deficiency Judgments
Deficiency judgments used to have the same 5-year statute of limitations, but Florida's new foreclosure laws changed that. Now, for deficiency judgments (for foreclosures after July 1, 2013) the statute of limitation is only 1 year, and that countdown doesn't start until after a home is sold to a buyer in a foreclosure auction. If a home was sold before July 1, 2013, then the statute of limitations ends in either 5 years or July 1, 2014; whichever one comes first.
I haven't paid in 5 years, is my home free?
Most likely, the answer is "no", but you should always have an experienced foreclosure attorney review your situation before reaching a conclusion.
Do you understand how foreclosure works in Florida? Do you understand the laws that can affect the foreclosure and loan modification process on your home? The Florida Foreclosure Handbook will teach you about all this and more; knowledge is power!