Fla. Appeals Court Nabs Sneaky F'closing Lender In Attempt To Improperly Go After Foreclosed Property Owner's Personal Assets To Satisfy Unpaid Debt

According to a recent ruling by Florida's 3rd District Court of Appeal, an otherwise-successful foreclosing mortgage lender was nabbed in its attempt (probably through its legal counsel) to dupe an ostensibly snoozing trial judge into signing an improperly-worded proposed judgment by sneaking a few extra words into the judgment that enabled it, after a foreclosure sale had already taken place, to go after the foreclosed property owner's personal assets to satisfy the remaining unpaid balance on the home loan without first obtaining a deficiency judgment, a process the lender apparently sought to surreptitiously circumvent.

The ruling is short and to the point, and appears below in its entirety (including the court's footnote):

• The final judgment of mortgage foreclosure on appeal unauthorizedly and contrary to Form 1.996, promulgated by the Florida Supreme Court for such actions, provides "for let execution issue," upon the amounts due on the underlying debt. As in American General Finance, Inc. v. Graves, 621 So. 2d 585 (Fla. 5th DCA 1993),(1) those words are stricken from the judgment under review, which is otherwise affirmed.
  
  The effect and purpose of this ruling is to prevent the circumvention of the process required to establish the right to a deficiency judgment, which prominently includes a valuation of the mortgaged property. See Century Group, Inc. v. Premier Fin. Servs. East, L.P., 724 So. 2d 661 (Fla. 2d DCA 1999).
  
  In other words, we disapprove any effort — including those already undertaken by the appellee in this case — to reach the personal assets of the mortgagor until, unless, and only to the extent that a deficiency judgment is rendered after an appropriate exercise of the trial court's discretion in accordance with applicable principles of law and equity. See Wilson v. Adams & Fusselle, Inc., 467 So. 2d 345, 346 (Fla. 2d DCA 1985), and cases cited therein; see also Fulton v. R. K. Cooper Constr. Co., 208 So. 2d 863 (Fla. 3d DCA 1967), writ dismissed, 216 So. 2d 11 (Fla. 1968).
  
  Moreover, the trial court must also consider the claim that the appellee specifically waived the right to a deficiency in the proceedings below, in which case no such judgment may be entered. See Taylor v. Kenco Chem. & Mfg. Corp., 465 So. 2d 581, 584 (Fla. 1st DCA 1985); Capital Bank v. Needle, 596 So. 2d 1134, 1136 (Fla. 4th DCA 1992).
  
  Affirmed in part, reversed in part and remanded in part.
  
  Not final until disposition of timely filed motion for rehearing.

(1) American General Finance, Inc., 621 So. 2d at 585, states in its entirety:

• We delete the words "for which let execution issue" from the final judgment of mortgage foreclosure which is otherwise affirmed as modified.
  
  AFFIRMED as modified.

For the ruling, see Farah v. Iberia Bank, No. 3D09-2524 (Fla. 3d DCA, October 6, 2010).

See Abstract Appeal: Second District: Adopting Proposed Judgments Verbatim for an observation on the not-uncommon occurrence of trial judges signing proposed judgments, prepared by counsel for a victorious litigant, without making any changes thereto.

Note: This ruling serves as a reminder that, at least in Florida, after a foreclosure sale has taken place, the lender has no business trying to hit up the foreclosed homeowner for the unsatisfied portion of the loan balance without first going through the aggravation of heading back to court and obtaining a deficiency judgment (which necessarily requires some judicial determination of the property value to determine exactly how much the lender is entitled to collect from the homeowner).

Keep in mind that, in the event the unsatisfied balance on the foreclosed loan ends up in the hands of some scavenger "zombie debt" buyer for collection (who then pursues the foreclosed homeowner without first obtaining a deficiency judgment), such collection attempts could constitute a violation of the Federal Fair Debt Collection Practices Act.