The Right Way to Settle a Foreclosure Case
I recently helped a client settle a foreclosure case via a short sale with a waiver of deficiency. Everything was great, until the bank’s attorneys submitted this Order_Dismissing_Case to the Court, without submitting it to me for review beforehand, resulting in the Order being signed before I ever received a copy. (The foreclosure mills’ repeated, ex parte submission of contested Orders is absolutely appalling, but that’s a blog all to itself.)
The problems with the Order are obvious:
1. The foreclosure lawsuit was dismissed without prejudice, enabling the bank to re-file suit.
2. The Order said the mortgage was “considered to be in full force and effect.”
3. The Order said Note “shall not be considered cancelled” and the original Note was to be returned to the Plaintiff.
When I read this Order, I was beside myself. This case settled. The property was sold. Any deficiency was waived. Hence, the mortgage was paid/satisfied as a matter of law, as was the Note. There was plainly no basis for the Plaintiff to take the position that the Mortgage and Note remained in place, nor was there any reason for the Plaintiff to have the original Note returned to it. Similarly, there was no reason for the dismissal “without prejudice,” as there was no circumstance where the lawsuit could be re-filed.
I filed a Motion to Vacate this Order and for Sanctions, arguing, essentially, just that. I asked for sanctions against counsel for submitting the Order, with these flaws, without my consent. Interestingly, when I spoke to the attorney at Florida Default, he said that he understood my concerns but that upper management required Orders to be submitted in this manner. I pushed for an explanation. Why? What is the purpose of an original Note being returned, with an Order saying the Note and Mortgage were still in effect, if the property had been sold and any deficiency waived? The FDLG lawyer had no answer (as there was none).
After I continued pushing the issue, FDLG relented, consenting to the entry of this Amended_Order of Dismissal. Note the differences? This Amended Order clarifies:
1. The foreclosure lawsuit is dismissed with prejudice;
2. The mortgage is satisfied, cancelled, and of no further force and effect; and
3. The original Note is to be kept in the court file, where it shall be removed from the stream of commerce and destroyed in the normal course.
These differences may appear to be subtle to non-lawyers, but they make a world of difference going forward. Under the first Order, the bank could have re-filed suit on the same note and mortgage, which were still in place. Yes, we had a short sale agreement with deficiency waiver, but if the bank tried to sue in 5-10 years, would my client still have the paperwork to prove it? Who knows. With the Amended Order, she won’t have this concern, as the public record now appropriately reflects that the mortgage is satisfied, the Note has been removed from the stream of commerce, and the foreclosure lawsuit can never be re-filed.
Mark Stopawww.stayinmyhome.com
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