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How to Calculate the Statute of Limitations in a Mortgage Foreclosure

HourglassLawyers are often accused of complicating simple topics. One such question that we get asked about often by both lenders and debtors is when does the statute of limitations run on a mortgage foreclosure in Florida.  This simple question has actually generated national headlines.  So we will devote this post on how to calculate the statute of limitations in a mortgage foreclosure.

A statute of limitations is best described as a statute prescribing a period of limitation for the bringing of certain kinds of legal action. For example, in Florida, if you were involved in a car accident, you have four years from the date of that accident to file a lawsuit. If you wait four years and a day, then your claim is barred.

In Florida, actions based on a contract have a five year statute of limitations. So presumably, if one fails to pay their mortgage and the lender waits five years and a day, then the lender’s claim is barred by Florida’s five year statute of limitations.

But what happens when a lender, or the court, dismisses an otherwise timely lawsuit for mortgage foreclosure, and the lender then re-files that lawsuit five years and a day after the initial default?

To answer that simple question turns on many different factors. This issue, however, is actually going to be decided, and resolved, by the Florida Supreme Court.

But today there exists a conflict in the different courts of appeal, in Florida, and that existing conflict is what the Florida Supreme Court is going to resolve.

For instance, some appellate courts in Florida adhere to the “continuing default” theory. The Fourth and Fifth District Court of Appeal have each concluded that after a foreclosure was dismissed that the lender could re-file based on the new default that occurred after the dismissal of the suit. That was the case even if the original default, the one that served as the basis for the original suit, had occurred more than five years go.

Under that “continuing default” theory, the dismissal negates the acceleration of the loan such that mortgage payments would continue to be due and owing each month after the lawsuit’s dismissal. Therefore, this permits the lender to reaccelerate the loan following a new default.

As the Fourth DCA noted in Evergrene Partners v. Citibank, when “the claims of acceleration and subsequent acts of default have never been adjudicated on their merits in this case, … any acts of default still within the statute of limitations may be raised in a subsequent suit.”

However, the Third District Court of Appeal, the appellate court governing Miami, in Deutsche Bank v. Beauvais, has expressly disagreed with the Fourth and Fifth District Court of Appeal and has rejected the “continuing default” theory.

In Beauvais, the Third DCA noted that the dismissal “did not by itself negate, invalidate or otherwise decelerate the lender’s acceleration of the debt in the initial action.” Since the lender took no affirmative action to reinstate the loan following the dismissal, the second foreclosure action filed more than five years after the original default was deemed untimely and barred by the statute of limitations.

But as it stands today, the best course of action for lenders is to ensure that their actions are filed within five years of the original default even if the case has already been dismissed one time. For debtors, if more than five years have passed, you will need to check to see if the lender ever attempted to “deaccelerate” and then “reaccelerate” the loan after the dismissal. If they did, then the five year statute of limitations may have been extended. With that said, do not hesitate to contact us should you wish to discuss your legal rights as they relate to the calculation of the statute of limitations for a mortgage foreclosure.

New Rules for Closing Residential Transactions

re closingNew Rules for Closing Residential Transactions

If a buyer of a residential listing applies for a mortgage loan on or after August 1, 2015, new federal regulations will apply to the loan transaction. Generally, these new regulations will apply to all transactions involving a new residential mortgage loan. Cash and commercial transactions, even if a residence is involved, are not affected.


New Forms Replace GFE and HUD-1 Settlement Statement

After August 1, 2015 buyers applying for a mortgage loan will receive a Loan Estimate from the lender instead of the current Good Faith Estimate (GFE). Buyers will generally receive the Loan Estimate three days after applying for their loan.

The other new form, the Closing Disclosure, will include all of the information currently found on the HUD-1 settlement statement (HUD-1); it will also include an additional three pages of financial disclosures currently found on other forms. The traditional HUD-1 information will be found on pages two and three of the new five-page Closing Disclosure. However, the Closing Disclosure does not use the same familiar categories found on the HUD-1 and some costs are in a different area. For example, your real estate commission and any related charges for your services will be located in Section H labeled “Other” at the bottom of page two of the new form.

Lender Will Prepare Closing Disclosure

While the new rule allows a lender to authorize a settlement agent to prepare the new form, for a variety of reasons you should expect that the lender will prepare this new five-page form. This is a brand new challenge for lenders because most of the information currently found on the HUD-1 is gathered by the settlement agent. For example, your commission, association assessments, home warranties, inspection fees, etc.

Settlement agents will continue to be responsible for gathering this information and providing it to the lender. They will need to provide exact information about services and charges to the lender in a timely fashion. Therefore, you will need to communicate your information to the settlement agent much, much earlier than day of closing, perhaps two weeks before the scheduled closing date! Why? Read on. (more…)

Are You Entitled to a Disbursement of Surplus Proceeds from a Foreclosure Sale?

auctionThe real estate market is improving.  Just about all objective data points to an ever improving real estate market.  For instance, the number for foreclosure filings have decreased.  The real estate inventory hitting the market has increased.  And for the first time in years, many lawyers are starting to see a surplus from sales conducted at the courthouse steps.  And that has many borrowers asking, are they entitled to a disbursement of surplus proceeds from a foreclosure sale?

A surplus is found when a property sells for more than the judgment amount at the courthouse during the auction.  The excess between the amount of the money realized at the courthouse auction and the foreclosure judgment is called a “surplus.”

Specifically, it typically works this way.  A borrower defaults on his mortgage.  The lender then files a foreclosure against the borrower.  The lender then secures a final judgment against the borrower, and a sale of the property is scheduled.  The clerk of court then sells the property at auction at the courthouse steps to the highest bidder.  From the proceeds of the sale, the clerk of the court satisfies the lender that secured the foreclosure judgment.  All junior lienholders are then satisfied in accordance with their priority of liens on the property.

If there is still money left over after all the lienholders have been satisfied, then the borrower would be entitled to that surplus.

For the past several years, it was incredibly rare to see a surplus realized from a judicial sale.  The primary reason for that is that most properties that were being sold at the courthouse were “under water” or “upside down.”  Therefore, many borrowers were leaving the courthouse with a deficiency after the sale and it was often up to the lenders to decide whether or not they wished to pursue that deficiency against the property owner.

Recent changes in the law has made it more difficult to pursue deficiency judgments following the sale of the property.  Specifically, lenders now have one year to pursue deficiency judgments as opposed to five years.  This puts added pressure on the lenders to commence legal action against the borrowers fairly quickly after the sale has been completed.

But today, we are seeing more sales where surpluses are realized.  And if you are one of the many borrowers who have benefited from the rising tide of equities in properties, then you may be entitled to the surplus realized at the judicial sale.  If so, you may be entitled to the return of that surplus if you have timely satisfied all of the obligations to ensure the issuance of that surplus.

Miami Foreclosures are Reversed by Appellate Court

foreclosureThe Third District Court of Appeal has reversed two foreclosures recently.  Each case represented a unique fact pattern.  But taken together, these cases represent a continued effort by the Third District Court of Appeal to ensure that homeowners have their fair day in court.  The Third District Court of Appeal is attempting to ensure that all the procedures that are followed in just about every other case are also followed in foreclosure matters too.

In Rocketrider Pictures v. Bank United, 138 So.2d 1223 (Fla. 3d DCA 2014), the appellate court was confronted with the issue as to whether or not the judicial sale of property after the entry of a foreclosure judgment was proper given that the judgment entered was only against the wife, and not the husband, despite the fact that the property was owned by both the husband and wife as tenants by the entireties.   It is a fundamental concept that where tenants by the entireties are involved, one title holder cannot be divested of title without the other because both tenants own the entire property together; equally and completely. As a result, “[p]roperty held as an estate by the entireties is not subject to the hen of a judgment against one tenant alone.”   Teardo v. Teardo, 461 So.2d 276 (Fla. 5th DCA 1985).

Nevertheless, in the Rocetrider case, the defendant was erroneously foreclosed on and the jointly held property sold at the judicial sale despite there being no interest to transfer.  Therefore, the appellate court reversed the sale and held that an “estate by the entireties is not capable of being the object of satisfaction for the debt of one of the tenants alone.  Thus, the interest of the judgment debtor alone could not pass by the sale.”

In Morlock v. Nationstar, No. 3D14-1247 (Fla. 3d DCA 2014), a homeowner won a wrongful foreclosure dispute with its bank.  In that case, the appellate court concluded that the trial court had abused its discretion when it wrongfully entered a final judgment against the homeowner.  The final judgment was entered because the homeowner was defaulted.  However, the default should never have been entered given that the homeowner had properly and timely filed extensions and had also filed its answer to the complaint and asserted affirmative defenses as well.

Don’t hesitate to contact us to discuss these cases further, or if our firm could be of additional assistance to you and your real estate needs.

Zombie Foreclosures are Creating Mishaps for Real Estate Purchasers throughout South Florida

zombie foreclosuresZombie foreclosures are creating mishaps for real estate purchasers throughout South Florida.  Ground zero for the residential real estate collapse was right here in South Florida.  So it should come as no surprise that problems continue to persist with foreclosures of so many of those homes.

What is a zombie foreclosure?  As the name implies, a zombie foreclosure involves vacant property.  It involves property that is being foreclosed where the homeowner vacated the property.  But for various different reasons, the foreclosure just continues and never ends despite the fact that the property is vacant.

Abandoned by the homeowner, the home often falls into a state of disrepair.  Appliances in the property are often stolen, the landscaping unattended, and the property otherwise becomes unsightly.

Such properties are often ripe for fraud.  The fraud could come in the form of squatters unlawfully residing on the property, or efforts made by fraudsters to illegally convey the property that they don’t even own.

But what happens when the homeowner leaves the property in light of the foreclosure but the foreclosure is never completed?  This is a new and growing problem that many real estate owners and purchasers are facing today.

In such a situation, and to repeat, the home often falls into a state of disrepair.  The grass may be too high, the fence may need repair, or the property taxes may need to get paid.  The municipality where the property is located will often cite the homeowners for those violations or impose a tax lien on the property.

Those liens will often need to be satisfied before the home can be sold.  And the homeowner may not even be aware of the fact that he may still be responsible for those liens since he “abandoned” the property.

This situation also creates issues for individuals wishing to purchase properties involved in zombie foreclosures.  In one recent case, here in South Florida, a real estate purchaser was found to be liable for the liens incurred on the property even though the liens were recorded after the entry of the final judgment, but before the judicial sale.

That court found that liens “recorded between final judgment of foreclosure and judicial sale are valid and enforceable.”

One of the best ways to avoid this situation is to perform a lien search and title search on the property.  This will allow you to perform the necessary investigation, and due diligence, on the property prior to your closing.  With that said, if you need assistance securing a lien or title search, or other assistance with your real estate purchasing needs, then please do not hesitate to contact us to discuss your situation further.

Accidental Landlords Take Advantage of HARP 2.0 to Re-Finance Their Investment Properties and Save Thousands of Dollars

re financeAs we previously discussed, the Harp 2.0 program is a government sponsored program intended to help many struggling homeowners re-finance their homes.  An often overlooked aspect of Harp 2.0 is that it is also intended to help accidental landlords re-finance their investment properties and help them save thousands of dollars.

An “accidental landlord” is someone who purchased a new primary residence, but was unable to sell their prior primary residence.

Under this scenario, the initial primary residence is converted into an investment property.  In other words, after you purchased your new home you could not sell your old home.  As a result, you started renting the old home and became an “accidental landlord.”

The question that is often asked is under this scenario would the “investment” home/property be eligible to re-finance under Harp 2.0?

If the homeowner can qualify to re-finance under Harp 2.0, then there is a good chance that the converted investment property may also qualify.  And if it qualifies, then that could potentially save the accidental landlord thousands of dollars over the life of the loan.

There are no doubt obstacles that need to be overcome in order for an accidental landlord to qualify to re-finance under Harp 2.0.  But generally speaking, in order to qualify the homeowner must be current on their mortgage, with no late payments exceeding 30 days in the last six months and no more than one late payment in the last year.  Under the initial Harp guidelines, loan to value limits were capped at 125%, but Harp was modified (Harp 2.0) to remove those caps and now there are no “underwater” limits.  On the other hand, however, the current loan to value ratio must be greater than 80%.

But if you want to take advantage of this program you better hurry.  The program is currently set to expire on December 31, 2015.

If you do qualify, the potential savings could be significant.  Of course, if you do qualify, and decide that re-financing under Harp 2.0 will save you thousands of dollars, then make sure you follow these seven tips to save money on closing costs.  And, of course, don’t hesitate to contact our office to discuss your options further.

Four Tips to Intelligently Make an Offer on a Home

a real estate closingDeciding to purchase a home is one of the biggest financial decisions we will make in our lifetime.  We recently discussed five mistakes that all first time home time home buyers should avoid making.  But in this post, we will provide four tips to intelligently make an offer on a home.

So when you find a home that you love, and that is within your budget, you want to make sure that your offer is both realistic and good enough to beat other potential buyers trying to buy the same property while also ensuring that you don’t over pay for the property.

Here are five tips that could help you accomplish that objective:

  1. Research.  Before you submit an offer on that property you should conduct as much research as possible about the subject property.  You should try and find out how long the property has been on the market.  Learn about the current market dynamics in that neighborhood in terms of supply and demand for other properties.  You should also check the physical condition of the property.  In sum, the more information you can obtain about the property and area the better position you will be in to negotiate the sales contract.
  2. Initial Offer.  Once you are ready to submit an offer, you should quickly and thoroughly prepare a proposed contract with all of your proposed terms and conditions.  It is not enough to simply agree on a sales price, but you should also consider when you want to close as well as ensuring that you will be receiving clear title at the time the transaction is complete.
  3. Negotiate.  Remember, your initial offer is just that – a starting point.  Therefore, be prepared to receive a counter-offer from the seller.  The counter-offer may include many non-financial terms as well as a new proposed sales price.  Be prepared to go over both the proposed sales price, and other proposed terms.  Also be prepared for these negotiations to go several rounds with the seller.
  4. Home Inspection.  It is imperative that before you purchase the home that you schedule a thorough home inspection.  An inspection should focus on unsafe conditions or expensive repairs like structural integrity, plumbing, roof condition, electrical maintenance, termites, pests, and more.  Moreover, if you have any additional concerns, be sure to discuss them with your inspector so your inspector can inspect same.  Once the inspection is complete, your inspector will prepare a report and that report may serve as the basis to re-open negotiations with the seller.

Once you have completed this process, it will be time to complete your transaction and become a home owner.  Here are seven tips to save you money on closing costs.

Nonetheless, if you follow the above process you will no doubt help yourself get the best possible deal on your home purchase.

Many South Florida Homeowners are Finally Able to Sell their Homes – For a Profit

For sale signHome prices are on the rise in South Florida.  And this is comforting news for many South Florida homeowners that were hit hard during the Great Recession.

Today, many South Florida homeowners are finally able to sell their homes – for a profit.  With the housing market slowly making a comeback homeowners are seeing their property begin to produce equity again. Indeed, according to a recent report, South Florida saw an 11% increase in price gains from a year earlier.  That means that many home owners that are selling their property are even realizing a profit from the sale.  There are less short sales today, and more traditional sales where homeowners are in fact making money from the sale.

In today’s market, the “for sale” sign seems to be making a comeback.  If you take a drive through many South Florida neighborhoods you will notice an increase in “For Sale” signs.  That is the case because many homeowners are now in a position to sell their home and make a profit.

Part of the reason for this improved market is that supply and demand are starting to even out more than they have in the last year or so.  For instance, less foreclosures are also helping the real estate market.  So far this year, there have been 6,574 foreclosures filings in Miami-Dade County.   At the same time last year, there were 12,720 foreclosure filings.  So foreclosure activities in Miami-Dade County have decreased by close to 50%.

The decrease in the foreclosure rate is only helping the real estate market as a whole rebound.  Home prices are also rising faster than the rate of inflation.  And many homeowners are taking advantage of those prices to sell their homes for a profit.

But with more properties coming to the market, buyers now finally have more options.   But many of the homes coming to the market today are million dollar plus home listings.

If you are considering purchasing a property, and you are a first time buyer, then you should avoid making these mistakes even as the market continues to improve.  Moreover, and as you consider buying property, please make sure you understand that you could potentially save money in closing costs by following these tips.  Please do not hesitate to contact us should you wish to discuss your real estate transaction with our firm.

Five Mistakes All First Time Home Buyers Should Avoid Making

homestead exemptionBuying a home for the first time is exciting.  While home hunting it may be easy to get blinded by the size of the swimming pool, or the spacious open layout, or the amazing backsplash on the kitchen walls to go with those new granite and quartz counter tops and hard wood floors.  When one falls in love for such a property they will often make mistakes that will regret at a later date.

With that said, here are five mistakes all first time home buyers should avoid making.

  1. Overspending.  Know your budget.  Know your financial limits.  You should meet with a lender to determine what your financial limits will be and then secure a pre-approval for an amount that you can afford.  You should only start searching for a home once you know how much you can afford.  And you should try to stay within your financial parameters.
  2. Don’t Assume You Will Be Making More Money.  One of the lessons we all learned from the Great Recession is that many people, and lenders, believed that individuals would be making significantly more money in years to come.  Don’t make such assumptions.  During the Great Recession many individuals actually lost their jobs and then their homes because such assumptions were made.  So if you’re about to graduate from medical school, don’t assume that you will be making significantly more money in a few years even if your career path is a bright one.
  3. Failing to Account for your Closing Costs.  We recently discussed, in detail, seven tips that could save you money on your closing costs.  In sum, don’t underestimate the impact the closing costs may have on your transaction.  You may have to pay such items as homeowners insurance, property taxes, and depending on the size of your down payment, private mortgage insurance (PMI).  But that is not all.  You will also have to pay various third party vendors to perform necessary tasks to complete your transactions.  For instance, you will likely have to pay for a home inspection, survey, title insurance, attorney fees etc.  Therefore, make sure you have an understanding of what your closing cost obligations will be prior to completing your real estate transaction.  Feel free to contact us today to discuss closing costs associated with your transaction in greater detail.
  4. Failing to Protect Yourself.  Understand the fine print in the contract.  The sales contract is typically several pages for a reason.  Home inspections, for instance, could reveal some significant problems with the home.  But many first time home buyers don’t understand the significance associated with such clauses and may perform such inspections outside of the agreed upon time period set forth in the contract.  The same holds true with finance contingency clauses.  If a buyer fails to qualify for financing, but also failed to adhere to the strict terms of the financing contingency provision in the contract, then their deposit may be end up in jeopardy.  Don’t put your deposit in jeopardy.  Understand your contract and ensure that all timelines are complied with or ensure that you secure the appropriate extension on such deadlines.
  5. Failing to be Realistic.  Some first time home buyers are simply too optimistic and will purchase a property that has substantial problems because they love the color of the front door.  Many first time home buyers will purchase a home in the wrong part of town thinking they can fix the problems with the home, but forgetting that they can’t correct the problems in the neighborhood.  Yet other first time home buyers may simply be too difficult.  They may submit low ball offers and then get frustrated when ever such offer is rejected.  Make sure you’re realistic with your expectations.

Seven Tips to Save Money on Closing Costs

Real Estate TransactionThere are many costs associated with the purchase, or re-finance, of a property.  These are known as closing costs and closing costs includes such things like an application, loan origination, appraisal, home inspection, credit report, title insurance, attorney costs, appraisal, and survey.  These costs must be paid before the transaction is complete, and they are often paid at the closing table.  Typical closing costs will vary, and the biggest variable is the property price.  However, closing costs are typically between 3% to 6% of the property’s price.

In preparation for your closing, or re-finance, here are seven tips that could save you money on your closing costs:

  1. Compare Offers.  When doing a home purchase, or re-finance, the natural tendency is to shop for the best possible mortgage rate.  But don’t stop there.  Shop all third party vendors.  In an effort to save money in closing costs, make sure you get competing offers from companies that offer services like home inspections and surveys.  Indeed, feel free to contact our office today to learn about our title fee structure to see if we could save you money on title insurance during your real estate transaction.
  2. Look Out for Low Ball Offers (if it is too good to be true, it likely is).  When comparing closing cost estimates, be suspicious of figures that seem especially low.
  3. Recycle Lenders and Title Insurance.  Using the same title insurance or lender that performed your initial transaction could save you significant sums of money in your transaction.
  4. Ask Questions.  If something looks questionable then you should ask about it.  If you don’t understand why you are being charged a certain fee, ask why that fee is being charged.  A simple question inquiring as to why a certain line item cost is on your closing statement could save you some money.
  5. Negotiate with the Seller.  Again, mortgage rates should not be the only point you attempt to negotiate with your lender.  The payment of any and all closing costs should also be an important negotiation with your lender.
  6. Time the Closing Well.  If you close at the end of the month, you can avoid prepaid interest charges.  Whether substantial, or nominal, your closing costs can be reduced by simply planning ahead and scheduling your closing towards the end of the month.  Indeed, when reviewing your good faith estimate, and pre-HUD, pay particular attention to line 901.  Line 901 contains the first month’s interest that you pay in advance.  A lot of originators will account for only a few days of interest – so if you close at the start of the month that figure could increase dramatically.
  7. Walk Away.  It is important to review all the closing costs documents prior to closing.  At the closing table, if you notice that the fees have changed then you should inquire why they changed.  If the change in fees can’t be justified, then you should be prepared to walk away from the transaction.