Tuesday, November 08, 2016

Statute Of Limitations In Florida Foreclosure Cases Rendered Toothless By State Supreme Court; Ruling A Big Win For Sloppy Banksters, Provides No Closure For Homeowners In Long-Term Foreclosure Limbo

In Tallahassee, Florida, the Daily Business Review reports:
  • The Florida Supreme Court on Thursday ruled in favor of mortgage lenders in a decision that homeowners' advocates say will create renewed uncertainty for some borrowers about whether they can stay in their homes.

    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. Borrowers argued a five-year statute of limitations should apply. "People have a right to rely on statutes of limitation as bringing closure, especially after five years," said Kendall Coffey of Coffey Burlington in Miami, who represented borrower Lewis Bartram. "That closure has been erased for hundreds of borrowers. While we appreciate the court's consideration, we strongly disagree with their decision."

    But attorney Derek Leon, who represents mortgage lenders in several pending state court cases, said the court would have devastated the mortgage industry if it had accepted the borrowers' arguments. He estimated a decision in the borrowers' favor would have wiped out $300 million to $400 million in debt obligations secured by real property across Florida.

    "This is perhaps one of the most important decisions in the mortgage industry in a very long time, and it was a sweeping victory for the banks and anybody in the mortgage servicing business," said Leon, who is with Leon Cosgrove in Coral Gables.

    The Bartram decision applies to mortgage contracts containing an acceleration clause, meaning that if a homeowner defaults, the lender can require the full balance of the loan be paid immediately.

    The justices found that when foreclosure actions are dismissed, lenders and borrowers return to their pre-foreclosure complaint status. That allows homeowners to continue to pay back their loans in installments, rather than all at once.

    It also reinstates lenders' right "to seek acceleration and foreclosure based on the mortgagor's subsequent defaults," the court ruled in an opinion authored by Justice Barbara Pariente. "Accordingly, the statute of limitations does not continue to run on the amount due under the note and mortgage."

    Chief Justices Jorge Labarga and Justices Peggy Quince, Charles Canady and James Perry concurred. Justices Ricky Polston and Fred Lewis concurred in result. The decision affirms a Fifth District Court of Appeal ruling in the case.

    The Thursday decision was consistent with the Florida Supreme Court's 2004 opinion in Singleton v. Greymar Associates, Pariente wrote.

    In Singleton, the court ruled successive foreclosure actions based on separate periods of default were not barred by res judicata, the principle that a case that has already been adjudicated cannot be pursued again by the same parties. Two separate defaults are considered two different breaches of the mortgage contract and can be brought as two different actions, the court ruled.

    While he concurred in result, Lewis wrote that he was uncomfortable with the expansion of Singleton to "potentially any case involving successive foreclosure actions."

    "I fear [continued expansion] will come at the cost of established Florida law and Floridians who may struggle with both the costs of owning a home and uncertain behavior by lenders," Lewis wrote.

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