2 Cases of Banks Failing to Honor Mortgage Modifications in Florida

Posted By on July 25, 2017

Homeowners have been successful in enforcing mortgage modifications against foreclosing banks in Florida.

Mortgages are Contracts

Home mortgages, just like any other contract, can be changed (or modified) by the parties to the agreement.  Over the last several years, banks have provided countless homeowners the opportunity to save their homes by offering mortgage modifications that lowered the borrowers monthly payments.  Of course, homeowners trying to modify their mortgages and avoid foreclosure assumed that banks would act in good faith and honor the modifications they offered homeowners. However, a lot of times that doesn’t happen

Fannie Mae Flex Modification and HAMP

For instance, you have likely heard of the Home Affordable Modification Program (HAMP).  This was a federal program providing for mortgage modifications of certain kinds of home loans to avoid foreclosure. Many banks and mortgage holders offered HAMP modifications to struggling homeowners due, in part, to incentives offered by the U.S. Treasury to the banks to modify.  However, the program had many problems with execution and the uncertainty of the program led to many broken promises.

Fortunately, in December 2016, HAMP was replaced by the new Fannie Mae Flex Modification.  To see if you qualify for a Fannie Mae Flex Mortgage Modification, click here.

Are All Mortgage Modifications Legally Binding?

Unfortunately, all mortgage modifications are not legally binding.  Before a homeowner commences negotiations for a modification with their bank or mortgage servicer, they should protect themselves and learn the elements of an enforceable mortgage modifications in Florida.

For instance, a letter from a bank to a homeowner that contains information about a notice of interest rate increase on a modified mortgage, where no written mortgage modification had been previously offered, delivered or signed by the borrower, is likely not an enforceable mortgage modification. Generally speaking, bank mortgage modifications are not letters, they are written formal agreements requiring signatures from both the borrower and bank in order to be enforceable.

 

Florida Supreme Court 2017

Justice may mean taking your case to the appellate court for legal review.  Shown: the 2017 Florida Supreme Court, the highest appellate court in the State of Florida.


 

2 Cases of Lenders Failing to Honor a Mortgage Modification

Florida banks and mortgage lenders’ failure to honor formal mortgage modification agreements have become the basis for more and more defenses to foreclosure lawsuits.

Consider the following two cases:

1.  Nowlin v. Nationstar Mortg., LLC, 193 So. 3d 1043 (Fla. Dist. Ct. App. 2016).

In this mortgage modification case, the mortgage lender filed a foreclosure lawsuit against the borrowers even though they never missed a mortgage payment.

What happened was the borrowers got a home loan from BAC Home Loans Servicing in October 2002, which later transferred their loan to Nationstar.  BAC and the Nowlins entered into a formal mortgage modification of their home loan in July 2009.

The Nowlins weren’t behind on their payments when the mortgage modification was signed by both parties.

They received a letter from BAC informing them that their loan modification had been approved, and all they had to do was sign and return two enclosed documents before a notary and return them to BAC via Federal Express.  The FedEx receipt showed BAC received the documents on August 18, 2009.

Under their modification agreement, they were also required to send cashier’s checks for three consecutive mortgage payments. When the last cashier’s check payment was received by BAC, the mortgage modification would become a binding agreement.  The first payment was due on October 1, 2009.

The Nowlins sent cashiers’ checks, which were cashed by BAC on September 9th, November 1st, and December 1st.

Despite the Nowlin’s on time payments and receipts proving such, BAC sent them a letter in December 2009, notifying them that BAC was accelerating their mortgage loan because their August 2009 mortgage payment had not been received.  When they called BAC, they were told their modification had been cancelled.  They sent in paperwork for a second modification and BAC later claimed that paperwork wasn’t in their file.

In July 2014, BAC transferred the mortgage to Nationstar, who then went forward as plaintiff in the foreclosure proceedings.

The Nowlins lost at trial and appealed their case to the Florida Second District Court of Appeals and they won.  The foreclosure lawsuit was held improper and reversed.

The appellate court held that there was a valid modification agreement between BAC and the Nowlin’s and therefore the foreclosure was wrongful.

In its offer to the Nowlins, BAC specifically outlined what actions would constitute an acceptance of its offer to modify the mortgage contract. The Nowlins were required to (1) sign and return the documents provided by BAC, and (2) make three monthly payments beginning on October 1, 2009. The Nowlin’s provided evidence through FedEx receipts and bank documentation which showed they did both these things.

Under Florida contract law, the Nowlins’ acceptance of BAC’s offer to modify the original home loan was effective upon mailing of the payments and not upon receipt. (See: Morrison v. Thoelke, 155 So.2d 889, 905 (Fla. 2d DCA 1963).)

Basically, Nationstar’s argument was that it had no record of receiving the loan modification documents. The bank tried to rescind the offer of a mortgage modification before the Nowlin’s accepted the deal. Fortunately for the Nowlin’s the court ruled that acceptance occurred at the time of mailing, not at the time the bank received the paperwork and payments.

2.  Kuehlman v. Bank of America, NA, 177 So. 3d 1282 (Fla. Dist. Ct. App. 2015).

In this mortgage modification case, the borrower fell behind on his mortgage payments and entered into a loan modification.  Unfortunately, the borrower fell behind on his payments again, but the bank accepted the payments.  Thereafter, the bank filed foreclosure.

Result:  Bank of America filed a foreclosure lawsuit and won and the Borrower appealed.  The appellate court reversed the lower court’s foreclosure judgment finding that there was a legally binding modification of the mortgage.

Here’s what happened:  The home owner was behind on his mortgage payments and was offered a mortgage modification by the Bank, which had a deadline.

The borrower accepted the offer and returned all of the paperwork to the Bank.  He also included a payment for the new amount required under the agreement. Both were past the deadline stated in the offer.

He then continued making the revised payments under the modification agreement.  He made six more, which were all late.  However, all these late mortgage payments were accepted by the Bank and were cashed by the lender.

Many months later, the Bank got a notice from Fannie Mae (or Freddie Mac) instructing the Bank to reject the modification.

The Bank accepted two more payments from the Borrower after it received this notice.

Then it notified the borrower it was accelerating the mortgage, and gave the Borrower an opportunity to cure his default based on the original mortgage terms.  After that, it filed a foreclosure action.

The Bank argued that the Borrower failed to meet the deadline in the original modification offer, so the borrower failed to timely accept the offer.

According to the appellate court, when the Bank accepted the late paperwork as well as the late modified mortgage payments, there was a valid modification.  In contract terms, the Bank had accepted the Borrower’s counteroffer.

Are You Having a Problem with a Mortgage Modification?

A mortgage modification is a great opportunity for a homeowner to reorganize their finances. If the parties adhere to the terms of the agreement, the new mortgage terms should make living in the home more affordable for the homeowner, assuming, of course, that the bank actually honors the deal.

With that said, if you are offered a mortgage modification by your lender, then it is a good idea to follow the terms of the deal very closely. Document and make copies of any paperwork sent to the bank, and be sure to include a date on all paperwork. That way, you should be able to avoid any issues with the bank because as you can see they try to find all kinds of reasons to not honor the deal.

If you are having a problem with a mortgage modification in Florida, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about your rights.  Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

You May Also Be Interested In:

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What is Normal Wear and Tear Relating to a Tenant Security Deposit?

Posted By on July 11, 2017

Knowing whether or not damage is caused by “normal wear and tear” impacts how much money, if any, the landlord can deduct from the tenant’s security deposit. 

Security Deposits When Renting A Home In Florida

In Florida, most residential landlords will likely ask their tenants for money as security for their tenant’s future obligation to pay rent and maintain the premises. That security money is “on deposit” with the landlord. Meaning, it is not the property of the landlord and therefore the landlord has a legal obligation to keep the money safe.

In fact, the Florida legislature passed a specific law controlling how security deposits are to be safeguarded for residential tenants.

Florida’s Security Deposit Law

Florida Statute 83.49 controls residential security deposits and the duties of a landlord to protect and return that money to the tenant. If the landlord fails to obey this law, then the tenant can sue the landlord in a Florida court of law. If the tenant wins, then the landlord will have to return the security deposit to the tenant, pay the tenant’s court costs, and pay the tenant’s legal fee.

See: Florida Statute 83.49(3) (c).
 

Shoredrive

Shore Drive Apartments: designed and built by noted Florida Architect, William B. Harvard, in 1970.


 

What Is A Security Deposit?

A security deposit is a sum of money the tenant pays to the landlord in advance of taking possession of the property.  This deposit can serve several purposes, but one of the main reasons is to compensate the landlord for excessive wear and tear caused by a tenant.

Under Florida law, the landlord is required to keep this deposit money safeguarded in a separate account.  Unless he or she can prove a valid exception, the landlord is legally bound to return this deposited money to the tenant when the lease is over and the tenant lawfully vacates the premises.

Read: How to Get a Refund of Your Security Deposit from the Landlord When Renting a Home or Apartment

What Is “Normal Wear and Tear” Under Florida Law?

Florida law recognizes that the condition of an apartment and its fixtures (appliances, wall and window coverings, carpets, etc.) will deteriorate over time.  For example, curtains will eventually fade because of sun exposure, and hanging pictures and mirrors will result in leaving holes in the walls. For this reason, a landlord is generally not permitted to keep any amount of a security deposit just because the premises and its contents are in need of repair, replacement or maintenance.

Under the law, “normal wear and tear” is not considered causing damage to property. Meaning, the reduction in the value of property caused by normal wear and tear cannot be deducted from a  tenant’s security deposit.

For instance, in a 2011 Broward County case, the tenant won a lawsuit against the landlord over failure to return the security deposit.  The landlord deducted the cost of carpet cleaning; general cleaning of the home and driveway; and painting of the interior, from the security deposit.

The court ruled that these expenses were “normal wear and tear” and the cost to address these issues should not have been deducted by the landlord from the tenant’s security deposit.  See, Burley v. Mateo, 18 Fla. L. Weekly Supp. 624a (Broward County 2011).

Examples of Normal Wear and Tear

Paint on the walls of an apartment will fade and get dirty over time. This is a naturally occurring condition which isn’t caused by a tenant.  As part of ordinary maintenance, a landlord should freshen up an apartment with a new coat of paint every time a new tenant occupies the premises.

In addition,  carpets fade and tear over time.  Flat, worn or discolored carpet does not mean that the tenant actively damaged the apartment.  Rugs don’t last forever.

Other instances of “normal wear and tear” may include (1) rust in an oven; (2) grease in a stove hood; (3) interior doors not properly closing; (4) toilets leaking and (5) pin holes in the wall where picture frames were hung.

If the lease does not define what is considered to be “normal wear and tear,” or what the tenant is expected to do at “move out,” then Florida common law (the rulings of past court cases) will control how a dispute will be resolved.

As a result, most Florida leases will have language detailing what the landlord expects the tenant to do when vacating the premises.  For example, the tenant may be asked to pay for the carpet to be professionally cleaned.

**Read your lease for how “normal wear and tear” may be defined for your apartment, house, or condo.**

Can a Landlord Keep the Tenant’s Security Deposit Because of Normal Wear and Tear?

There are many instances where a landlord is allowed to keep a tenant’s security deposit, in whole or in part, to pay to repair or replace items damaged by their tenant.  However, the damage must go beyond normal wear and tear.

Florida’s security deposit law exists to not only protect tenants but it also allows landlords to sue the tenant for damages over and above the amount of the security deposit, if need be.

Examples of Damage by a Tenant That Is Not Normal Wear and Tear

Damages by a tenant can be anything that harms the landlord’s property.  If the tenant’s grandchildren knock a hole in the clubhouse wall, or break a window, then the tenant is liable for the repair.  If the tenant fails to repair the damage, then the landlord may be able to do so on its own using the tenant’s security deposit.

If the tenant is a hoarder and the landlord has to go to special lengths to clean the premises, then those costs can be deducted from the security deposit.  The costs of cleaning a filthy apartment and removing debris and trash, including conditions caused by house pets, can be deducted from the security deposit.

Another example of damage by the tenant is replacement of carpets and drapery because of the tenant’s excessive smoking.  If the tenant’s smoking has left a permanent odor of stale cigarettes in the curtains and rugs, this can be considered excessive wear and tear.  Meaning, the costs to clean, and even replace, these items can be deducted from the security deposit.

Notice A Florida Landlord Must Give In Order To Withhold Any Part of A Security Deposit For Damages To The Property

For tenants who have already signed a lease, or those who are fighting for the return of a security deposit after they’ve vacated the apartment, Florida Statute 83.49 provides guidance.

Under this Florida law, there are specific time limits for the landlord to withhold the security deposit from a tenant.   Florida Statute 83.49 requires the landlord:

  • to return the security deposit within 15 days of the lease termination / vacating of the premises.
  • to give the tenant written notice by certified mail to the tenant’s last known mailing address within 30 days of the lease termination / vacating of the premises of his intent to impose a claim on the security deposit. The written notice must explain the landlord’s reason for imposing the claim.

Moreover, the landlord’s written notice has to include the following language (or something substantially similar):

This is a notice of my intention to impose a claim for damages in the amount of   upon your security deposit, due to  . It is sent to you as required by s. 83.49(3), Florida Statutes. You are hereby notified that you must object in writing to this deduction from your security deposit within 15 days from the time you receive this notice or I will be authorized to deduct my claim from your security deposit. Your objection must be sent to   (landlord’s address).”

What Should You Do?

Before signing a lease, a tenant should read their lease carefully, paying specific attention to the section about the use and protection of their security deposit. This provision can and should be negotiated before the lease is signed, including clearly stating whether or not the tenant is responsible to clean the carpet and/or patch the walls at the end of the lease.

If you are having a problem with your landlord returning your security deposit because of normal wear and tear a good piece of advice is to speak with an experienced Florida real estate lawyer to learn about your rights.

The good news is that Florida law provides for the payment of attorney fees in the event the landlord is found to have improperly kept a tenant’s security deposit (which means, in many instances, the tenant will not have to pay any money to the lawyer, unless the lawyer wins the case). Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

Also See: Tenant Defenses to Residential Evictions in Florida

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Partition of Florida Homestead Property

Posted By on June 27, 2017

In Florida, “homestead property” is residential real estate which is occupied by a person or family as their permanent residence.

The legal concept of “homestead” is provided by the Florida constitution.  Its purpose is to stop the family home, or homestead, from being sold to pay off debts incurred by the land owner.  Tullis v. Tullis, 360 So. 2d 375 (Fla. 1978).

As explained by the Florida Supreme Court, the law recognizes three kinds of homestead protections:  (1) homestead tax exemption; (2) homestead protection from sale by creditors; and (3) homestead restrictions on the sale or devise of the property by a co-owner.    Snyder v. Davis, 699 So. 2d 999, 1001-02 (Fla. 1997).

 

Constitutional Protection of Florida Homestead Property

The constitutional protection afforded homestead property is a part of the Florida Constitution under Article X, Section 4

Of particular importance is section 4(a) of this constitutional provision, which states

(a) “There shall be exempt from forced sale under process of any court, and no judgment, decree or execution shall be a lien thereon…”

As a general rule in Florida, a creditor of a homeowner cannot partition or force the sale of property if the property has “homestead” protection (exceptions include mortgage holders, construction liens and liens for ad valorem real estate taxes).

However, there are exceptions. For example, certain co-owners can “partition” and force the sale of the homestead property to a bona fide purchaser.

What is a Partition?

A partition of real estate involves breaking the property into separate ownership interests.  That means, legally dividing the property to terminate the shared ownership and forcing the sale of the real estate.

For more detailed information about Florida partition lawsuits, read:

Partition of Florida Homestead Property

In order avoid violating the Florida Constitution, Chapter 64 of Florida Statutes along with Article X, Section 4 must be followed when it comes to partitioning Florida homestead property.

Real Estate Owned By Husband and Wife

The general rule for a Florida homestead is if both husband and wife are living, then the homestead property can only be sold if they both sign a deed. Furthermore, a creditor of either of them, or both, cannot force the sale of the homestead. That protection from the forced sale of the property is the essence of the homestead protection. This is true even if just one of their names appears on the deed.

Why?  In Florida, when a married couple buys or owns a home or condo which they use as their residence, then under the Florida constitution the homestead protection against the forced sale of the property attaches to the property.  It doesn’t matter if they bought the property together or one person owned the property before they are married. Once they are married, and they reside in the property, the homestead interest attaches to the property preventing the forced sale of the property.

Can one spouse force another spouse to sell the home? Can one spouse sell the homestead without the other spouse’s permission? 

The simple answer is no, the property can only be sold if they both agree and they each sign a deed. However, there is a way for one spouse to force the sale of the family home: the husband and wife can get divorced.  In the event of a divorce, the ownership interest changes to “tenants in common” which means each party has a separate transferrable interest in the property.

Read: How Do You Terminate The Joint Tenancy of Florida Real Estate?

Can A Co-Owner of Real Estate, Who Is Not Married To The Other Co-Owner, Use The Homestead Protection To Prevent The Partition of The Property?

Married couples are not the only ones who can share a joint interest in residential real estate in Florida.  Business partners or heirs of an estate can jointly own real estate.  These non-married parties can co-own real estate in Florida as “tenants in common” or as “joint tenants with right of survivorship.”

Even in these situations, the homestead protection can still be used to protect the property from a forced sale by a creditor even though the co-owners are not married (at least a portion of the property can be protected – that portion used by a co-owner as their primary residence).

(Note: The Florida Constitution does have a requirement for the use of the homestead protection against the forced sale and that is that the protection applies to real estate owned by a human being (a “natural person”) and not a corporation or LLC.)

So, can a co-owner who isn’t married use the homestead protection against the other co-owner to prevent the forced sale or partition of the property?  If the homestead protection applies to one of the co-owners, then how can their co-tenant partition and force the sale of the real estate?   

This issue was addressed in Tullis v. Tullis, 360 So. 2d 375 (Fla. 1978).  There, the Florida Supreme Court held that the Florida “constitutional provisions allow the partition and forced sale of homestead property upon suit by one of the owners of that property.”  There is nothing in the law that prevents a co-owner “from suing for partition and obtaining a forced sale in order to obtain the beneficial enjoyment of her interest in the property.” Tullis, 360 So. 2d at 375.

Also see, Wescott v. Wescott, 487 So. 2d 1099 (Fla. Dist. Ct. App. 1986).

In Tullis, Don and Shirley Tullis were a married couple who owned their home here in Florida.  Don’s young daughter from a prior marriage lived with them.

Over time, they decided the marriage wasn’t working, so they filed for divorce.  Don and his daughter stayed in the home and Shirley moved out.  Their divorce decree didn’t explain how their family home would be handled, ownership-wise.  So, Shirley filed a new lawsuit to partition the property so it could be sold.

Don fought against Shirley’s partition, arguing that the homestead protections kept her from forcing a sale of the home.  Everyone agreed that the property couldn’t be divided. Meaning, it would have to be sold if Don wouldn’t buy out Shirley’s interest.

Shirley won at both the trial level and at the appellate level.  Then, the Florida Supreme Court ruled in her favor as well.

The Florida Supreme Court pointed out that the couple had divorced and now they were two common owners of the real estate.

Therefore, they were now like any other co-tenants; meaning, Shirley could sue for partition and force the sale of the land.

Are You Considering Partitioning Homestead Property in Florida?

If you own a home or condo in Florida and share an ownership interest, then you need to know if any kind of homestead protection applies to your real estate.

  • If it does, then are you prohibited from selling it?
  • Are you protected against creditors forcing a sale?

If you are thinking about partitioning your residential real estate, then a good piece of advice is to speak with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

Want more information on partition actions under Florida law?  Check out our resource page on partition lawsuits, and feel free to download and study our sample partition complaint.

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

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Ocwen Filing Bad Foreclosure Lawsuits: Is Ocwen Servicing Your Mortgage?

Posted By on June 13, 2017

Ocwen is being accused of overcharging borrowers and is being sued (again) by regulators.

Based in West Palm Beach, Ocwen promotes itself as “one of the leading mortgage servicing companies in America.” That’s not an exaggeration: Ocwen services a lot of mortgages here in Florida.

However, lawsuits filed against the company are on the rise, alleging that the company has been engaging in illegal practices. Here’s what you need to know if you have (or had) an Ocwen mortgage.

 

Seal of the Attorney General of Florida

In the April 2017 lawsuit, Florida AG seeks to bar Ocwen from doing business in the state.

 

What is a Mortgage Servicer?

A mortgage servicer collects mortgage payments and performs other related services like collection efforts, paying real estate taxes and insurance premiums.  Additionally, servicers have the power to file a foreclosure lawsuit against the borrower for failing to make timely payments, as well as other breaches of the mortgage.

Some mortgage servicers also provide loan modification programs to help struggling home owners avoid losing their homes to foreclosure.

What Does Ocwen Do For Florida Home Owners?

Ocwen is a major player in Florida residential real estate financing.  This is because after the 2008 Foreclosure Fraud Crisis, Ocwen bought huge amounts of subprime home loans from Florida lenders anxious to avoid loans considered to be at high-risk of default and foreclosure.

Ocwen continued to build its mortgage servicing empire from there.  Today, it not only services existing mortgages, but originates home loans and offers reverse mortgages.

It advertises itself as a leader in helping “families stay in their homes” with loan modification programs. Ocwen provides more home loan modifications under the HAMP program that any other lender.  It’s no wonder it’s dubbed the country’s “sub-prime mortgage giant” by Bloomberg.

New Lawsuits Filed by Federal Government and State of Florida

Ocwen may be a residential financing powerhouse here in Florida, but that doesn’t mean it can get away with violating the law.

1.  Federal Lawsuit against Ocwen for Illegal Foreclosures and More

A few weeks ago, the federal government filed a lawsuit against Ocwen for violation of federal regulations in how the company was servicing mortgages.  According to the Consumer Financial Protection Bureau (CFPB), Ocwen had been:

  • illegally foreclosing on homes;
  • failing to credit mortgage payments to loan accounts;
  • adding their products onto their borrowers’ accounts (even though the borrower didn’t approve or know of the additional fees or costs).

Read the 93 page federal complaint here.  It is filed in the United States District Court for the Southern District of Florida, West Palm Beach Division, as Case No. 9:17-CV-80495 with Ocwen Financial Corporation and its subsidiaries Ocwen Mortgage Servicing, Inc., and Ocwen Loan Servicing, Inc., being named as defendants.  It is based upon federal law.

2.  State Lawsuit against Ocwen for Deceptive Trade and Mortgage Servicing Misconduct

Shortly after the CFPB filed its lawsuit, the State of Florida filed a separate lawsuit, alleging “mortgage servicing misconduct” in violation of state laws.  This new lawsuit was filed by the Florida Office of Financial Regulation (FOFR) and Pam Bondi, Attorney General for the State of Florida based upon alleged violations of state law.

According to the complaint, Ocwen violated the Florida Deceptive and Unfair Trade Practices Act, the Florida Real Estate Settlement Procedures Act, and Chapter 494 of the Florida Statutes.

Read the 49-page state complaint here.

FOFR alleges that Ocwen (1) filed illegal foreclosures, (2) mishandled loan modifications, (3) misapplied mortgage payments, (4) failed to pay insurance premiums from escrow and (5) collected excessive fees.

3.  Ocwen’s Response

Ocwen denied that any wrongdoing occurred on its part.

The company issued a statement stating that these claims are unfounded and that it works to help borrowers, not hurt them. 

For details, check out the Housing Wire coverage of Ocwen’s defense stance.

What about the 2014 Settlement between Ocwen and Regulators?

In 2014, both the CFPB and 49 states (including Florida) sued Ocwen for bad mortgage practices, which ended in a settlement.

In that settlement agreement, Ocwen paid a $127 Million fine as well as providing another $2 Billion in relief to consumers harmed by its actions.

  1. This meant that Floridians with foreclosures between January 1, 2009 and December 31, 2012, would be sent money in settlement by the Settlement Administrator, as well as being able to seek additional monetary relief in their own lawsuits against Ocwen should they choose to do so.
  2. After this 2014 settlement, Ocwen continue to operate as a mortgage servicer in Florida and the rest of the country. The deal didn’t bar Ocwen from continuing to do business.

Now, according to the Florida Attorney General and the CFPB, Ocwen has persisted in unlawful practices.  So, the new lawsuits have been filed for “pervasive and systemic” problems in its operations.

Bondi’s office also wants a federal court order that bars Ocwen from servicing mortgage loans here in Florida.

From Pam Bondi:  “Enough is enough. Florida’s distressed Ocwen borrowers should no longer have to endure costly servicing errors and unfair practices.”

10 Things You Should Know If You Have (Or Had) A Mortgage Serviced By Ocwen

As described in the 2017 complaints, Ocwen allegedly has engaged in the following (many borrowers are unaware that these things are happening):

  1. Ocwen has loaded wrong information and inaccurate data into its internal loan servicing system, called REALServicing. It is servicing home loans based upon erroneous information.
  2. Ocwen has been illegally foreclosing on home owners. In the federal lawsuit, Ocwen is alleged to have wrongfully foreclosed on at least 1000 borrowers.  This has happened in several ways, including foreclosing on borrowers who were complying with their new loss mitigation agreements.
  3. Ocwen has illegally sold homes at foreclosure sales.
  4. Ocwen has not credited payments to mortgages.
  5. Ocwen has not sent borrowers accurate statements on mortgage balance, total payments received, etc.
  6. Ocwen has mismanaged escrow accounts including those that hold payments made toward property taxes.
  7. Ocwen has failed to pay insurance premiums for borrowers that were to be paid out of the escrow accounts.
  8. Ocwen has mismanaged private mortgage insurance (PMI) plans for borrowers and borrowers have overpaid.
  9. Ocwen has enrolled borrowers into its own products without their consent and collected payments from them (deceptive trade).
  10. Ocwen has mismanaged mortgage accounts involving borrowers who have passed away, including failing to recognize legal heirs and beneficiaries interests and foreclosing on the decedent’s home despite the probate process.

What can you do If You Have Had Dealings With Ocwen?

If you make your mortgage payments each month to Ocwen, then should you be concerned?

If you have…

  • a current home loan, then the lawsuits suggest that there may be issues with mortgage balance, your escrow account, or add-ons that you never agreed to buy.
  • been subject to an Ocwen foreclosure, then were you a victim of a wrongful foreclosure? Your file will need to be reviewed for legal errors and omissions under state and federal law.

…then you may want to consider one of the following:

1.  File Complaint with Regulators

Florida homeowners with concerns about Ocwen mortgage servicing are invited to file a complaint with the Florida authorities at MyFloridaLegal.com or by calling (866) 9-NO-SCAM.

Federal complaints can be filed at FLOFR.com or by calling (850) 487-9687, selecting Option 1.

This will enable you to share in any settlement proceeds that may result from the new litigation.

2.  Consider Independent Legal Action

If you feel you’ve been affected by the wrongdoing of Ocwen’s mortgage servicing, you may want to consider filing your own lawsuit and recovering your damages.

What Should You Do?

An experienced Florida Foreclosure Defense Lawyer can help you determine the viability of your claims and how best to proceed.   The complaints filed with the government cannot replace filing your own civil claim.

If you are facing an Ocwen foreclosure in Florida, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about the legal defenses that are available to you. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

Please note:  Not every Ocwen mortgage will have violations and not every Ocwen foreclosure will be wrongful.  But the only way to determine if you have been a victim of the acts alleged in these two new regulatory lawsuits is to review your individual circumstances and the actions that Ocwen has taken regarding your loan.

For more on wrongful foreclosure, check out the following:

Did Your Foreclosure Violate the Law? Are You a Victim of Wrongful Foreclosure?

Can You Collect Attorney Fees From a Bank Related To A Foreclosure?

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 
 
 
 
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New Florida Condo Law: Bad Condo Boards Face New Criminal Charges

Posted By on May 30, 2017

In a bipartisan manner the Florida Legislature passed an important change in how condo boards and condominiums are to conduct themselves here in the Sunshine State.  This new legislation addresses some important issue for South Floridians and includes criminal consequences for Condo Boards that do bad things.

 

South Palm Beach condominium lakeside

 

Florida Senate Bill 1682 Amends Florida Statute 718.111

Once signed by Florida Governor Rick Scott, the changes to the Florida Condominium Act will be effective within a matter of weeks.

Florida SB1682 will be effective on July 1, 2017, as an amendment to Florida Statute 718.111, as follows:

  • prohibiting an officer, director, or manager of a condominium association from soliciting, offering to accept, or accepting a kickback for which consideration has not been provided;
  • prohibiting an association from hiring an attorney who represents the management company of the association;
  • requiring the Division of Florida Condominiums, Timeshares, and Mobile Homes to maintain and provide copies of financial reports;
  • authorizing, rather than requiring, the division to employ full-time attorneys to conduct certain arbitration hearings; and
  • prohibiting specified parties from purchasing a unit at a foreclosure sale resulting from the association’s foreclosure of association lien for unpaid assessments or from taking a deed in lieu of foreclosures, etc.

Read the text of the new law (amended Florida Statute 718.111) here.

1. Condo Board Members Can Be Arrested for Violating a Criminal Statute

Under this new law, Florida condo board members can face criminal action for certain behavior that has plagued condo owners for years. A prosecutor in the local state attorney’s office will have the power to prosecute a condo board member after that member has been arrested and charged for things like:

A. Kickbacks

The Condo law has been amended so that kickbacks are added into the statute.  Not only are kickbacks to a Condo Board Member to be considered subject to a civil penalty under Florida Statute 718.501(1)(d), taking a kickback is also defined as a crime in Florida Statute 617.0834.

B.  Voting Fraud

Under the new Condo Law, if there is a forged ballot or voting certificate in a condo election, then it is a crime punishable under Florida Statute 831.01, the state criminal law against forgery.  If found guilty, the convicted Condo Board Member will be sentenced for committing a felony of the third degree.

C.  Taking Condo Association Funds

Theft or embezzlement of condo funds is defined as a crime punishable under Florida Statute 812.014, the state criminal law against theft.  If the amount in controversy (taken or stolen) is high enough, then the convicted Condo Board Member faces sentencing for a felony of the first degree.

Using the Condo Association’s debit card (either in the name of the Condo Association or billed directly to the Condo Association) for anything other than an association expense can be charged and prosecuted as credit card fraud pursuant to Florida Statute 817.61. Over $100 and this becomes a felony of the third degree.

D.  Destroying or Hiding (Withholding) Condo Association Records

Under the new Condo Board crime law, any Condo Board member that destroys an official document or record of the Condo Association “in furtherance of a crime” commits a crime.  Depending upon the circumstances, that may be a charge of either (1) tampering with evidence as provided in Florida Statute 918.13 or (2) obstruction of justice as provided in Florida Statute 843.02.

Tampering with evidence is a felony of the third degree; obstruction is a misdemeanor of the first degree.

E. Additional Provisions

The new Condo Board law does more.  There are provisions in the new law that:

  • outlaw the Condo Board members from buying condo units other than time shares that have been foreclosed upon by the Condo Association for unpaid assessments;
  • bar the Condo Board from hiring the attorney who represents the Condo Association’s management company; and
  • give renters of condo units the right to inspect and copy the Condo Association’s Bylaws and Rules.

2. Removal of Condo Board Members

What if the Condo Board Member fails to adhere to the new statute?  What can the condo owners do – do they have to go to court and get help from the judge?

Under the new Condo Law, any Condo Board Member that fails to obey the terms of the statute must be removed from the Condo Board.  This can happen even if the Condo Board Member later proves that he or she was not in violation of the statutory language.

A. If Charged With Crime, Condo Board Member Must Be Removed From Board

The law goes further than defining the criminal activity here.  It also states that any Florida condo board member who is charged with a crime defined in the amended statute must be taken off the condo board.

Just getting charged requires removal, not conviction.

B. Mere Failure to Provide Access to Financial Records Means Removal

Now, Florida Condo Boards must keep official condo association records open for association members.

If a member of the condominium association is denied access to condo financial records by a condo board member, then the board member must be removed because they are in violation of the new condo law.

Denying access to the condo records is enough to get the Condo Board Member removed from the Condo Board.

C. Reinstatement of Charged Condo Board Members

If the condo board member is later cleared of wrongdoing and found innocent, then he or she can be reinstated to the condo board.

Read: Common Lawsuits Against Florida Condominium Boards

It Started With Media Expose by el Nuevo Herald/Univision 23

According to reports by the Miami Herald, this new Condo Board Law comes after members of the Florida Legislature were shocked by the expose on Condo Board abuses by reporters Brenda Medina and Enrique Flor.  See, “Good law goes after condo abuses,” an editorial published on May 1, 2017, by the Miami Herald Editorial Board.

You can read part of that expose here, detailing how Miami-Dade condo unit owners discovered their names had been forged on ballots electing the Condo Board Members, among other things.

Condo Owners Given Power in New Legislation

It’s well known that there have been longstanding abuses by those in power on Florida Condominium Association Boards.  Condo owners have been frustrated by their inability to fight back and shocked at how blatant some of these Board Members are in abusing their powers.

Now, Florida Condo Board members can be held to account for their actions.  Renters as well as owners have more control over their lives now.

What Should You Do?

If you or a loved one live in a Florida condominium and have an issue or controversy with the Condo Association or the Condo Board, then having an experienced Florida Condo Lawyer to help you investigate and advocate on your behalf can be invaluable.

A good piece of advice is to talk with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

For more on Florida Condominium issues, see:

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.
 
 
 
 
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Florida Supreme Court Gives Final Word on Bartram and Foreclosure Refiling

Posted By on May 16, 2017

Last fall, we discussed the Florida Supreme Court’s decision in the Bartam case relating to foreclosure lawsuit deadlines Our article explains in detail the Supreme court’s opinion and it’s practical effect on foreclosures in Florida. Specifically, the case addressed the issue of the lawfulness of a mortgage holder refiling a foreclosure lawsuit, as well as other related issues (including the application of Florida’s Statute of Limitations).

However, the decision was not final. That’s because the borrowers asked the Florida Supreme Court to reconsider their ruling by filing a “motion for rehearing” of the matter.
 
Seal of the Supreme Court of Florida

 

What Is A Motion For Rehearing?

In a motion for rehearing, a moving party (in this case, the Plaintiff) is required to address with particularity the points of law or fact that, in its opinion, the court has overlooked or misapprehended in its decision. See Florida Rules of Appellate Procedure – Fla. R. App. P. 9.330.

Until a court rules on a rehearing motion, a case is not final. However, once a decision is final, it becomes the law of the land and is legally binding on all those owning real estate in Florida.

Read: Court Procedures That Can Delay Foreclosure

What Happened With The Motion for Rehearing in Bartram?

On March 16, 2017, the Florida Supreme Court denied the Motion for Rehearing filed in the Bartram case. Read it here.

However, the Florida Supreme Court did issue a “corrected” opinion in the case. The correction only involved adding names of some lawyers who were representing parties in the case. (See the Notice of Correction here..)

This means that the ruling made by the State’s Highest Court back in November still stands and it is now settled law in Florida that a bank can refile a foreclosure lawsuit even when a prior case has been dismissed.

Do You Have A Question About A Foreclosure Lawsuit?

If you are facing a foreclosure in Florida, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about the legal defenses that are available to you. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

The Bartram opinion does not mean that the bank automatically wins its foreclosure suit.

For more on foreclosure defenses and related issues, see our prior discussions:

 

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 
 
 
 
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What Does The 2017 FHFA Foreclosure Prevention Report Mean For Florida Homeowners?

Posted By on May 2, 2017

It is important for Florida homeowners to be aware of their rights when it comes to their residential real estate. After all, it is likely the largest investment most Americans will make in their lifetime. It’s a key motivation for our articles on this blog. This is true whether the issue relates to:

Each piece of Florida real estate is unique and so are the circumstances of most real estate matters. Having a general understanding of Florida’s real estate laws are essential in today’s complex world.

However, knowing the law is not enough to protect that investment. Homeowners also need to be aware of the current economic conditions and how that impacts some key players, including mortgage lenders.

Be Aware of Financial Conditions

Knowing the current financial and economic conditions can be critical to the successful resolution of any residential real estate issue with a lender. This is true both before and after a potential lawsuit is filed.

Experienced Florida real estate lawyers recognize this fact and try to use this information to benefit their clients, especially when it comes to dealing with a foreclosure and loss mitigation.

So, where can you find reliable foreclosure information?

 
US-FederalHousingFinanceAgency-Seal

 

Federal Housing Finance Agency (FHFA) Data

One key source for information on residential real estate financing in Florida are research reports published by the federal government. They are free and available online to the public.

One example is the February 2017 Refinance report.  Another is the Foreclosure Prevention Report.

Foreclosure Prevention Report

The Foreclosure Prevention Report (FPR) is published by the Federal Housing Finance Agency (FHFA). It provides vital data regarding the residential mortgage industry as well as the condition of the financial mortgage market. It gives information that is specific to the State of Florida as well as our southern region and for the entire country.

Specifics are contained in FHFA reports that can help sway a mortgage lender to make a deal with a borrower, or sway a seller to drop their price.  For instance:

1. Mortgage Rates

We know from the latest FPR that the average interest rate on a 30-year fixed rate mortgage rose from January to February 2017 (from 4.15% to 4.17%).

Based on these facts, we know that residential mortgage interest rates may continue to rise during in 2017. This may persuade a seller to be more flexible with the sale price of their home.

2. HARP Refinancing of Underwater Homes with Current Mortgages

We’ve discussed HARP refinancing of residential home loans before.  HARP stands for the “Home Affordable Refinance Program.”

It is a federal program for home owners who are underwater in the home mortgages but have yet to fall behind on their monthly mortgage payments.  HARP has been extended by Congress through September 30, 2017.

The FPR reveals that Florida lead the country in the number of HARP refinances – and that over 60% of all HARP home loans were in just ten states. These states include:

  • Florida,
  • Illinois,
  • Michigan,
  • Ohio,
  • Georgia,
  • New Jersey,
  • Puerto Rico,
  • Pennsylvania,
  • New York, and
  • California.

 3. Underwater Mortgage Refinancing

HARP accounted for more than 6% of all Florida residential mortgage refinancing. Many of these refinances involved underwater mortgages. In fact, underwater mortgages were the basis for over a third of the HARP refinance deals done in Florida.

4. Loan to Value Ratio

It is possible to get a residential mortgage with a loan to value ratio that exceeds 100%. According to FPR, we know that 6% of HARP refinances had a loan to value ratio over 125%.

Furthermore, almost twenty percent of HARP loans were made to residential borrowers with a loan to value ratio over 105%.

 5. Mortgage Loan Modifications

During the month of January 2017, the federal government through Fannie Mae and Freddie Mac helped to thwart 14,558 foreclosures nationally.  Over half of these resolutions were mortgage loan modifications.

a. Principal Forbearance in a Mortgage Loan Modification

One way to modify a home loan or mortgage is through principal forbearance. From the FPR we know that this was negotiated in only 19% of the loan modifications done in January 2017.

This is fewer than have been done in the past, which means that banks may be less likely to agree to principal forbearance in future mortgage modifications.

 b. Extending Term of the Mortgage in Mortgage Loan Modification

Another way to modify a residential mortgage is to extend the life of the loan, or its terms.  Extended term loan modifications accounted for 44% of mortgage loan modifications tallied in the FPR.

So, it’s more likely to negotiate and resolve a mortgage issue with a lender that extends the term of the loan than to get a deal on principal forbearance. According to FPR, almost half of loan modifications were resolved by extending the term of the loan.

6. Other Home Retention Actions

Besides a mortgage modification, there are other ways to avoid losing your home. Lenders may be able to agree to programs like:

a. Extended Repayment Plan – An agreement between the lender and borrower, where the borrower has an extended time period to bring their mortgage current by (i) paying the usual mortgage payment, plus (ii) an additional agreed-upon amount to pay off the delinquency.

b. Forbearance Plan – An agreement between the lender and the borrower to reduce or suspend monthly payments for a specified time period. Afterwards, the monthly mortgage payment schedule resumes.  The borrower also agrees to pay additional money to cover the delinquency and get the account current.

7. Short Sales and Deeds-in-Lieu

Both short sales and deeds-in-lieu mean that the borrower loses his or her home.  However, these may be more beneficial in the long run for the borrower than an official foreclosure action because it has less of a long-term impact on their credit history (the bank may also waive any deficiency against the borrower).

According to the FPR, there were 1,615 short sales and deeds-in-lieu completed in January 2017.  That is 5% less than in December 2016.  This may signal a trend for banks to be less willing to agree upon a short sale and deed-in-lieu as an alternative to filing a foreclosure lawsuit here in Florida.

8. Charge-offs-in-lieu of Foreclosure

Here, the lender has a reason to forego a foreclosure action because owning the property is not in the lender’s best interests.

For instance, if it is shown that there are environment issues on the land, or the property has lost most of its value, then the bank may be willing to charge off the mortgage.  The unpaid mortgage balance becomes a lien on the real estate, to be dealt with in the future when the property changes ownership.

This may not be common, but it is effective under the right circumstance.

9. Foreclosures are Rising in 2017

According to the FPR, foreclosures are on the rise. From December 2016 to January 2017, foreclosure sales were up 16% — and foreclosure actions were up 10%.   As a result, banks are now concerned about increasing defaults.

10. Reasons for Falling Behind in Mortgage Payments

According to the FPR, lenders tend to hear the same explanations again and again regarding why the mortgage is not current.

The FPR lists these as the “Top Five Reasons for Delinquency” (Report, page 13):

  • Curtailment of Income;
  • Excessive obligations ;
  • Unemployment;
  • Illness of principal mortgagor or family; and
  • Marital Difficulties.

Knowing that the bank is aware of these reasons can be helpful in finding a foreclosure alternative for your situation. One tip is to make sure the lender understands how your case is unique and deserves individual consideration (i.e. write a letter and provide proof of your hardship).

What Should You Do?

If you are facing a defaulting mortgage or a foreclosure lawsuit here in Florida, having an experienced Florida real estate lawyer to help you negotiate with your lender can make all the difference in how fast and how effectively your real estate matter can be resolved for and your family.

If you are having an issue with your home, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

_______________

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 
 
 
 

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Payment Defense to Foreclosure

Posted By on April 18, 2017

In Florida, when a lender files a foreclosure lawsuit, the lender must prove that a homeowner has breached his or her obligations under the note and/or mortgage. In turn, a homeowner has the right to raise defenses that defeat or otherwise mitigate the claims made by the lender.

One such foreclosure defense is payment.

Gfp-checkbooks

The Foreclosure Defense of Payment

Under Florida law, if you have satisfied your monthly obligation to your lender of making your monthly payment, then it is highly unlikely that you will lose a foreclosure lawsuit based upon non-payment.

Even though this outcome sounds obvious, it is not safe to assume that a bank won’t file a non-payment foreclose lawsuit where the homeowner has made all of his or her payments, because they do. Here’s an example of such a scenario.

The Case of the Bank Alleging Lack of Payment Even Though Mortgage Payments Were Made

A good example of a foreclosure lawsuit based upon non-payment is the case of Gulliver v. Texas Commerce Bank, 787 So. 2d 256 (Fla. Dist. Ct. App. 2001). In that case, the bank sued for foreclosure based on a mortgage it held after it was assigned from the original lender.

At the time that the foreclosing bank took over the mortgage pursuant to the assignment, it was notified that the mortgage was one month behind in payments.

The foreclosing bank sent a formal notice to the borrower, introducing itself as the new mortgage holder of the home loan. It also notified the borrower that the mortgage payment was late, and the note was considered to be in default.

The borrowers made the mortgage payment. They also paid future mortgage payments to the new mortgage holder.

Unfortunately, the new bank didn’t tell the homeowners that they weren’t applying their payments to their mortgage balance. The new bank was holding these payments in a “suspense” account and not applying them to reduce their debt.

Several months went by and the new bank filed a foreclosure lawsuit. In the complaint, the bank swore to the court that no payments had been made on the mortgage for the past 7 months.

The borrowers hired a lawyer and filed an answer to the complaint that included the affirmative defense of payment. They filed an affidavit (which is sworn testimony) with supporting documents showing payments had been made. This evidence was shown through cashed checks. Despite this evidence, the court ruled in the bank’s favor.

Upon review, the appellate court held that the homeowners presented a valid defense. The court stated that making all of the monthly payments is a meritorious defense which should not be overlooked.

It didn’t matter that the lender put the payments in a “suspense account.” The bank didn’t win at summary judgment because there were facts in dispute that needed to be resolved.

Proving Payment

When asserting the foreclosure defense of payment, the borrower has to show that payment was made. This can be accomplished through documentation.

However, not all payments are the same. In fact, some payments aren’t really even payments. This scenario is described below.

The Case of the Bouncing Checks

In the case of Scarfo v. Peever, 405 So. 2d 1064 (Fla. Dist. Ct. App. 1981), the bank sued to foreclose on the homeowner’s property. The borrowers asserted the foreclosure defense of payment. Moreover, the borrowers not only asserted payment, they also stated that they stood “ready, willing, and able” to pay off the mortgage in full and were ready to do so before the bank filed the foreclosure lawsuit.

The mortgage in this case had a due date of the ninth (9th) of every month, with a 30 day grace period. The borrowers never paid on or before the due date. They always paid before the end of the grace period. Sometimes, they made partial payments during the course of the month.

One month, the borrowers sent out their mortgage payment on the last day before the expiration of the grace period. The lender, Mr. Scarfo, did not immediately deposit it and present it for payment. According to the facts of the case, he was sick with the flu.

When he presented the check for payment, it bounced not once, but twice.

Mr. Scarfo notified the borrowers that the check had bounced and that he was accelerating the note, thus filing suit to foreclose on the property. The borrowers brought him cash to cover the bounced check as well as the next month’s payment. They did this the day after the foreclosure lawsuit was filed. However, the lender still moved forward to foreclose.

The court ruled that when the borrower made his monthly payment by check, it was his responsibility to make sure there were sufficient funds in the account to cover its payment when the lender presented it.

The bounced check was not the lender’s problem. Moreover, it was insufficient to prove the foreclosure defense of payment.

The lender had the legal right to accelerate the mortgage because of the default. Trying to catch up on mortgage payments after a foreclosure lawsuit is filed is not enough to nullify a foreclosure action.

Does It Matter If The Borrower Has The Ability to Pay off the Mortgage Debt in Full?

When arguing the foreclosure defense of payment, how much does the borrower have to prove? If the borrower has the ability to pay off the mortgage, then what happens?

The Case of the Borrower “Ready, Willing, and Able” to Pay Off the Balance

In the case of Redding v. Powell, 452 So. 2d 132 (Fla. Dist. Ct. App. 1984), a parcel of land had been purchased with a mortgage. Everything went smoothly until the final payment was due. The lender filed a foreclosure action based upon the failure to pay the final payment on the note.

The borrowers denied that they had defaulted on the note, and they denied that the lenders were due any further sums.

They also asserted a foreclosure payment defense: they had been, and remained, “ … ready, willing and able to pay off the mortgage since they first learned that a balance was still owed.” The lenders refused to take their money – even before they took any steps to collect on the mortgage or to file for foreclosure.

Moreover, the lender’s lawyer had in his possession the borrower’s check which covered not only the principal balance and interest due on the mortgage, but a clearing fee as well. The lawyer did not have his client’s permission to cash it. There were funds to cover the check if presented.

The court ruled, when a borrower fails to make a final payment, the lender has no legal duty to demand payment before foreclosing on the property. It was the lender’s option to file the foreclosure lawsuit.

However, the borrower’s payment defense was legally valid. Here, the borrowers had asserted a defense of accord and satisfaction of the debt. Their checks and accompanying affidavits demonstrated their payment defense.

What about Prepayments?

There are instances when borrowers will make payments in advance on their mortgage, or “prepay” the note. Often, home owners will add $100 – $200 to their monthly mortgage payment. This is done to pay off the principal faster, and is considered a financially savvy thing to do by many financial advisers.

What happens when there is a foreclosure? Can these advance payments help in a foreclosure payment defense?

The Case of the Accepted Prepayments

In the case of Gulf Life Insurance Company v. Pringle, 216 So. 2d 468 (Fla. Dist. Ct. App. 1968), the borrowers successfully had the lender’s foreclosure case dismissed based upon their foreclosure defense of pre-payment.

Here, the lender filed a foreclosure lawsuit because the borrowers were not making their periodic mortgage payments by the due date. However, the borrowers were paying the lender and had even made payments in advance to the lender that exceeded the amount of the stated mortgage payment.

The mortgage in this case allowed for prepayments and there was no pre-payment penalty. Specifically, the note provided the option to make, without penalty, payments of $100.00 or multiples thereof, not to exceed 15% of the original sum of the note during the life of the mortgage.

When the foreclosure suit was filed, the total amount in periodic prepayments exceeded the mortgage payments due and owing at the time of the foreclosure lawsuit being filed.

The borrower proved that the mortgage payments were actually ahead of schedule and the lender had no right to accelerate the note.

What Should You Do?

When you are sued for foreclosure, all is not lost. Under Florida law, you may have a variety of defenses to assert against the bank. One such defense is the affirmative defense of payment.

The burden of proof here is upon the borrower to assert this defense and prove it through facts and evidence. Lenders often try to end these foreclosure lawsuits quickly with a “motion for summary judgment” stating that there are no disputed facts that have to be resolved by a trier of fact (judge or jury).

If you are facing foreclosure in Florida, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about your rights, including those related to the affirmative defense of payment and motions for summary judgment. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

_______________

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

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Court Procedures That Can Delay Foreclosure

Posted By on April 4, 2017

In Florida, those fighting a residential foreclosure should be aware of the procedures often used by lawyers and judges that delay a foreclosure lawsuit from proceeding.

Two of these procedures are called “stays” and “continuances.” Both are governed by the Florida Rules of Civil Procedure as well as local rules, state statutes, and court precedent.

Stay versus Continuance

Stays and continuances are not the same. A stay is an order by a judge that places a foreclosure lawsuit on hold, whether it be a temporary hold or a permanent one.

When a judge orders a stay, there is no hearing or trial date until the stay is lifted by the court. Many people facing foreclosure may be familiar with a “bankruptcy stay,” which is an order preventing a foreclosure sale from occurring.

On the other hand, a continuance is an order by a judge that delays a hearing date or the date of a particular foreclosure trial.

A continuance can happen before, during, or even after the hearing or the trial has started.

 

Courtroom clock, David W. Dyer Federal Building and U.S. Courthouse, Miami, Florida LCCN2010719005

Image: Courtroom clock, David W. Dyer Federal Building and U.S. Courthouse, Miami, Florida; from photographs in the Carol M. Highsmith Archive, Library of Congress.

Motion To Continue The Foreclosure Lawsuit Before Trial

A motion for continuance can be requested by either party. For example, the lender may want to continue the lawsuit for various reasons (e.g., witnesses are unavailable, documents are lost or misplaced, etc.). In other cases, the home owner fighting the foreclosure may need more time for things like gathering more evidence in discovery.

Example of Bank Moving for Continuance before Trial Date:  the Reive case

An example of how a motion for continuance works in a Florida foreclosure case is provided in the recent decision, Reive v. Deutsche Bank Nat. Trust Co., 190 So. 3d 93 (Fla. Dist. Ct. App. 2015).

In that case, the bank filed a motion to continue its foreclosure lawsuit. It was not a new lawsuit; the bank had sued the borrower for foreclosure three (3) years earlier.

Every motion for continuance must provide valid basis for requesting the trial be postposed

Every motion filed before a judge has to have a valid legal reason for its requested action. In the above case, the bank asked the judge to order the case continued because the underlying loan was being transferred by the lender to a new mortgage servicer. And, of course, the borrower did not contest the motion to delay the lawsuit. 

Nevertheless, the judge denied the unopposed motion to continue the three-year-old lawsuit.  The bank had to proceed with the trial notwithstanding the fact that the loan was being transferred to a new servicer.

The trial date was less than two weeks away (10 days from the date the judge denied the continuance).  

With only 4 days before the time to appear in court to pick a jury, the borrower (defendant) was notified of new witnesses and new documents that the bank was planning on using at the trial.

The usual minimum time limit for delivery of this information is 30 days. The reason for this is so the lawyer who receives the new information has time to analyze it and prepare his response or reply to it (for example, the lawyer may object to the use of the documents on the basis that he or she has not had an opportunity to question the proponent of the information or authenticate it and/or challenge its accuracy).

In most, if not all, Florida litigation, parties are given formal “pretrial discovery deadlines” by court order, which are set by the judge.  These deadlines apply to things such as providing witness lists and documents.

So, in this case, the borrower (defendant) objected.  He filed a motion with the judge, requesting that the new information not be allowed at trial because it was past the deadline.  The judge ruled against the borrower. As a result, the borrower appealed his case to the reviewing court.

Motion for Continuance and Trial by Ambush

The borrower won his appeal.  According to the appellate court, the borrower was correct for objecting to the introduction of the new evidence.  This scenario of last minute evidence after a denial of a continuance motion was a “surprise in fact” and in violation of the rulings of the Florida Supreme Court (violating Binger v. King Pest Control, 401 So.2d 1310, 1313-14 (Fla.1981).  Furthermore, it was a “trial by ambush” and a violation of the borrower’s constitutional due process rights.

The case was reversed and sent back for a new trial.

Motion For Continuance During Foreclosure Trial

In a Florida foreclosure lawsuit, either side can file a motion to continue the case even if the trial has already begun.

Example of Bank Moving for Continuance after Trial Starts:  the Serban case

An example of this type of continuance was made by the bank in the case of HSBC Bank USA, NA v. Serban, 148 So. 3d 1287 (Fla. Dist. Ct. App. 2014).

In March 2008, HSBC Bank (Bank) filed a foreclosure lawsuit against its borrower, alleging that he had failed to pay his mortgage payments.

The foreclosure lawsuit sat on the court’s docket for five years without much, if any, action by the bank.

Courts Can Set Foreclosure Cases for Trial

In August 2013, the circuit court set the case for trial on October 17, 2013.  This is a common practice by the courts to get old cases moved along and off the docket.

Courts have the power to set cases for trial without any party filing a motion asking that the case be given a trial date.

The court ordered the case be tried before a judge; no jury was required.  (This is known as a “bench trial.”)

Here, the case was set for trial in 65 days.  Florida Rule of Civil Procedure rule 1.440(c) requires 30 days’ notice, so the order gave the parties twice the minimum time required for its trial date notice.

Included in its notice-order was language requiring (1) the bank (Plaintiff) to file “all necessary documents”  and be “present and prepared” on the trial date; and warning that (2) if either party was not ready for the Non-Jury Trial, they might be sanctioned which could include dismissal of the entire lawsuit.

The bank didn’t object to this order.  The borrower was allowed to amend his answer and formally assert more defenses before trial.

When the foreclosure trial date arrived, lawyers for each side appeared before the judge for the bench trial.  At that time, the bank’s lawyer announced he was ready for trial, but that he was requesting a continuance because of witness unavailability.

From the case, the bank’s lawyer is quoted from the record as telling the judge:

“….  Wells Fargo is the servicer, Your Honor. All of the Wells Fargo witnesses are assigned out for other trials. I have been begging and trying to get a witness for the case, and the client has been trying to find somebody. But all of their witnesses are assigned out, and they couldn’t have somebody here today. Your Honor.”

The bank’s lawyer admitted to the judge that he had known for at least a week before the trial setting that there was no witness available to represent the bank. 

Good Cause for Continuance at Trial

So, the borrower’s lawyer objected.  He objected to the case being continued because (1) this was not good cause for a continuance; and (2) the borrower had already paid for the lawyer’s time to prepare and appear on this trial date.  It wasn’t fair to ask the borrower to pay for this again.

The trial court judge agreed with the borrower.  The motion for continuance was denied.  The foreclosure case was dismissed as requested by the borrower (though the bank could refile under Florida Rule of Civil Procedure 1.420(b)).

The reviewing court agreed with the decision, noting that the bank had filed the foreclosure lawsuit over five (5) years before the scheduled bench trial, which was more than enough time to get a witness to represent the bank.

What Should You Do?

Having a foreclosure lawsuit filed against you isn’t the end of your fight against the lender who is trying to take your home.  An experienced Florida foreclosure defense attorney can help you both before and after the lawsuit is filed.  Sometimes, that may even mean taking the case to the appeals (reviewing) court before justice is served.

If you are facing foreclosure, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn about your rights, including those related to stays and continuances. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

For more, check out our past discussions on residential foreclosures in Florida, including:

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Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

 

 

 
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Can You Collect Attorney Fees From a Bank Related To A Foreclosure?

Posted By on March 21, 2017

Residential foreclosures are still a problem for many home owners in Florida, particularly here in Broward County, Miami-Dade County, and Palm Beach County. To make matters worse, some banks are still committing wrongful acts during the foreclosure process which can result in the banks having to reimburse a homeowner their costs, including attorney’s fees, to defend themselves.

 

Florida Foreclosure Notice

 

When May A Bank Be Required To Pay the Borrower’s Legal Fees and Expenses in A Foreclosure Suit?

Whether or not the bank will be required to reimburse the borrower for any legal fees and expenses in the foreclosure action will depend upon the circumstances of their case. Here are 2 fact patterns where a bank can be required to pay a homeowner’s costs for their foreclosure defense.

1. Bank Voluntarily Dismisses the Foreclosure Lawsuit

In any civil case, if the party that brought the lawsuit decides to stop the proceedings, then they can do so by filing a “notice to dismiss.”

In Florida, if the bank voluntarily dismisses the foreclosure action, then the borrower may be able to recover the expenses to defend him or herself.

Why? The answer is explained in the case of Bis V. US Bank Nat. Ass’n, 172 So. 3d 971 (Fla. Dist. Ct. App. 2015).

 Bis v. U.S. Bank: Voluntary Dismissal of the Foreclosure, Fees and  Costs

In 2015, homeowners Steven and Eugenia Bis took their foreclosure case to the Florida Court of Appeals to appeal the trial judge’s denial of their request for the bank to pay their attorneys’ fees and court costs.

In part, their appeal was successful.  The court ruled that the couple could get the bank to cover the legal expenses they incurred in defending against the foreclosure.  However, the bank would not be forced to reimburse them for their attorneys’ fees.

Here’s what happened: Several years ago, the bank, U.S. Bank National Association (“the Bank”), filed a foreclosure lawsuit against the couple after they were unable to resolve their differences during settlement negotiations.  They hired a lawyer and fought the Bank over the foreclosure.

The case was progressing like most foreclosure lawsuits, including the discovery process.  Then, on the day of the foreclosure trial, the Bank arrived with a notice of voluntary dismissal of the foreclosure lawsuit.  The Bis’ were glad the case was dismissed, but they wanted to get their costs covered by the bank.

So, the Bis’ filed a request with the Florida judge that the Bank be forced to pay both their legal fees and costs.

  Florida Rule of Civil Procedure 1.420(d)

The appeals court found that the Bank had followed Florida Rule of Civil Procedure 1.420 which provides that costs are to be assessed in the action that is the subject of the voluntary dismissal. See, Wilson v. Rose Printing Co., 624 So.2d 257, 258 (Fla.1993).

Unfortunately, this rule does not provide for attorneys’ fees.  So, the borrowers could get their costs reimbursed by the Bank but not their legal fees.

2. Sanctions against the Mortgagor Bank

If the lender wrongfully files a foreclosure lawsuit against the borrower, then the mortgagee (bank or lender) may be forced to reimburse the borrower for their legal fees and court costs by way of the court assessing sanctions against the bank.

This scenario is explained in the case of Snow v. Rosse, 455 So.2d 615, 617 (Fla.Dist.Ct.App.1984).

 The Case of Snow v. Rosse:  Sanctions in a Foreclosure Lawsuit

In this case, the borrowers claimed they made their mortgage payments as was required under their promissory note, but the mortgagees filed for foreclosure anyway.  The borrowers provided proof that they had sent mortgage checks, but there was fraudulent activity on the part of the mortgagees. What happened was that the mortgagees didn’t cash the borrowers’ checks.

The trial court rules that under Florida Statute 57.105, the borrowers could be awarded their attorneys’ fees after they were victorious in defeating the foreclosure lawsuit filed against them. In this case, the award of attorneys’ fees and court costs was considered a sanction against a party who has undertaken wrongful actions; in this case, holding onto mortgage checks and then trying to foreclose was considered a wrongful act.

What Should You Do?

In Florida, there are instances where a homeowner can have their foreclosure defense costs, including legal fees, covered by the bank. Those situations are case specific. One such case is where the bank fails to properly deposit your mortgage payment checks, another is where the bank has voluntarily dismissed its lawsuit.

If you believe you have grounds to recover your foreclosure costs from a bank or other foreclosing party, a good piece of advice is to talk with an experienced Florida real estate lawyer to learn whether or not your facts qualify to have the bank reimburse your costs for defending yourself. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.

You May Also Be Interested In:

_______________

Picture of Larry Tolchinsky

Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.
 
 
 
 
If you found this information helpful, please share this article and bookmark it for your future reference.

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