How to Calculate the Statute of Limitations in a Mortgage Foreclosure

HourglassThe simple question of how to calculate the statute of limitations in a mortgage foreclosure has finally been answered by the Florida Supreme Court.  And the banks won. Mortgage lenders may file new foreclosure actions against borrowers who won foreclosure cases more than five years ago if the borrowers defaulted again within five years of the first case’s dismissal, the court ruled.

We discussed this topic previously.  At the time, the Florida Supreme Court had not issued its ruling in Bartram v. U.S. Bank National Association, a case focused on whether the statute of limitations had run or not.  In Bartram, the mortgagor obtained a note and mortgage with a Bank.  Within the year, he stopped making the required payments.  The Bank subsequently filed a foreclosure action which was involuntary dismissed five years later when the Bank failed to appear at a case management conference.  After dismissal, the mortgagor once again failed to make the required payments and the Bank once again filed to foreclose the property.  The mortgagor stated that the Bank could not file the claim because it was outside of the 5-year statute of limitations.

On certified question by the 5th DCA the Florida Supreme Court was asked whether an acceleration of payments due under a residential note and mortgage with a reinstatement provision in a foreclosure action that was dismissed pursuant to the Florida Rules of Civil Procedure, triggers application of the statute of limitations to prevent a subsequent foreclosure action by the mortgagee based on the payment defaults occurring after the dismissal of the first foreclosure action.

The Court answered that question in the negative.  The Court explained that a lender is not precluded by the statute of limitations from filing a subsequent foreclosure action after the involuntary dismissal (with or without prejudice) of the first foreclosure action if the alleged subsequent default occurred within five years of the subsequent foreclosure action.

The Court reasoned that the effect of an involuntary dismissal is a revocation of the acceleration, which reinstates the mortgagor’s right to continue to make payments on the note and the right of the lender to seek acceleration and foreclosure based on the mortgagor’s subsequent defaults.

A subsequent default after dismissal is a new and independent right to accelerate which starts a new statute of limitations.

The lender is not barred by the statute of limitations from filling a subsequent foreclosure action premised on a separate and distinct default.  The statute of limitations runs from the date of the new default, and this new default gives the lender the right to accelerate all payments due.

The Court concluded that since the original foreclosure action was dismissed, the Bank could not then accelerate the payments but the default after dismissal triggered the Bank’s ability to file a second foreclosure and accelerate the payments.

Buyers Beware of Buying Foreclosures

homestead exemptionForeclosures only seem like good deals today.  But if you’re going to buy a property being foreclosed then you really need to know what you’re getting. Therefore, buyers beware of buying foreclosures.  That’s why it is critical for buyers to perform all of the necessary due diligence prior to purchasing a foreclosed property.  As part of your due diligence, it is vital to have a home inspection performed by a qualified reputable home inspector. This way you’re going to know what you’re buying.  You need to get that home inspection performed on time so you can make an educated decision about the transaction.

The importance of knowing what you are buying cannot be overstated.

It happens every day where potential property owners fall into a trap.  The trap is when they believe in a property’s potential without consulting a qualified home inspector. They rush through the transaction thinking they are going to make a “quick buck” by flipping the foreclosed property, or they may just want to buy a cheap fixer-upper to make their dream home or office space.

Whatever the case may be, what inevitably happens most of the time is the buyer just purchased a bigger problem than they realized.  The property may require a lot of repairs, or worse a property that is condemned.

Of course, there may also be problems with the chain of title.  The foreclosure may not have been conducted properly by the foreclosing party which may mean that the buyer does not even own the property properly.  That would invariably result in additional litigation to clean up the chain of title and ownership rights.

Therefore, it cannot be stressed enough that if you want to make a successful foreclosure purchase here in Miami, take the time and effort to find a reputable home inspector that you can trust. Spend the money on hiring the necessary professionals to perform all the necessary searches and engage in the necessary due diligence to learn as much about the property as you possibly can.

Remember, buying a foreclosure is only a good deal when you take the appropriate steps to ensure that the property you are buying is worth the money and effort required.  Do not hesitate to contact us should you wish to discuss further.

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.

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.

Appellate Court Reverses Foreclosure Dismissal

foreclosure 008The Third District Court of appeal seems to be trying to stop the legal shenanigans taking place with foreclosure cases in Miami where some Judges appear to not want to follow the law and rules of procedures that apply to all the other cases.  Indeed, the appellate court recently reversed a foreclosure dismissal.

We recently discussed how the Third District Court of Appeal vacated a final judgment entered in the bank’s favor because of the bank’s reliance on inadmissible hearsay testimony to prove their case.  Now, the Third District Court of Appeal has reversed a bank’s dismissal because of the Judge’s abuse of discretion.

In Ocean Bank v. Garcia-Villalte, the trial judge issued a trial order despite the fact that the case was not at issue and could not be set for trial in accordance with Florida’s Rules of Civil Procedure.  Nonetheless, and despite the fact that the case was simply not ready for a trial, the trial judge dismissed the case when it learned that the bank’s attorney had failed to timely send a copy of the Judge’s trial order to the homeowner.

On appeal the bank argued that the Judge had abused his discretion in dismissing the bank’s lawsuit, and the appellate court agreed.  In so doing, the appellate court highlighted all of the irregularities that went into the trial judge’s decision to dismiss the bank’s case.

What this case illustrates is that the Third District Court of Appeal is trying to take a  hard line stance for both borrowers and the banks, as well as the Judges, to ensure that due process is not abused and that all the litigants have their fair day in Court.  You should contact our office if you are struggling to save your home in order to assess your legal rights.

Indeed, while the bank won this case, in the bigger picture this is a victory for everyone that is trying to fight the good fight within the rules and laws of Florida.  Any deviation from that legal framework – be it by the borrower or bank – will be reigned in by Florida’s appellate courts.

Foreclosure Judgment Vacated Because of Bank Irregularities and Technicalities

re-finance 00zzForeclosure Judgment Vacated Because of Bank Irregularities and Technicalities

Florida’s Third District Court of Appeal recently vacated a foreclosure foreclosure judgment because of bank irregularities and technicalities.  Specifically, the Third District Court of Appeal vacated a final judgment because the financial institution relied on inadmissible hearsay testimony to prove their case.  Hearsay is a legal term for testimony in a court proceeding where the witness does not have direct knowledge of the fact attested to while testifying.  In short, secondhand testimony is barred by the hearsay rule.

Kelsey v. Suntrust Mortgage, Inc. involved a mortgage foreclosure dispute.  Suntrust Mortgage Inc. prevailed at trial despite the fact that Suntrust’s only witness testified that she had no first hand knowledge of the loan or note.   That witness further testified that she had only seen the subject note once during the trial.  The mortgage file was first brought to the witness’s attention once litigation had already been filed. SunTrust used the witness’s testimony to try and authenticate the note relating to the mortgage, even though her knowledge had come from out-of-court documents that had not been made available for inspection prior to trial.

On appeal, the Third District Court concluded that such impermissible hearsay testimony could not serve as the basis for the entry of a judgment against the Plaintiff.  This appears to be the first result regarding robo-witnesses after the recent fall out from robo signors.

Moreover, the Third District Court of Appeal further determined that the foreclosure plaintiff must show an agreement, a default, an acceleration of debt to maturity, and the amount due.  The Plaintiff, in Kelsey, failed to show these documents.  Whatever documents were presented at the time of trial were not properly authenticated.  Additionally, Suntrust failed to have a witness testify whose testimony was not barred by Florida’s hearsay rules.

For the reasons mentioned above regarding the documents, the only testimony presented at trial was considered to be hearsay and an error in the eyes of the Court. In order for the bank to have properly authenticated the documents it must have been shown that the witness that did testify was a records custodian or had some personal knowledge on the documents.  Since she did not, her testimony was impermissible and the judgment was vacated since it was predicated on impermissible hearsay testimony.

If you are facing foreclosure or wish to assess your real estate related options, then please do not hesitate to contact us today.

Foreclosures Dip to Levels Not Seen Since 2006

bank-foreclosed-homes-for-sale.jpgForeclosure filings in 2013 were down 26% from 2012. These filings included notices of default, bank repossessions, and scheduled auctions. The foreclosure rate dropped to 1.04% in 2013, as one in every 96 homes reported at least one foreclosure filing. This rate is significantly lower than it was in 2010 when we saw a foreclosure rate of 2.23%.

Although this is the case there are still many homes in danger of foreclosure as borrowers owed at least 25% more than the homes actual value. Repossessions were also down 31% from 2012, as there were 463,000 homes repossessed in 2013. This is a great number considering there were more than a million repossessions in 2010.

Although the numbers as a whole look great, Florida is still the leader in foreclosures. Last year Florida saw 270,000 properties or over 3% of all housing units, that obtained at least one foreclosure filing. That’s a significant number considering it’s over twice as much as second place California.

Like Florida, Miami is the number one city in foreclosure proceedings, as one in every twenty-five homes or 96,710 properties has a foreclosure filing. This is up 44% higher than in 2011, which means that Miami is behind in bringing down its foreclosure filings. On the other hand, 2013 foreclosures filings for new matters were actually down. In 2013 there were 16,704 foreclosure filings in Miami-Dade County compared with 26,202 in 2012.

As such, in Miami, there is still a hefty backlog of foreclosures being pushed through the judicial system.

The good news, however, is that as the home market rebounds less homes are underwater. Additionally, home prices continue to increase as interest rates continue to remain at historic lows.

Foreclosure Filings Decrease in Miami

foreclosure.jpgAugust proved to be a good month for Florida’s foreclosure rate, which is continuing to drop. In August, there were 23,372 properties in Florida that received foreclosure filings. That number is down a whopping 15% from last year in August, and 14% from July alone. This is the lowest level in Florida since 2005 and reflects and overall decrease of 65% for new filings.

In Miami-Dade County, every 264 residences have at least one home to receive one type of foreclosure filing in August. This is almost a 20% decrease from last year, and nearly 15% from July. Broward County fares better that Miami in that one in every 372 residences got a filing for foreclosure.

Even with all that good news, however, Miami still holds the highest foreclosure rate of the top 20 metropolitan cities.

As for actual filings, in August there were 797 foreclosure filings in Miami-Dade County. In September there were 914 foreclosure filings in Miami-Dade County. These numbers are down from 2012. In August of 2012, there were 2,627 foreclosure filings, and in September of 2012 there were 1,995 filings.

Through September of last year there were 19,933 foreclosure filings in Miami-Dade County, but so far this year there have only been 13,634.

On the other hand, many foreclosures are already in the later stages and we have seen scheduled auctions increase by 39% since last year. Bank repossessions have also risen from last year by 48%.

If you are facing a foreclosure, you have options available to you. One of them is a defense to your case. If you are in doubt regarding your rights, don’t hesitate to contact us today to discuss further.

Homeowner Wins Appeal in Foreclosure Because the Bank Failed to Address all of the Defenses

law-gavel.jpgThe Fourth District Court of Appeal recently reversed the entry of final summary judgment in the bank’s favor because of procedural deficiencies.

Regions Bank had filed a foreclosure lawsuit against homeowners Michael and Elaine Seale. The homeowners had filed several defenses to the foreclosure lawsuit. The defenses included the allegation that the Bank lacked standing, that the Bank was not authorized to bring the action on behalf of the owner of the note, and that the bank failed to provide required default, acceleration, and opportunity to cure.

Nonetheless, the trial court granted summary judgment in favor of the bank, and the homeowner appealed.

By entering summary judgment in favor of the Bank the Fourth District Court of Appeal found that the trial court erred, because the Homeowners affirmative defenses were not factually refuted nor were they found to be legally insufficient.

In so ruling, the appellate court noted that a wealth of case law makes it clear that in the mortgage foreclosure cases, summary judgment is precluded if affirmative defenses are not factually refuted or shown to be legally insufficient.

In this particular case, legally sufficient defenses were erroneously struck, because nothing in the record refuted the claims made by the Homeowners.

The case has been reversed and remanded because the Bank did not provide the required notice of default and acceleration.

This is another illustration of how the banks are often in a rush to get to judgment. If you are facing a foreclosure, you have options available to you. One of them is a defense to your case. If you are in doubt regarding your rights, don’t hesitate to contact us today to discuss further.

Can Eminent Domain Solve The Foreclosure Crises in Miami?

ok-eminent-domain-law.jpgThe foreclosure crisis has not only impacted many Americans, but it has also impacted many communities. Homes that fall into foreclosure often fall into a state of disrepair. That leads to increased blight, a continued negative downward spiral of decreased real estate prices, and depressed neighborhoods. Even in today’s improving real estate market, the continued blight of foreclosed homes continues to be a problem for many of our hardest hit communities.

One local community is attempting to take a novel approach to solving this problem. The mayor of Richmond, California believes that the banks put all these people into loans that they simply could not afford. Then the banks refused to work with any of the homeowners in an effort to renegotiate the loans to make them affordable.

Consequently, the mayor is threatening to use, and invoke, the government’s eminent domain power in an effort to buy back the property. Eminent domain is a process that involves seizing private property for public use. Government use of eminent domain is most commonly used in the construction of roads and other government infrastructure.

If Richmond proceeds with its plan, however, it would be the first city in the nation to use its municipal power of eminent domain for mortgages.

Richmond’s plan would involve acquiring underwater mortgages at steep discounts, and then restructuring them to make them affordable for homeowners. While Richmond’s elected leaders emphasized that they would prefer to acquire the mortgages through negotiations with banks and investment firms, eminent domain would be an option to force the sales.

Then, once the city owns the property, they will in turn sell it back to the homeowner at a nice profit. Probably most importantly, the homeowner will be afforded an opportunity to buy the home back at a price, and with interest rates, that they could afford.

The idea behind the plan is to try to use the government’s powers to strong arm the banks into negotiating with homeowners. Many banks are crying foul. They claim that if the government were to move forward with this eminent domain plan that it will chill many investors in the future from providing prospective homeowners loans in the community in question.

In fact, several banks have taken the unprecedented step of filing suit against the City of Richmond in order to secure an injunction and enjoin the City of Richmond from moving forward with its plan.

Too often in today’s partisan political gridlock politicians are simply afraid to think out-of-the-box. This is no doubt a new novel approach in an effort to solve an age-old problem. But the approach proposed by the Richmond city officials begs the question – is this truly a workable plan to help solve the on going foreclosure crises still gripping our nation and local communities?