What Lenders Need to Know about Expediting Foreclosures Through § 702.10 Orders to Show Cause
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Lenders can often expedite a foreclosure by moving for an order to show cause under Section 702.10, Florida Statutes. There are two types of orders to show cause. The first directs the defendants to show why a foreclosure judgment should not be entered. § 702.10(1), Fla. Stat. (2020). If the defendants fail to raise a genuine issue of material fact at the show-cause hearing, the court will enter a final judgment of foreclosure.
The second, which applies in non-owner-occupied cases, directs the borrower to show why it should not be required to make payments to the lender during the foreclosure action. § 702.10(2), Fla. Stat. (2020). If the lender shows that it is likely to prevail in the foreclosure action, the court will order the borrower to make the regular payments required by the loan documents (starting from the date that the OTSC motion was filed).
Orders to Show Cause Under Subsection (1) (Foreclosure)
Under subsection (1), a court must enter an order to show cause if the lender meets certain criteria. In particular, the plaintiff’s complaint must be verified, comply with the technical requirements of Section 702.015, Florida Statutes, and state a cause of action. See § 702.10(1), Fla. Stat. (2020). The lender must then petition for an order to show cause under subsection (1), and the court will issue the order on an expedited basis.
The order will set a hearing for the defendants to show cause. At the show-cause hearing, if the court finds that all defendants have waived the right to be heard (e.g. fails to file defenses or appear at the show-cause hearing), the court shall promptly enter a final judgment of foreclosure without the need for further hearing if the plaintiff has shown entitlement to a final judgment and upon the filing with the court of the original note. If the court finds that a defendant has not waived the right to be heard on the order to show cause, the court shall determine whether there is cause not to enter a final judgment of foreclosure. If the court finds that the defendant has not shown cause, the court shall promptly enter a judgment of foreclosure. Therefore, if the defendant does not show up at the hearing, or if there are no disputed facts, the lender can obtain a final judgment of foreclosure early in the case.
Orders to Show Cause Under Subsection (2) (Rents During the Pendency)
Under subsection (2), a court is not necessarily required to issue an order to show cause upon a lender’s petition. Unlike under subsection (1), which uses the mandatory language “shall,” no mandatory language exists under subsection (2). Nevertheless, most courts seem to issue orders to show cause for rent payments upon a lender’s petition. See, e.g., PNC Bank, Nat’l Ass’n v. Andrews, No. 5:15-CV-41-OC-30PRL, 2015 WL 13357933, at *3 (M.D. Fla. Mar. 23, 2015) (“[U]pon review of Plaintiff’s verified complaint, the Court concludes that Plaintiff has sufficiently alleged an action for foreclosure. Therefore, Plaintiff’s motion to show cause pursuant to Florida Statute § 702.10(2) should be granted.”).
Perhaps courts assume that lenders will not file frivolous petitions because, under subsection (2), the lender bears a heavy burden to prevail at the hearing on the order to show cause for rent payments. At such hearing, the lender must prove it is likely to prevail in the ultimate foreclosure action. Fla. Stat. § 702.10(2)(d) (“If the court finds that the mortgagor has not waived the right to be heard on the order to show cause, the court shall, at the hearing on the order to show cause, consider the affidavits and other showings made by the parties appearing and make a determination of the probable validity of the underlying claim alleged against the mortgagor and the mortgagor’s defenses. If the court determines that the plaintiff is likely to prevail in the foreclosure action, the court shall enter an order requiring the mortgagor to make the payment. . . .”) If the lender shows a likelihood of success on the merits, the defendants will be required to make regular loan payments during the pendency of the proceedings.
Importantly, if the borrower fails to make the required payments or post a bond for the balance on the loan, the lender will be entitled to possession of the property. In addition to possession, the court may award other relief, including even a final judgment of foreclosure. We Help Cmty. Dev. Corp. v. Ciras, LLC, 144 So. 3d 578, 580–81 (Fla. 4th DCA 2014).
In sum, orders to show cause can provide lenders with much needed relief during the pendency of the foreclosure process. Sometimes, seeking an order to show cause can even result in an early foreclosure judgment.