I’m sad as I write this. Today, Florida’s Fifth District Court of Appeal issued a written opinion in a foreclosure case that affirmed a Final Judgment of Foreclosure. I’m sad because it didn’t have to be this way. It shouldn’t have been this way.
Here are the unfortunate facts …
A bank filed suit for mortgage foreclosure against a homeowner, who retained KEL Attorneys as counsel. The bank set a hearing on its motion for summary judgment, as often happens in these cases. When KEL Attorneys did not attend the hearing, the court entered a Final Judgment of Foreclosure without opposition. KEL moved to vacate that judgment, asserting it acted with “excusable neglect” by not attending the hearing, having inadvertently failed to calendar it. The court denied that motion, so KEL appealed.
At that point, KEL had a pretty good chance of winning on appeal in the Fifth District. After all, there are many cases which hold it is excusable neglect to not attend a hearing where the hearing was inadvertently not calendared. To the surprise and dismay of the Fifth District, however, KEL did not frame the issue on appeal in this manner in its Initial Brief. Instead, KEL asserted that it received no notice of the hearing. In its Answer Brief, the bank showed that was plainly not true. By its own admission, KEL had received notice of the hearing – it just failed to calendar it and failed to attend. KEL tried to fix the problem, and set forth the issue correctly in its Reply Brief, but by that point it was too late. When an issue is not raised in the Initial Brief in an appeal, it is waived.
On these facts, the Fifth District issued this opinion, which included an Order to Show Cause why KEL Attorneys should not be sanctioned.
The saddest part, meanwhile, is the innocent homeowner who lost this appeal – the foreclosure judgment on her home being affirmed – to no fault of her own.
I’m not going to disparage KEL Attorneys. That’s not ethical, and it’s not my place. That said, this opinion is a great illustration of how a homeowner’s choice of counsel can make a huge difference. Choose wisely, folks.
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First, the usual caveat. Representing yourself in a foreclosure case is probably not a good idea. After all, pro se homeowners often don’t know the correct procedural ways to bring their arguments. And if you don’t bring your arguments in the correct fashion, you may waive them forever.
Ok, I know. You’ve heard that before. Yada, yada, yada. Let’s get to the story.
In Hillsborough County Case No. 10-CA-20354, Bank of America declared a homeowner in default, then sued for foreclosure. The homeowner represented himself in court, arguing, essentially, that he was not in default and that BOA had applied payments to his account improperly. The issue? In 2005, the homeowner made a lump-sum payment of $22,000, intending that this sum be applied against future recurring monthly payments. But Bank of America didn’t apply the payments that way. Instead, BOA applied the $22,000 payment towards principal, then later asserted the homeowner was in default for not making normal monthly payments.
The issue before Hillsborough Judge William Levens was a narrow one. Was the homeowner in default, or did Bank of America apply the payments incorrectly and wrongly declare him in default? Judge Levens ruled in favor of the homeowner, dismissing the foreclosure lawsuit. Also, remember my recent blog on bank-induced default, where I explained that when a bank wrongly declares a homeowner in default, the remedy is to reinstate the loan, eliminating all default interest, late charges, and interest since the bank improperly declared the default? That’s the same thing Judge Levens did here, directing the “debt be recalculated” and the “resulting/remaining loan balance [be returned] to the contracted-for monthly payment amount.”
Bank of America didn’t like this result, so it appealed to Florida’s Second District Court of Appeal. In March, the Second District issued a PCA, affirming Judge Levens ruling. You might not have noticed that ruling, but that’s only because the Second District did not see the need to explain itself. Yes, the pro se homeowner wins and Bank of America loses.
Please remember the concept of bank-induced default. It might not apply in every case, but the remedy when it does – dismissing the foreclosure case and reinstating the loan to the point in time before the default – is a good one.
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The Florida Supreme Court just issued this opinion, which amended Fla.R.Civ.P. 1.490 to authorize the use of magistrates (i.e. lawyers who are not judges) to preside over foreclosure hearings. This sounds like a big change in foreclosure-world, and in some ways I suppose it is. The prospect of a non-judge deciding a mortgage foreclosure case is certainly a big change for many consumers.
However, if anyone does not like the prospect of their foreclosure case being decided by a non-judge, all they have to do is interpose an objection. Under the new version of Fla.R.Civ.P. 1.490, if an objection is filed within 10 days after the Order of Referral to Magistrate is entered, then the case is heard like the judge, like normal. The “objection” need not have legal grounds, either. The homeowner can simply say “I prefer the case to be heard by a judge,” and that’s what will happen. Conversely, the homeowner can not object, choosing to let the case be heard by the magistrate, and if the plaintiff does not object, either, then a magistrate may adjudicate the case.
Essentially, the purpose of the Rule is to allow non-judges to adjudicate those cases where homeowners don’t care enough to defend the case (or, hence, to object to the magistrate). It’s a way to help the courts through a backlog of cases.
The Court issued this opinion rather suddenly. As a result, it welcomed the opportunity for anyone to submit a comment in response to the new Rule. I see a problem with the Rule, as drafted, so I took the opportunity to draft a written comment, interposing my concern and suggested change. Yes, I filed a Comment in the Florida Supreme Court, suggesting a change to the Rules. Pretty cool. Here it is: Stopa Comment to Rule 1.490.
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I had a foreclosure trial today. Ho, hum, right? Just another foreclosure trial? Well, this case was filed in 2010, and I was just retained in the case a few days ago. As a result, there wasn’t time for me to do anything except file a Notice of Appearance and attend the trial. You might wonder …
Can a foreclosure defense lawyer really help when retained right before trial?
Without filing any paperwork?
Why yes! Yes I can!
This is far from ideal, don’t get me wrong. If I’m retained at the outset of a foreclosure case, I can file the homeowner’s pleadings and ensure all defenses are preserved. By waiting to retain counsel, many homeowners waive defenses by not asserting them soon enough. That said, it’s certainly possible to defend a case at trial, even when retained at the last minute. How can that be? Simple. Bank incompetence is pervasive in foreclosure cases.
We all know banks and their lawyers often fail to file the required paperwork. There’s more to it than that. You see, if you haven’t been putting up a big fight in your foreclosure case, and the case gets set for trial, then the plaintiff will probably treat the trial as an “uncontested” case. That means they’ve prepared for trial (I use the term “prepared” very loosely here) as if nobody is going to attend trial in opposition. When somebody shows up, it throws a big wrench in their plans. It’s like going to a sporting event expecting the opposing team was going to forfeit because they didn’t have enough players, then realizing not only is the opposing team at the game, but they’ve recruited a handful of athletes who are bigger, faster, and stronger than anyone on your team.
I’m going to save the specific argument that I made as trial began. (Some things have to stay a secret from the evil banksters and their lawyers (who, yes, read this blog)). Suffice it to say that just a few minutes into trial, the issue was no longer whether a foreclosure judgment would be entered, but whether the case would be dismissed or the trial continued. Yes, I appeared in the case just a few days ago and filed nothing, yet it was the plaintiff who was begging for a continuance to prevent the case from being dismissed.
After about 30 minutes of argument, the judge decided to continue the trial. While I certainly would have preferred a dismissal, this homeowner went from getting a judgment entered against him (in all probability) to getting the trial continued. Also, the judge agreed the bank’s case was such a mess that a new trial date wasn’t even scheduled, and the homeowner can continue living in the house in the meantime.
Foreclosure trials won’t always happen this way, of course. Sometimes, if you wait to hire a foreclosure defense attorney until right before trial, you’re going to lose. Sometimes, the failure to plead the necessary defenses makes it impossible for a homeowner to win, no matter how unprepared/sloppy the banks are. Many times, however, hiring counsel, even at the last minute, can prevent foreclosure.
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Back in 2011, I posted this blog, encouraging homeowners to stay current on their association dues. That’s even more important now.
You see, under the new legislation just passed in Florida, an association can request an expedited foreclosure hearing to try to accelerate the bank’s foreclosure case. If you’re current on your association dues, the association probably won’t feel a reason to make this request. If you’re behind on those payments, however, you run the risk that the association will cause that hearing to be set. Just think about it from the association’s perspective. If you’re paying your dues and taking care of the house, they probably don’t care if the house is in foreclosure. If you’re not paying your dues, however, then the association likely prefers that you get foreclosed so a new owner – who pays his dues – will get put in the house.
Don’t let a rather nominal association payment cause you problems on your mortgage foreclosure case. Pay those dues!
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You probably know by now that HB87 passed in the House and the Senate and will become law unless Governor Rick Scott vetoes it, which is not expected. This legislation changes the landscape of foreclosure defense in some significant ways. Let’s summarize (bearing in mind that this is purely a summary and there’s no substitute for knowing the precise language of the new bill or, better yet, hiring an experienced lawyer who does):
1. Finality of Judgment: Once a final judgment is entered in a mortgage foreclosure case, the property is sold to a third-party, and the appeal time has run, the mortgagor is precluded from getting title to the property back, even if the foreclosure was wrongful. Instead of being able to ask for the judgment to be vacated under Fla.R.Civ.P. 1.540 up to a year after the judgment was entered – or, in some circumstances, many years post-judgment - the homeowner’s remedy is now limited to claims for money damages.
For obvious reasons, the title insurance industry was the driving force behind this aspect of the bill. After all, if homeowners can’t make claims to get their foreclosed properties back, that’s a green light for title insurance companies to issue title insurance policies without fear of paying out claims.
2. Order to Show Cause: Expedited Foreclosure: Any lienholder (to include condo associations and homeowners’ associations) can ask the Court to issue an Order to show cause, forcing the homeowner to come to court and convince the Court not to enter an expedited foreclosure judgment. If the homeowner doesn’t file the appropriate paperwork/defenses, a foreclosure judgment is entered at that hearing. This sounds bad, but it’s similar to the existing version of Fla. Stat. 702.10, except it now enables any lienholder (as opposed to just the bank) to request the show cause hearing.
The condo and homeowners’ associations were the driving force behind this aspect of the bill. They believe this will give them leverage to accelerate the mortgage foreclosure lawsuit when the bank is slow to prosecute the case. Are they right? My thoughts are below.
3. Order to Show Cause: Monthly Mortgage Payments: If a residential property is not owner-occupied, the plaintiff can ask the court to require the mortgagor to make normal monthly mortgage payments to the plaintiff during the foreclosure case. If those payments are not made, then the mortgagor is removed from possession of the property even before the case is over. If this happens, the homeowner can still defend the lawsuit, but will be removed from possession before the case is over.
4. Statute of Limitations: On claims for deficiency, reduced to one year.
5. Pleading requirements: The new bill imposed a few new pleading requirements for plaintiffs.
(a) The foreclosure plaintiff must plead it is the “holder” or its specific factual basis to foreclose in its Complaint. This codifies what defense attorneys have been arguing in motions to dismiss for many months – it’s not enough to say you’re entitled to foreclose, you have to plead ultimate facts.
(b) If the plaintiff is suing on behalf of another entity, it must identify the document which sets forth that authority.
(c) The plaintiff must file a certification under oath, upon filing suit, that it possesses the original Note. If the note is lost, it must file an affidavit detailing the chain of assignments/transfers and must attach documents showing how ownership was acquired.
I’ll spare you my rants here – of which there are many – about the process in which this bill was enacted and the small handful of people who drove the train. Instead, I’ll share my views on how these issues will play out in everyday practice.
1. Finality of Judgment. I hate this provision, and I think it’s unconstitutional. After all, the Florida Supreme Court has the exclusive authority to create rules of practice and procedure in our courts, and it did so via Fla.R.Civ.P. 1.540. If that rule allows/requires a Final Judgment to be vacated even after the appeal time has lapsed, I don’t think the legislature is authorized to eliminate that Rule. That said, this provision won’t impact very many homeowners. Defend your case from the outset, file an appeal if you lose, and you won’t ever be in the position of having to worry about whether Rule 1.540 applies. Let’s move on.
2. Order to Show Cause: Expedited Foreclosures: On paper, little has changed here. Fla. Stat. 702.10 has been in place for some time now, yet the banks rarely utilize it. On the rare instances they have, I’ve had a lot of success preventing the expedited foreclosure from being granted. Frankly, it’s not too hard, if you know what you’re doing. As a result, I don’t think much will change by allowing lienholders to invoke this procedure.
What irks me is that the backers of this bill have no clue how this change will play out in everyday practice. It may sound great to some to allow a lienholder/association to request an expedited foreclosure hearing. However, suppose that happens, yet the bank doesn’t file the required paperwork for a judgment to be entered. Then what? Bear in mind, this type of thing happens all the time – an association wants a foreclosure case to go faster, but the bank refuses to prosecute the case … so it’s not hard to envision a lienholder/association pushing for an expedited hearing but the bank not filing the necessary paperwork at that hearing. Unfortunately, the statute poses no solution to this problem. The lienholder/association can cause the hearing to be set, and the court will be required to set the hearing, but how can a judgment be entered if the bank doesn’t provide the required paperwork? It can’t. That begs the question – why allow the expedited hearing, forcing the judges and court personnel to do more work and requiring homeowners to defend the expedited procedure, if there is no mechanism for making sure the required paperwork is filed?
I tried to address these concerns with the legislature. In fact, I drafted a proposed amendment to the bill which would have allowed the foreclosure case to be dismissed without prejudice if the show cause hearing was set and the bank didn’t file the required paperwork. Was that included in the final version? Of course not. As a result, I fear we are looking at many hearings where the association wants a case to go forward, but it cannot because the bank doesn’t file what it needs to file … a sad irony when the purpose of the bill was to make things easier for the courts.
3. Order to Show Cause: Monthly Mortgage Payments: Substantively, this is the biggest change. If you don’t live in your property, and you’re the mortgagor, the bank can force you to make monthly mortgage payments during the pendency of the case, failing which you lose possession of the property.
A couple of things are infuriating about this aspect of the bill. First, do you notice how the homeowner is required to make monthly mortgage payments to the plaintiff even before the case is over, yet there is nothing in the statute which requires those payments to be given back to the homeowner in the event the homeowner prevails at the end of the case? Suppose, for example, a homeowner makes 12 monthly payments of $2,000 per month, then, at trial, proves the bank lacked standing to foreclose. Shouldn’t the homeowner get his $24,000 back? Of course! Incredibly, however, this brilliant piece of legislation is silent on this issue. Seriously, Legislature? The wrong plaintiff can sue, collect monthly payments, and not be obligated to return those payments upon losing the case?
The sheer idiocacy of this aspect of the bill is obvious by comparing it to the tenant eviction statutes. If a tenant makes monthly rent payments into the court registry, then ultimately prevails against the landlord, the court orders that the money in the registry be returned to the tenant. Here, conversely, there is no mechanism in the statute for the homeowner to get his/her money back, even upon prevailing. The money isn’t held in the registry – it’s paid directly to the plaintiff, and there’s nothing which says the plaintiff has to pay the money back. I guess the legislature was too arrogant, shortsighted, or ignorant to realize a homeowner could win a foreclosure case at trial. Sigh.
Second, it’s an awful irony that the associations were supposedly the impetus behind this aspect of the bill, yet they don’t realize they were shooting themselves in the foot by creating it. Just think about the dynamics at play here. If the homeowner doesn’t live in the house but is paying association dues, the dues are likely being paid with rent monies. That’s how it works – homeowners rent out the property and pay HOAs with that rent. If that rental stream gets taken away from the homeowner, do you think there’s a chance in hell he/she is going to keep paying the association? I don’t. And the banks sure aren’t going to pay those associations, as their obligations to the associations are limited by statute. So what will result here? Unpaid associations and more vacant/dilapidated houses. Brilliant! Just brilliant.
There are a variety of reasons why this new legislation is probably unconstitutional. I touched on one or two of them above. However, I strongly urge all pro se homeowners to avoid making such arguments. Please. Don’t do it.
Look … I’ve shared a lot of information on this website. I hope it goes without saying that I want to help everyone involved in this fight. This issue, however, is too big for any one homeowner to take on themselves. The problem, of course, is that if the wrong person is making this argument without knowing all of the legal arguments to make and/or how to make them, it can result in an appellate decision that is damaging for everyone. Please, folks – don’t ruin this for everyone. Let the handful of foreclosure defense lawyers who know what they’re doing work with some lawyers with experience arguing constitutional issues. We know what arguments to make and how to make them try to get this legislation declared unconstitutional. You don’t. This is a big fight, and we can win, but we have to go about the fight the right way.
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In the foreclosure-world in which we now live, motions to dismiss are widely viewed with disdain. They’re a pest. An annoyance. They accomplish nothing but delay. I don’t feel that way, of course. I think motions to dismiss are an important aspect of foreclosure defense, as they, when used properly, ensure a plaintiff has stated a cause of action in its complaint and otherwise done what it’s supposed to do upon filing suit.
Unfortunately, many plaintiffs and, yes, judges, see motions to dismiss purely as a stall. You see, so long as the motion to dismiss is pending, the homeowner need not file an Answer, and without an Answer in place, the case isn’t “at issue” under Fla.R.Civ.P. 1.440 and can’t be set for trial. Hence, a motion to dismiss prevents a trial from being set.
Those pesky motions to dismiss. We need to get rid of those. There are trials to set and dockets to clear!
I’m glad the good judges in Hillsborough and Pinellas don’t share this mindset, as it has annoyed and frustrated me for a long time. Unfortunately, there has been little opportunity to do anything about it, either, as there is virtually no case law from Florida’s appellate courts on the circumstances in which a motion to dismiss in a foreclosure case should be granted. The problem is procedural. You see, when a motion to dismiss is denied, that ruling cannot be appealed until the end of the case. But once the case reaches its end, the homeowner isn’t concerned with appealing whether the foreclosure plaintiff stated a cause of action as much as whether the plaintiff was entitled to foreclosure. So if/when the appeal is ultimately brought, nobody talks about whether the plaintiff stated a cause of action, but whether foreclosure was permitted. As a result, case law on the circumstances in which a motion to dismiss is warranted in a foreclosure case is virtually non-existent.
That changed a bit recently, and I think it should change the way motions to dismiss are viewed throughout Florida.
On April 22, 2013, Florida’s First District Court of Appeal issued a written opinion in Wells Fargo Bank, N.A. v. Bokatka, Case No. 1D11-3356 (Fla. 1st DCA 2013). At first blush, the opinion seems unfavorable to homeowners, as the lower court dismissed the foreclosure suit with prejudice and the First District reversed that ruling. Dismissal with prejudice was wrong. Ugh.
If you look closer, however, the court made it clear that the motion to dismiss was properly granted, it just shouldn’t have been granted with prejudice. Take a look at this language from the opinion:
In this case, we do not fault the trial judge for dismissing the bank’s initial complaint, which facially created a contradiction between who the bank alleged was the owner of the note (the bank) and whom the attached note and mortgage identified as the owner (Option One). Putting aside (for the moment) the parties’ attempts to interject or examine materials outside the pleadings, dismissal without prejudice was appropriate simply to allow the bank an opportunity to amend its initial complaint to address this discrepancy and to fortify its allegations and attachments (perhaps with the allonge and some of the items the bank presented in support of its motion to vacate and set aside).
Mortgage foreclosure cases have many factual permutations—such as the many ways that ownership of notes can be established—that do not lead to simplistic judicial resolution at the frontend of litigation.
This language is important. Every plaintiff’s attorney and every judge who thinks a motion to dismiss is just something that gets denied so a case can be set for trial should re-read that last sentence:
Mortgage foreclosure cases have many factual permutations – such as the many ways that ownership of notes can be established – that do not lead to simplistic judicial resolution at the frontend of litigation.
I want every foreclosure defense attorney and every pro se homeowner to bring this case to every motion to dismiss hearing. That sentence needs to be shown to every single judge who adjudicates motions to dismiss. Every one.
When a foreclosure plaintiff alleges in its Complaint it is “entitled to enforce” the Note and Mortgage, point to that sentence.
When a foreclosure plaintiff alleges in its Complaint it is the “holder” of the Note, but the Note attached to the Complaint is payable to a different entity and does not contain an endorsement, point to that sentence.
When a foreclosure plaintiff asserts it has authority to prosecute the case on behalf of the owner of the Note, but does not specify who the owner is, point to that sentence.
These are the types of issues that motions to dismiss are supposed to resolve. Foreclosure plaintiffs should have to clarify these ”factual permutations” in their complaints, as the “judicial resolution” of such issues is not “simplistic.”
Legalese aside, I hope the First District’s opinion will make everyone realize motions to dismiss in foreclosure cases should be treated the same way as all homeowners should be treated – with respect.
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For years, I’ve listened as homeowners walked into my office with the same story. “The bank told me to default to be eligible for a loan modification, but when I stopped making payments, the bank refused to give me a modification.”
I have always believed this is a defense to foreclosure. I even have a term for it – “bank-induced default.” But don’t take my word for it. Read Florida’s case law on the matter. See La Boutique of Beauty Academy, Inc. v. Meloy, 436 So. 2d 396 (Fla. 2d DCA 1983) (“because the mortgagee, by its own conduct, led appellees to believe acceleration would not occur following a late payment … we affirm the order granting summary judgment for the mortgagors”); Dale v. Jennings, 107 So. 175 (Fla. 1926); Kerber v. Chadan, Inc., 364 So. 2d 1264 (Fla. 4th DCA 1978).
In my view, the law in this regard is clear. When a bank leads a homeowner to believe acceleration/foreclosure won’t occur after a default in payments – as it does when it tells a homeowner to default in order to get a loan modification – then it should not be able to foreclose. The Meloy case is particularly eye-opening. There, the Fourth District affirmed a summary judgment for the homeowners where the bank led the homeowners to believe a foreclosure would not occur after the default. Yes, a summary judgment for the homeowners … foreclosure case over, homeowners win, just like that.
That, however, begs the question. Even if a homeowner is able to “win” with this defense, what does that “win” mean? The bank can’t foreclose in that lawsuit, that seems clear. But what happens with the mortgage?
Let me dispel your immediate thought. No, I don’t think this gives a homeowner a free house. The fact that the bank wrongly declared a default shouldn’t give a homeowner a mortgage-free house.
So what, then, happens to the mortgage? If it doesn’t go away, can the homeowner resume payments? This is where it gets tricky.
In the bank’s view, the homeowner can’t resume making normal, monthly mortgage payments – not without paying all of the late charges, attorneys’ fees, and default interest since the alleged default, not to mention the monthly payments that accrued since the last payment was made.
In the homeowner’s view, doing that would be ridiculous. Why should a homeowner who was wrongly declared in default have to pay default interest, late charges, and attorneys’ fees where those charges would have been unnecessary if the bank hadn’t wrongly declared the default?
Judge William Levens of Hillsborough County recently encountered a fact pattern like this and crafted a really interesting solution. His Final Judgment not only denied a foreclosure, but it required the bank to reinstate the mortgage as of the date that payments stopped being accepted. All default interest, late charges, attorneys’ fees – POOF, GONE. The homeowner could resume making monthly, mortgage payments today as if the mortgage were never in default.
Great result, huh? I thought so, and that’s why I blogged about it nearly a year ago.
Now is when it gets really interesting.
The bank didn’t like that result, so it appealed to Florida’ Second District Court of Appeal. Today, the Second District issued a written opinion which reversed part of Judge Levens’ ruling but affirmed the rest. Significantly, the appellate court affirmed the judge’s ruling that the mortgage should be reinstated retroactive to the date that the bank wrongly stopped accepting monthly mortgage payments.
Read the appellate court’s ruling for yourself:
At the conclusion of the foreclosure trial, the trial court found that Kraz had not been in default under the terms of the loan when BB&T declared the default. Having reached this conclusion, the trial court denied BB&T’s request to foreclose on the property, and it set about creating an equitable remedy that would return the parties to the financial positions they would have been in had the improper default not been declared. As part of that remedy, the trial court reinstated the loan, ordered BB&T to write off the default interest and late fees it had charged …
Wow. It’s one thing for one circuit court judge to make a ruling like this. Useful, yes, but the extent to which it can be used in other cases is arguable. However, when the Second District makes this ruling, it is binding law for every circuit judge in Florida.
Yes, it’s now binding precedent that when a bank wrongly declares a default that a foreclosure should be denied and the parties returned to the positions they were in when this happened. I don’t want to call it a “bombshell” (I think Weidner has that term trademarked), but this is a really, really big deal.
How many cases can this impact? As I see it, thousands. Maybe tens of thousands. In my experience, there are untold thousands of homeowners who were induced to default under promises of a loan modification, and all such homeowners can use this argument to not only contest foreclosure, but to ask that they be returned to the position they were in at the moment the homeowner stopped making payments. That means not only that the bank can’t foreclose, but that all late charges, default interest, and attorneys’ fees are eliminated, and the homeowner can resume making normal, monthly mortgage payments.
One notable aspect of the Second District’s ruling … the fact that three years has passed without the homeowner making monthly mortgage payments is not relevant. Think about that for a minute. There’s no obligation to get current. Just begin making payments again, as if it were three years ago.
Can this concept work for everyone? Undoubtedly not. Many homeowners were not the victims of “bank-induced default.” But many were. And now that we have precedent from a Florida appellate court, it’s time to start pushing the envelope on this defense, over and over again.
Any homeowner who was duped to stop making payments under the auspices of a loan modification (only to ultimately realize the modification never came) … I can’t guarantee this defense will work, but you sure as heck better try. And if you want to bring your case to my firm, then, well, I hope you see I’m well-versed in the argument.
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Banks often do some really despicable things … breaking into houses, violating various federal and state laws … I could go on and on. Nonetheless, I almost always avoid the temptation to file suit on behalf of homeowners. In my view, there’s an enormous difference between fighting to defend a foreclosure lawsuit as a defendant and initiating a lawsuit as a plaintiff. Today, I received an absolutely heartbreaking email from a prospective client, and while her situation is truly awful, it’s a good way to illustrate why I am so firm in my beliefs on this issue.
You see, no matter how egregious a bank’s actions may be, if you’re a homeowner facing foreclosure, you probably don’t have a lot of money. That’s why you’re in foreclosure – times are tough. Unfortunately, banks know this. Hence, the cold, hard reality is that if you file a lawsuit as a plaintiff against a bank, the bank will use your lack of finances against you. Your inability to pay to fight shouldn’t matter – anyone should be able to seek relief in court if they were wronged. In reality, though, this makes all the difference. The moment you file that lawsuit, the bank will hire a silk-stockings law firm that bill by the hour with the primary objective of outspending you and outlasting you. Your case might appear great on the merits – “the bank broke into my house” – but if you can’t afford to take that case to trial, then what will it matter? In my view, if you start down this path, you invariably wind up spending a bunch of money you can’t afford to pay, only to, eventually, run out of money. So then you’re out of money and still haven’t finished your case.
Occasionally, when I’ve expressed this fear to clients, they responded by asking if I’d take the case on a contingent fee. While I understand the thought, my time is limited. If I can spend untold hours on one case, or spend that same amount of time representing lots of homeowners facing foreclosure, the choice is easy. I’ll forego the one case to help as many as possible.
Please read this email from a prospective client. I’m sharing it with her consent as a way to help homeowners realize this is a trap they should avoid. You might think you have a great case, but if you’re filing suit as a plaintiff against a bank, the chances of the bank being able to outspend you and outlast you are quite high.
As I say this, please realize this homeowner paid over $100,000 in fees. When a lawyer like me is telling you he’d turn down a case like this – for a homeowner who could pay six figures in fees – that should tell you the extent of my concerns about this type of situation. For me, there’s more at stake here than fees. It’s just heartbreaking to know anyone would pay fees like this – from retirement accounts, no less – and now be in no better position than when the problem started.
So let’s keep fighting the good fight – but let’s do it as defendants, avoiding the spending battles the banks initiate when you file suit. That’s certainly what this homeowner would do if she had it to do over again.
Here’s the email …
Good Afternoon Mr. Stopa,
I am proceeding pro se in three lawsuits – one of them a foreclosure and two others in which I am the plaintiff suing Wells Fargo & Corelogic for their repeated breaking & entering (one done before filing for foreclosure) and continued trespass on my property. The lawsuits are almost four years old. Until recently I was represented, but the attorneys withdrew over continued frustration with the Defendants’/Plantiffs’ non compliance with discovery requests, and my inability to promise them an additional $30,000.00.
I have no discovery, and have paid over $100,000 in legal fees – mostly from my retirement accounts, which my attorneys were aware of. No depositions, except for my own. I now need to subpoena the Corelogic agent who broke into my house twice, and am in need of legal advice. The defendants’ attorneys refuse to produce him (even though they said he could be contacted through their offices) and his Florida Driver’s license has a UPS Store as his address.
The judge refused to stay the upcoming (May) trial in the Corelogic case. I can afford a consultation and limited legal work, but can no longer afford “unlimited” representation. Do you know any lawyer who would talk with me? Someone just starting out and in need of experience?
Even though I feel that my past attorneys took advantage of me (my former attorneys still haven’t returned my 20,000.00 retainer held in trust, from which they will deduct their expenses in withdrawing and their final invoice) I am hoping to find someone who could at least give me limited legal advice. I had filed a Cert Petition with the court of appeal in an effort to quash my attorneys’ withdrawal, but it was denied last week on the determination that I would not suffer “irreparable harm” that could not be remedied on appeal.
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Florida’s Fifth District Court of Appeal just issued an opinion in U.S. Bank, N.A. v. Wanio-Moore which seems to indicate that anyone can verify a foreclosure complaint consistent with the requirements of Fla.R.Civ.P. 1.110(b). In fact, that person need not specify his/her position or title with that verification, as a mere signature is sufficient. In the words of the Fifth District, “the trial court erred in concluding that a foreclosure verification must state must state the signer’s position” and “the rule does not require any information about the signer’s positional authority.”
I find this opinion disappointing on many levels.
First off, do you notice how the homeowner represented herself pro se. Not to criticize pro se representation (okay, I’m criticizing it), but does anyone think this homeowner made the best possible argument to the appellate court, one an attorney with experience on these issues would have made? I sure don’t. It’s a cryin’ shame to have important issues like this – impacting many thousands of pending foreclosure lawsuits – decided on an appeal where a lawyer wasn’t even involved.
As for the substance of the ruling, read it. Do you know what troubles me? The seeming indication that anyone can verify a foreclosure complaint. The way this opinion is written, one (at least arguably) need not be an officer, director, employee, or agent of the plaintiff – or have any relationship with the plaintiff at all. In fact, the signer need not include his/her title or position in the verification at all. Hence, accepting this literally, one could argue that the bank can go to a local tavern and have a random drunk sign the verification – and that said verification is all that is required by Rule 1.110(b).
Did we already forget the reasons Rule 1.110(b) was created in the first place? This was the first and only time in the history of Florida jurisprudence that the Florida Supreme Court created a rule of procedure to protect the courts and the public from an industry’s widespread use of false documents. Are we really at the stage where we can act like any old signature will do – without even clarifying who is signing?
I sure don’t think so. That’s why I filed this Motion to appear as an Amicus and a Motion for Rehearing and Clarification.
Please bear in mind … this was not my case. Hence, there’s a fair chance the appellate court will deny my motions without explanation. That said, I just couldn’t sit back and do nothing. Law is being created adverse to homeowners, and the banks are very good at choosing to go to the appellate courts on those cases where a competent defense counsel is not involved. As a result, I have to share my views in this manner or else I may never be heard. But I’m not giving up … and neither should you.
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