http://www.lscu.coop/index.php/content/download/9243/107969/file/STATE%20ACTION%20ALERT

FLORIDA

STATE ACTION ALERT Call Senate President Jeff Atwater’s office TODAY! 850­487­5229 An extremely negative legislative proposal has been brought to our attention. Senator Haridopolos is proposing an amendment to establish the "One Action Rule" in Florida.

This will require a lender to first foreclose on a property prior to suing on the note for a deficiency.

ASK Senator Atwater to oppose this bad legislation that would negatively affect millions of Florida’s credit union members!

The One­Action Rule would be bad for Florida for many reasons: 1. When lenders make commercial loans, they look at the “total package” being presented to them by the mortgagor. This includes guarantors, value of collateral, cash­flow, and the like. Without having any protections that the guarantor will pay should the loan go into default under the One­Action Rule, these loans become nonrecourse loans and the risk to making the loan is increased greatly. This coupled with not having any cash­flow data for new businesses, will cripple lending in Florida.

2. With a nonrecourse loan, lenders will be required to due at least one of the following: a. Increase the interest rate to account for the risk. b. Require mortgagors to put much greater equity/down payment into the property. This will hurt new entrepreneurial businesses immensely. c. Not make the loan.

3. Because of the higher regulatory scrutiny that credit unions are currently facing, the increase risk created by the One­Action Rule will force CU's to make fewer loans. Regulators are forcing CU's to decrease their risks every day. How would enacting a law that increases risk help? If the loan is retroactive, how would the examiners view that loan? The examiner may write that loan down and require more reserves, which only hurts lending.

4. Of the 8 states that have some form of One­Action Rule, all have non­judicial foreclosure, which Florida does not have. Coupling judicial foreclosure with the One­Action Rule would turn the foreclosure complaint into a notice to guarantors to hide their assets.

California, the primary example given by proponents as to why this is good, has non­judicial foreclosure where mortgagors have 90 days to cure, then 21 days of public notice. The entire foreclosure process is finished in approximately 120 days.

However, in Florida, foreclosures have to go through the courts and are taking, on average, 18 to 24 months to complete, plenty of time for guarantors to shield or spend their assets.

5. Any proposed statute change would not be enforceable on current loans regardless of how it is drafted. If drafted to affect current loans/law suits, this would be considered an impairment of contract and would be tied up in court for years.

6. The primary proponents of this law change are very wealthy, developers who are trying to buy a change in the law through their donations.

7. While all lenders are against the One­Action Rule, this will hurt credit unions and community banks the most.

8. Enacting the One­Action Rule in Florida may help some irresponsible borrowers; however the vast majority of borrowers in Florida are very responsible. Enacting a One­Action Rule will increase cost to responsible borrowers.

The Florida Legislature is advocating no new fees or taxes on Floridians, however, if the One­

Action Rule is enacted, the Florida Legislature will be advocating and increase in costs for doing businesses in Florida.

We need you to call Senator Atwater’s office today – his Capitol office is 850­487­5229.

Tell him how this negatively affects your members!