Case Example of Precluding Foreclosure Summary Judgment Based upon Attempts to Pay Mortgage Payments
For details of the case, read: Delandro v. America’s Mortg. Servicing, 674 So. 2d 184 (Fla. Dist. Ct. App. 1996)
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In 1979, Georgina Delandro applied for a mortgage and was approved by First Family Mortgage Corporation of Florida. She got a home loan from First Family to help her buy her home.
Ms. Delandro had been dutifully paying on that mortgage, month after month, from 1979 until September 1993. During that time, at some point, First Family changed its name to America’s Mortgage Servicing, Inc. (“AMS / First Family”).
Nurse Falls Behind on Mortgage Payment, Then Brings Payment to Bank
Sadly, like many Florida homeowners, Mrs. Delandro fell into difficult times. She worked as a nurse; her husband suffered a disability. In September 1993, she fell behind (“into arrears”) on her mortgage.
By November, things were better. She went to AMS / First Family with a cashier’s check to pay on the home loan. The bank refused to take the cashier’s check.
On January 3, 1994, she went back. She took another check to pay on the mortgage. The bank would not take that payment, either.
What is a cashier’s check?
A cashier’s check is defined as a check drawn by a bank upon its own account and accepted in advance by the bank because it is being issued. In other words, the cashier’s check is an engagement by the Bank to honor the check as presented, no questions asked. See, Bank of Bay Biscayne v. Ball, 99 Fla. 745, 128 So. 491 (1930).
Here, if the borrower tried to pay with her own personal check, the mortgage lender might not want to accept it. By bring a cashier’s check from her bank, she was presenting an “engagement” from her bank that it would pay the full sum to the mortgage lender out of its account, not the borrower’s account. By presenting a cashier’s check, the borrower was demonstrating to AMS / First Family that her payment was backed with her bank’s assurance that the money was there.
Cashier’s Checks are a Traditional Method of Payment Used by Banks
Foreclosure Lawsuit Filed By the Bank
The following month, February 1994, AMS / First Family filed a civil lawsuit seeking to foreclose on the home she had lived in for over a decade. The lawsuit was filed with the clerk’s office by America’s Mortgage Servicing, Inc., F/K/A First Family Mortgage Corp. of Florida, and a copy of the complaint was served upon Ms. Delandro.
In its Original Complaint (paragraph 11), AMS/First Family stated it was declaring the full amount payable under the note and mortgage to be due and owing and unpaid, thus exercising its option to accelerate the entire principal sum. This language was intended to make the entire amount remaining on the loan payable all at once.
Formally, in its paragraph 11, the complaint stated that acceleration of the debt occurred on the day that the lawsuit was filed (February 9, 1994) and that “… Plaintiff declares the full amount payable under the note and mortgage to be due.”
Pro Se Answer: Affirmative Defense that She Tendered Payment
Ms. Delandro did not hire an attorney immediately. She responded to the lawsuit with her own filing with the clerk, in what is called a “pro se answer.” There, she explained in writing how she had tried to pay the bank and the bank had refused to take her money.
She also explained the bank charged late fees even though her payments were not late. (AMS / First Family had assessed $1,109.00 in late charges.)
She detailed how the January 1994 payment not only met but exceeded the amount necessary to cover principal and interest for the period of the default. The total amount of her January 1994 payment was more than enough to bring the mortgage current, even with the late charges, which she still disputed as being excessive.
Still, she explained in her answer, the lender refused to take that money.
Legally, this was her assertion of the affirmative defense of tendering payment. She defended against the foreclosure lawsuit by showing she had tendered the amounts to bring the mortgage current, but the lender wrongfully refused to accept payment.
Bank Files Motion for Summary Judgment; Borrower Appeals
After the borrower filed her answer with its affirmative defense, the bank filed a motion for summary judgment.
The bank asked that the judge allow foreclosure due to default on the home loan. The bank did not go into great detail in this filing, and did not provide much in the way of supporting documentation or affidavits. It was a “bare bones” request for the judge to enter a judgment that would allow the foreclosure on the home.
Mrs. Delandro objected to the bank’s request for a summary judgment. Nevertheless, the trial judge granted the motion. So Mrs. Delandro appealed his decision to the reviewing appellate court.
Lender Needs to Show No Disputed Issues of Material Fact
On appeal, the mortgage lender had to demonstrate to the reviewing court that there was no factual controversy or “genuine issue of material fact,” in the matter and that it should have its foreclosure judgment as a matter of law. Ramos v. Wright Superior, Inc., 610 So.2d 46, 48 (Fla. 3d DCA 1992).
Since Mrs. Delandro had asserted her affirmative defense of tendering payment to AMS / First Family, the bank had to demonstrate to the appeals court there was no fact issue regarding payment. In considering the lender’s arguments, the reviewing court would look at all the evidence in the light most favorable to the nonmoving party, Mrs. Delandro. See Moore v. Morris, 475 So.2d 666, 668 (Fla. 1985). She would get the benefit of the doubt as the appeals court considered AMS / First Family’s arguments that no fact issues remained in the case.
The Acceleration of the Loan
The original complaint was filed with a true and correct copy of the actual mortgage note. That note had language stating that AMS / First Family had the legal right (“option”) to accelerate the debt when the mortgage was in default. The mortgage language was clear that acceleration was not automatic.
This meant that AMS / First Family had to take action in order to exercise its legal right to accelerate the debt. Pici v. First Union National Bank, 621 So.2d 732, 733-34 (Fla. 2d DCA),review denied, 629 So.2d 132 (Fla.1993).
What did the lender do? According to the complaint, the acceleration happened on the day the foreclosure lawsuit was filed with the complaint’s paragraph 11 stating “Plaintiff declares the full amount payable under the note and mortgage to be due.”
Tendering of Payment as Foreclosure Defense
As a matter of Florida law, “tender of payment” is a good defense to a foreclosure lawsuit where the mortgage debt has been accelerated.
The key is when the borrower brings that payment to the bank.
The law precludes foreclosure where the borrower “tenders payment of defaulted items, after the default but before notice of the mortgagee’s election to accelerate has been given (by actual notice or by filing suit to foreclose for the full amount of the mortgage indebtedness)….” Campbell v. Werner, 232 So.2d 252, 256 (Fla. 3d DCA 1970).
In other words, if the payment were tendered before the complaint was filed with its Paragraph 11, then there was a valid “tender of payment” defense asserted by the borrower, Mrs. Delandro.
Specifically, in her answer Mrs. Delandro stated on two (2) occasions she had tendered payment to the lender (November 1993 and in January 1994). It was not contested that the mortgage had not yet been accelerated at either time.
What about the late fees?
In her answer, Mrs. Delandro challenged the late charges assesses by AMS / First Family. She argued that there should not have been late charges on the loan because the payments were not late.
Even if the November 1993 payment was short and properly refused, the amount she brought AMS / First Family in January 1994 was more than enough to cover everything: principal and interest for the period of the default and, reading the record in the light most favorable to the borrower, everything else necessary to bring the mortgage current, including the late charges.
She tried to tender those disputed late fees, too, and these were also refused by AMS / First Family.
Lender Failed to Meet Burden in the Motion for Summary Judgment
Since AMS / First Family had not provided any arguments or evidence to refute her defenses and show there were no disputed issues of material fact with respect to payment, it was held that AMS / First Family failed to meet its burden for a summary judgment.
Moreover, it never tried to do so in the trial court; its motion for summary judgment never addressed the tenders of payment by the borrower in November 1993 and January 1994, or the calculation of late charges. In drafting that motion, AMS / First Family provided no language discussing the allegations of payment or any language demonstrating why Mrs. Delandro’s tenders of payment were not sufficient to bring the mortgage current. See Duke v. Reed, 396 So.2d 1218, 1219 (Fla. 3d DCA 1981) (summary judgment improper where question remains if tender was made prior to acceleration).
Intent to Tender Mortgage Payment Blocks Foreclosure
The borrower who tries to pay the mortgage lender before the note has been accelerated has a valid defense that blocks any foreclosure action by that lender. In Florida, there can be no foreclosure where there was:
- intent to make timely payment, and
- it was attempted, or
- steps taken to accomplish it, but
- nevertheless the payment was not made due to a misunderstanding or excusable neglect, coupled with
- some conduct of the mortgagee which in a measure contributed to the failure to pay when due or within the grace period.
Campbell v. Werner, 232 So. 2d 252, 256-57 (Fla. Dist. Ct. App. 1970).
In this case, the January 1994 amount clearly exceeded the amount necessary to cover principal and interest since the date of default. Even if AMS / First Family had returned the January 1994 cashier’s check over a dispute about the amount of late charges, foreclosure should have been refused by the trial judge pursuant to Campbell v. Werner.
Note: the record indicates a total of $1,109.00 in late charges. The reviewing court pointed out that “… under the wording of the mortgage it is difficult to see how a late charge of that magnitude is mathematically possible.”
Accordingly, the judgment granting foreclosure of Mrs. Delandro’s home was reversed, and the case was returned to the trial court so Mrs. Delandro could have “a fair opportunity to have her defenses considered.”
Borrower’s Lawyer Defends against Motion for Summary Foreclosure Judgment
This case is an example of a borrower asserting an affirmative defense against a foreclosure action based upon her attempts to pay everything owed and bring the mortgage current. When the bank went ahead and tried to foreclose on the home, it could not do so.
First, the lender failed to negate her arguments regarding payment attempts. It also failed to show that there were not any material issues of fact as to (1) whether the borrower tendered amounts necessary to bring mortgage current prior to acceleration, and (2) whether lender had assessed late charges not owed or had (3) failed to disclose correct amounts due.
In Florida, summary judgments are often used as vehicles by lenders to foreclose on homes and condos. It is important to realize that not only are the underlying bases for the foreclosure lawsuit often weak or wrong, but the bank’s actions in the procedures and burdens of proof in requesting a summary foreclosure judgment can be in error, as well.
An experienced Florida real estate attorney can help borrowers defend against foreclosure actions and summary judgment motions filed by lenders, and they can be much more economical than you may think. Most Florida real estate lawyers, like Larry Tolchinsky, will offer a free initial consultation to answer your questions.
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