Palm Beach County’s struggling borrowers caught another break last month as steep drops in new foreclosure filings continued after the July 1 start of Florida’s fast-track foreclosure law.

Just 547 homeowners were foreclosed on countywide in September, a 51 percent decrease from last year and down 5 percent from August, according to a Wednesday report from the Palm Beach County Clerk and Comptroller.

Statewide, new foreclosure filings dropped 59 percent from last year but were up 16 percent from August, as measured by a RealtyTracreport to be released today.

The new law, which was the first substantial foreclosure-related legislation passed since the housing crisis began, allows any lien holder to ask for a court hearing that will hasten the foreclosure process. But it also requires lenders to have specific paperwork when they first file to foreclose, including the mortgage note or, if the note is lost, sworn testimony about what happened to it. Weston-based foreclosure defense attorney Roy Oppenheim said lenders will catch up, but are grappling with the new documentation rules.

“They treated these 7 trillion dollars’ worth of mortgage notes with less concern or propriety than how I treated my baseball cards as a kid,” Oppenheim said. “They literally had no clue who they sold these notes to and sometimes they sold them twice.”

Martin and St. Lucie counties also saw new foreclosure filings fall last month, dropping 42 percent and 48 percent, respectively, from the previous year.

Florida’s overall foreclosure activity last month, which includes new filings, notices of sale and bank repossessions, put it in second place nationally for states with the highest activity. That’s with a 22 percent decrease from September 2012.

New foreclosures nationwide were at their lowest level since the second quarter of 2006, according to RealtyTrac.

Still, RealtyTrac Vice President Daren Blomquist warned that foreclosure spikes in some communities can be attributed to failed or expiring foreclosure prevention programs that may affect more homeowners as housing supplements wane.

“Even slight economic downturns at the local or regional level can push these homeowners hanging on by a thread over the edge,” Blomquist said.

As of July 31, Florida had 313,005 foreclosures pending in Florida courts. Oppenheim said the slowdown in filings will add to that backlog once lenders get their paperwork to jibe with the new law.

Wellington foreclosure defense attorney Malcolm Harrison agrees.

He said people come to his office who haven’t paid their mortgage in a year, but still haven’t been served a foreclosure notice. They know it’s coming, he said, but not when.

“I think it’s the new law because it’s extremely complicated,” Harrison said. “We definitely are going to need clarification decisions from the appellate courts.”

Whether the bank has possession of the note at the initial filing became a bigger issue in Florida’s foreclosure world last month when the Second District Court of Appeal in Lakeland reversed a favorable bank ruling to give a home back to the borrower.

In the case, Deborah E. Focht vs. Wells Fargo Bank, the lender proved it was the loan owner soon after filing the foreclosure in 2008, but the court said it didn’t have “standing” at the beginning.

The judges weren’t happy about giving the house back, saying Focht “will continue her free use” of the home. They noted that they are seeing an increase in similar cases and have asked the Florida Supreme Court to weigh in on the issue.

“Ms. Focht cannot demonstrate that she has been the victim of any legal harm arising from Wells Fargo’s delayed possession of the note,” wrote Judge Chris Altenbernd. “In fact, it appears that she has lived for years in this duplex during the foreclosure, collecting rent from tenants in the other unit, while making no payments on the note and while forcing the lender to advance $22,213 toward taxes and other escrow expenses.”

Not everyone believes the new foreclosure law is the reason for the dip in filings.

Ken Thomas, a Miami-based bank consultant and economist, said economic improvement, not a document dilemma, is driving the decrease.

“Contrary to popular belief, banks want to work with customers to prevent foreclosures,” Thomas said. “Because the economy has improved, there’s a better chance to work something out.”

Florida’s fast-track foreclosure law allows for a quicker court process in some cases, but requires lenders to have specific documents when they file to foreclose.

By Kimberly Miller