Wednesday, December 31, 2014

Another Snoozing Bankster Sleeps Through Foreclosure Statute Of Limitations; Court Denies Foreclosure On $1M+ Penthouse, But Also Refuses To Cancel Note & Mortgage, Will Not Quiet Title In Favor Of Property Owner

In Miami, Florida, the Daily Business Review reports:
  • Deutsche Bank snoozed and lost on a foreclosure suit that took about seven years to play out in Miami-Dade.

    While the bank's case wound its way through the court system, Aqua Master Association Inc. started its own foreclosure claim to enforce liens and collect unpaid dues for a penthouse at 201 Aqua Ave. in Miami Beach.

    The condo association gained ownership of the penthouse in 2011, and successfully argued in court that Deutsche Bank waited too long to pursue the case.

    The Third District Court of Appeal agreed, siding with the condominium association and barring the bank from continuing the foreclosure.

    The case shows the "negative consequences that lenders can face if they go too far with their delay tactics in foreclosure cases," condo association attorneys Nicholas and Steven Siegfried said in a statement.

    The case was Deutsche Bank Trust Co. Americas v. Harry Beauvais, a borrower who defaulted on his mortgage within months of securing it in early 2006.

    Loan servicer American Home Mortgage Servicing Inc. filed suit in January 2007, demanding accelerated payments for the full $1.44 million.

    Ironically it was this move for upfront payments that would unravel the lender's case and cost the bank the million-dollar property, because the condo association successfully argued the demand started a five-year clock for resolving the foreclosure.

    Statute of Limitations

    The court booted American Home Mortgage's case without prejudice when the servicer failed to attend a hearing.

    That dismissal led the condo group to start its own efforts to claim outstanding fees on the penthouse.

    "Like a lot of associations, this one was waiting to see what would happen with the foreclosure action," said Nick Siegfried, shareholder at Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel in Coral Gables. "But since the bank didn't proceed and the case was dismissed, the association had no choice but to proceed on its own."

    Aqua Master Association won control of the penthouse in 2011, but its claim remained subject to the mortgage.

    When Deutsche Bank took over American Home's foreclosure suit in December 2012, Aqua said the clock had already been ticking for five years and was about 11 months outside the statute window.

    The bank argued the earlier dismissal "decelerated" the loan, but a judicial panel disagreed.

    In an opinion issued Dec. 17, judges Frank Shepherd, Kevin Emas and Edwin Scales barred Deutsche Bank from pursuing the foreclosure. They found the bank never withdrew the original demand for accelerated payments, and so had to abide within the five-year window.

    Mortgage Still in Play

    But it was a case of good news and bad news for the Aqua condo association, because while the Third DCA blocked the lender from pursing the foreclosure, the court did not wipe out the mortgage. It means Aqua can continue to rent the penthouse, but can't sell it without approval from Deutsche Bank, whose mortgage lien is valid until 2041.

    Siegfried said the group is considering an appeal to challenge the lien.

    Deutsche Bank attorneys William McCaughan, Steven Weinstein and Stephanie Moot of K&L Gates in Miami did not respond to requests for comment by deadline.

    "Even though the bank can't enforce the mortgage, it has the ability to prevent a sale from going through," Siegfried said. "The association would have to deal with them on some level and perhaps negotiate a payoff with them, otherwise hold off the sale of the property."
Source: Statute of Limitations Dooms Deutsche Bank in Foreclosure.

For the court ruling, see Deutsche Bank Trust Company Americas v. Beauvais, Case No. 3D14-575 (Fla. 3d DCA, December 17, 2014).