Though we have noted in this blog the rarity--if not potentially the impossibility--of obtaining a "free house" in mortgage foreclosure cases, as many borrowers chase much like Captain Ahab looking after his great white prize, one decision shows the extremely limited factual circumstances where a party can obtain just that.
In the case of REVERSE MORTGAGE SOLUTIONS, INC. versus the heirs of Ruby Lee Hayes (24 Fla. L. Weekly Supp. 938a), the court was faced with a reverse mortgage that was the subject of a mortgage foreclosure, which is not of itself an unusual proposition. However, what made this case unique was the fact that the bank (or perhaps its counsel) were so inattentive (which, again, is not altogether that unusual in and of itself) that it went unnoticed that more than five years had passed since the original action to foreclose had been dismissed by the trial court. Whereas, under the newest Bartram v. U.S. Bank, N.A., 41 Fla. L. Weekly S493 (Fla. November 3, 2016) case law, the statute of limitations is extended by each missed payment regardless of acceleration of the note by the bank, in this action, the default was the passing of the borrower, Ruby Hayes.
Since no payments were due (being a reverse mortgage), the court determined that no continuing default was present through which the bank could claim an extension of the statute of limitations. Final Judgment was entered in favor of the borrower's lone heir, awarding her the house and denying the bank's effort to foreclose the mortgage and note.
It's not immediately clear what the heir's plans are for the home, but should she elect to stay in the home for the remainder of her life, it may prove very difficult for the bank to collect anything on its note and mortgage whatsoever. At least for the time being, we appear to have a verified sighting of the fabled "free house" foreclosure unicorn.
We have on several occasions in this blog touched on the requirements of standing for the lender, evidentiary requirements for the default notice, and foundation for bank witnesses. Though recently there had seemed to be a tightening of requirements for proving the sending of the default notice and for qualifying a witness to speak on another institution's default notice generation protocols and record-keeping, a recent case seems to again potentially lessen the burden on lenders seeking to foreclose.
In the case of JPMORGAN CHASE BANK NATIONAL ASSOCIATION v. JEAN PIERRE 2017 Fla. App. LEXIS 4632, 42 Fla. L. Weekly D 781, 42 Fla. L. Weekly D 781 (Fla. Dist. Ct. App. 4th Dist. Apr. 5, 2017), the Fourth District Court of Appeals reversed judgment in favor of the borrowers and ordered entry of judgment for the lender (actually, the successor in interest to the lender) on the basis that the trial court's findings that the bank had not proven that a default notice had been sent and that it had not proven standing were contrary to the law.
In this case, though the witness that appeared worked for a third party servicer for the bank, she speculated about the date upon which the note had been transferred and testified that the servicer--not the bank that brought the action--owned the note. Further, she testified that she had learned during her training at the servicer about the original (not the current lender that her company was actually representing) lender's default notice generation protocols and that she was aware, generally, with those protocols and that her company had verified through collection notes that the letter had been sent.
Citing issues with standing given the testimony by the record custodian that a party other than that which filed the complaint actually owned the note and testimony which apparently led the trial court to determine the witness did not have actual familiarity with the originating lender's default notice policy, the trial court entered judgment in favor of the borrowers. The appellate court reversed and ordered entry of judgment in favor of the lender, stating (in sum) that the stated familiarity with the process by which a third party originating lender generally goes about sending letters with notice of default was sufficient and that it did not particularly matter when the witness believed the endorsement was signed transferring the note and it did not particularly matter that the witness thought her company owned the note in question rather than the Plaintiff lender.
A subtle maneuver was made by the appellate court here, as well. Though the standard of review was de novo, since the issues were deemed a matter of law, the question of whether the witness knew about the default notice procedure and whether a letter was sent was an issue of fact, since the borrowers had denied that a letter had been sent. The appellate court seems to have taken the bank witness testimony at face value and disregarded the denial by the borrowers that any notice had been sent. The trial court (which is presumed to be in the best positoin to weigh credibility of a witness) was disregarded by the appellate court on this point, which perhaps was due to the fact that the trial court did not make a finding on the record that the witness was not credible in her testimony.
Compare this case to the recently reviewed case of Allen v. Wilmington Trust, N.A., 2017 Fla. App. LEXIS 3970 (Fla. 2d DCA 2017), which we discussed here.
If you have questions about a foreclosure, a contract, or other real estate dispute reach out to the foreclosure attorneys of Icard Merrill today.
The question of who "holds" the note and mortgage (even where, as is often the case, the 'holder' cannot physcially hold the note and mortgage because they are lost) is one of the most often litigated aspects in residential foreclosures. Borrowers in default and looking for ways to keep their home (or at least to stay in the home mortgage free for as long as possible), often find themselves getting a crash course over the internet on concepts such as the "holder" of the note, indorsements, allonges, indorsements in blank, and standing. Speak to a borrower that is a veteran of a multi-year, multi-action foreclosure and an uninitiated attorney may even learn a few things about these terms as well.
Another recent case before the Fourth DCA touches on several of these concepts and helps give more guidance to those defaulted borrowers seeking to stem the virtually inevitable tide of foreclosure of their home. As the court in PennyMac Corp. v. Frost, 2017 Fla. App. LEXIS 3441 (Fla. 4th DCA 2017) stated, the note in question was originally indorsedn in blank by the original lender, however, that indorsement was marked "void." Subsequently, an allonge and blank indorsement was executed by a successor in interest to the original lender. The borrower argued (and the trial court agreed) that the original void indorsement rendered any subsequent indorsement invalid for purposes of standing without more steps being taken as a nonholder in possession of the note and with the rights of a holder.
Foreclosure actions can be challenging and very confusing to the uninitiated. Talk to an attorney in the foreclosure group at Icard Merrill today if you have questions about your home and mortgage.
A crucial blow to wayward borrowers and a life raft for inattentive banks and foreclosure counsel were handed out simultaneously by the Florida Supreme Court recently in Bartram v. U.S. Bank, N.A., 41 Fla. L. Weekly S493 (Fla. November 3, 2016). This case will likely have far-reaching impact in the foreclosure world and likely represents a death-knell for the “free house” dream held by many borrowers and defense attorneys.
Before the Court in Bartram was the issue of statute of limitations in a foreclosure action and the impact of acceleration letters from lenders. The essence of the issue could be summarized by stating that banks are generally owed payments on a monthly basis, but when buyers default, banks often “accelerate” the note, meaning that all remaining payments come due as of the month of the acceleration notice.
The argument by defense attorneys, therefore, has long been that, by the mechanism of the acceleration notice, no more payments are due after the date of acceleration and rather one lump final payment was due. The issue arose for lenders when they then either failed to bring an action within the five-year statute of limitations following that acceleration or the bank’s action was so mis-prosecuted that it ended up being dismissed or adjudicated against the bank (meaning that the court determined that the case brought on that accelerated obligation was found in favor of the borrower). Under either scenario, the argument went; the bank had no new defaulted obligation to complain of and could no longer bring a successful case against the homeowner.
However, the Bartram decision appears to have firmly slammed shut the door on that argument. Id. The Court held (in what could conceivably be called a bit of tortured logic) that a dismissal by the bank of its action effectively acts as a “revocation” of the acceleration clause and returns the parties to their pre-foreclosure positions (i.e., monthly payments again due). Id. This allows the bank to bring a new action on payments missed post-acceleration.
Curiously, the Court stated that this artificial “revocation” mechanism may not be allowed if there is an express term to the contrary in the parties’ note/mortgage (a term that has never likely been seen in any mortgage or note). What is also curious is how the Court seemed to ignore entirely the fact that acceleration notices are often sent in advance of a foreclosure action and are not a part of the action itself (raising the question of how far “pre-foreclosure” the parties are actually being returned—potentially months or maybe longer?). Also curiously, the Court was silent on whether the borrowers could then resume making payments on the newly re-instated monthly obligation (hint: the banks won’t allow that).
This case likely represents an ugly, but potentially necessary “bail-out” for banks and their attorneys. The logic and legal basis for the ruling is fairly questionable. Yet, it often happens that banks and the massive foreclosure-focused legal firms serving them are so inattentive that cases languish for months or years and are often dismissed or not brought in a timely manner.
Therefore, allowing banks a perpetual ‘do-over’ on bringing foreclosure cases probably reaches the correct result; homes that banks lent a lot of good money to buy are returned to the banks once the borrowers have long since stopped paying for them. It would be arguably a more logical result to have homes left in the hands of borrowers if banks and their attorneys botch the great many opportunities they have to properly foreclose, but it would not necessarily be the just result. In Bartram, the court appears to have recognized the just result and simply stretched (tortured) the law to achieve it, potentially sacrificing logic to get there.
If your home is in foreclosure, or you are a lender seeking a law firm that will actively protect your rights, contact the foreclosure attorneys at Icard Merrill today.
In another lesson to employers and human resources management, a recent decision once again highlights the importance of documentation when it comes to challenging unemployment compensation claims by employees purportedly terminated for cause.
The court in Williams v. City of Winter Haven, essentially provided employers with a mandate with respect to documentation, finding that “an isolated rule violation based on a good faith error in judgment does not amount to misconduct that would justify a refusal of benefits.” 41 Fla. L. Weekly D1657 (Fla. 2d DCA July 15, 2016). This stems from the court’s interpretation of the term “misconduct” as defined by section 443.036(29), Florida Statutes.
Employers should read this pronouncement from the court to mean that an employer must show evidence (read: documents) that the employee undertook multiple violations of a known policy. How do employers show this? Employers should have proof in writing (by email or signature list) of receipt of a copy of a written policy, written evidence of coaching, corrective action, or other employee feedback for the problem employee showing how they were made aware of the policy and how their conduct was violating it, and at least one or more follow up documented corrective action discussions with the employee prior to termination.
Employers should keep in mind, “[t]he unemployment compensation statute must be liberally construed in favor of the claimant, and the “‘disqualification provisions, being remedial in nature, are to be narrowly construed.’” Id., quoting Davidson v. AAA Cooper Transp., 852 So. 2d 398, 401 (Fla. 3d DCA 2003). The final takeaway from this notation by the court is that employers would be best served by implementing a thorough (and legally appropriate) interview and hiring process to screen applicants as well as a robust training and coaching program designed to bring in great applicants, train them for success, and retain them. This will be far more cost effective (and operationally sound) than perfecting the challenge process for unemployment claims.
For answers to your questions about unemployment compensation, sound human resources strategies under Florida and Federal law, or other questions about employment, speak Icard Merrill’s highly-qualified employment attorneys today.
Anyone that has been to a foreclosure hearing or trial docket in the last five years or more will understand the obvious implications of those colloquially-termed "cattle call" dockets. A room filled with attorneys, pro se homeowners, bored (or sometimes absent) bank representatives and court staff pack most courtrooms assigned to the foreclosure cases. These conditions (and especially the dozens of cases set for the same hearing or trial time) lead to what some would consider an unusual amount of both mistakes and creative interpretations of the law and rules of evidence. A recent case outlines one (hopefully) extreme example of this situation.
In a Fourth District case, the homeowners were forced to appeal in order to overturn a judgment rendered almost entirely upon the testimony of a loan analyst that not only did not work for the then-current lender (and, seemingly never had worked for them), but also never worked for the predecessor lender and learned the information she testified to at trial by searching through Google on the internet. Sosa v. Bank of N.Y. Mellon, 187 So. 3d 943, 944 (Fla. 4th DCA 2016) It bears repeating that the witness's testimony somehow avoided being stricken despite having virtually zero foundation whatsoever other than the witness essentially having heard of the lenders and looked them up on the web. Thankfully, the appellate court prevented an egregious miscarriage of justice in this case, but the fact that a judgment was entered on these facts is frightening.
This case drives home the point that it can be absolutely crucial to have competent counsel (as well as a court reporter) in a foreclosure trial or hearing. Failure to have one could result in a homeowner having to either scramble after a zany ruling, or simply being ruled against in a way that clearly violates the law and rules of evidence. Talk to the foreclosure attorneys at Icard Merrill today if you have questions about your home.