Tuesday, March 28, 2011
Fewer Foreclosures Stress Florida's Court System Finances
Plummeting foreclosure filings in Florida, a state hard hit by the U.S. economic slowdown, have led to a $72.3 million budget shortfall for the state's court system, prompting the chief justice to seek $42.5 million in temporary funding.
Without the infusion of cash, Chief Justice Charles Canady told Florida Gov. Rick Scott that the state's courts will need employees to take furloughs to help make up for the shortfall. Canady said such furloughs will negatively affect court operations.
Though falling short of meeting Canady's request, Scott's office transferred $14 million from trust funds related to mediation, arbitration and court education to keep the courts running through April. In the meantime, state budget officials will look for the root of the problem and potential solutions before determining whether to supply another $28.5 million.
One contributing factor to the court's financial shortfall has been a significant slowdown in filing fees, primarily related to, a controversy over mortgage servicing companies filing improper documents.
Since 2009, Florida's court system has relied on these fees for a significant portion of its funding. This year alone, 80 percent of the court system's $462 million budget would come from all case filing fees, with court officials predicting that real-estate filings would provide three-quarters of that amount.
Those projections, however, were wrong. In February, foreclosure filings dropped to about 8,200, the lowest in more than four years. At one time, in October 2008, more than 38,000 foreclosures were filed with Florida's courts.
Though the state's court system anticipates foreclosure filings to steadily grow in the next fiscal year, as properly documented foreclosure filings are expected to enter the system, Canady is hoping the Florida Legislature will move the majority of court funding away from filing fees.