New Amendments to the Florida Rules of Civil Procedure Regarding Foreclosures

Pleading requirements contained in Rule 1.110 have been moved to Rule 1.115 and slightly amended/adjusted.

1.115 Pleading Mortgage Foreclosures

(a) Claim for Relief. A claim for relief that seeks to foreclose a mortgage or other lien on residential real property, including individual units of condominiums and cooperatives designed principally for occupation by one to four families which secures a promissory note, must: (1) contain affirmative allegations expressly made by the claimant at the time the proceeding is commenced that the claimant is the holder of the original note secured by the mortgage; or (2) allege with specificity the factual basis by which the claimant is a person entitled to enforce the note under section 673.3011, Florida Statutes.
(b) Delegated Claim for Relief. If a claimant has been delegated the authority to institute a mortgage foreclosure action on behalf of the person entitled to enforce the note, the claim for relief shall describe the authority of the claimant and identify with specificity the document that grants the claimant the authority to act on behalf of the person entitled to enforce the note. The term “original note” or “original promissory note” means the signed or executed promissory note rather than a copy of it. The term includes any renewal, replacement, consolidation, or amended and restated note or instrument given in renewal, replacement, or substitution for a previous promissory note. The term also includes a transferrable record, as defined by the Uniform Electronic Transaction Act in section 668.50(16), Florida Statutes.
(c) Possession of Original Promissory Note. If the claimant is in possession of the original promissory note, the claimant must file under penalty of perjury a certification contemporaneously with the filing of the claim for relief for foreclosure that the claimant is in possession of the original promissory note. The certification must set forth the location of the note, the name and title of the individual giving the certification, the name of the person who personally verified such possession, and the time and date on which the possession was verified. Correct copies of the note and all allonges to the note must be attached to the certification. The original note and the allonges must be filed with the court before the entry of any judgment of foreclosure or judgment on the note.
(d) Lost, Destroyed, or Stolen Instrument. If the claimant seeks to enforce a lost, destroyed, or stolen instrument, an affidavit executed under penalty of perjury must be attached to the claim for relief. The affidavit must: (1) detail a clear chain of all endorsements, transfers, or assignments of the promissory note that is the subject of the action; (2) set forth facts showing that the claimant is entitled to enforce a lost, destroyed, or stolen instrument pursuant to section 673.3091, Florida Statutes; and (3) include as exhibits to the affidavit such copies of the note and the allonges to the note, audit reports showing receipt of the original note, or other evidence of the acquisition, ownership, and possession of the note as may be available to the claimant. Adequate protection as required under section 673.3091(2), Florida Statutes, shall be provided before the entry of final judgment.
(e) Verification. When filing an action for foreclosure on a mortgage for residential real property the claim for relief shall be verified by the claimant seeking to foreclose the mortgage. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement:
“Under penalties of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

Two-Way Media LLC v. AT&T Inc.- Attorneys Read Your Emails Closely!!

Last week, a federal appellate court held that two law firms missed an appeal filing deadline in a $40 million verdict case, even though the law firms claim to have been misled by a notice of electronic filing email sent by the federal trial court. Two-Way Media LLC v. AT&T, Inc., No. 2014-1302 (Fed. Cir. March 19, 2015). 

In the case, AT&T lost a jury trial in federal court in Texas.  It then filed motions for a Renewed Judgment, or alternatively, for a new trial under seal. The trial court issued orders denying the motions and entered a final judgment, which caused appeal delays to start running. 

However, the electronic filing email that linked to the orders on ECF (the  federal court electronic filnig system) stated in the summary of the document field that the orders granted the motions to file under seal, without indicating that the orders also denied the relief sought in the motions themselves. Thus, the time to file an appeal began to toll.

AT&T’s attorneys say that they did not discover this until after the appeal deadlines had already run, but on appeal, in a 2-1 decision, the U.S. Court of Appeals for the Federal Circuit ruled that it was too late and that the trial court correctly denied the defendant’s motion to extend or reopen the appeal period. 

The moral of the story for lawyers is that you should not trust the wording in those electronic filing emails that we get in Florida and in federal court, and actually read the order or document attached to that email.  An attorney can no longer use the excuse that he/she relied upon the electronic filing email with a summary of the order/motion instead of reading the actual attached/linked document.


Lenders Foot Dragging on Foreclosures Stick Florida Home and Condo Owners with Association Fees & Taxes- New Potential Law To Counter This Practice

State Representative Katie Edwards (D-Plantation) has sponsored a vital foreclosure bill to protect the interests of Floridians. HB 975 would require lenders to assume responsibility for association fees and property taxes when a foreclosure is filed with the court.


Under current law, homeowners in foreclosure remain on the title. Thus, home and condo owners continue to be financially responsible. Rep. Edwards’ bill would help protect Florida consumers by requiring lenders pursuing foreclosure to take on financial responsibilities associated with ownership. The changes would speed up the foreclosure process that currently lags behind the rest of the nation.

“Mortgage lenders are directly to blame for Florida’s foreclosure crisis and it’s falling on the backs of Floridians. Lengthy foreclosures and minimal responsibility for amounts owed by foreclosing lenders has forced associations to pass staggering amounts of unpaid delinquent assessments on established homeowners,” Rep. Edwards said. “Roughly 21 percent of foreclosed properties sit vacant for years while lenders avoid paying taxes and maintenance assessments by delaying the taking of the title to the property. This is bad for Florida and my bill aims to stop it.”

While a lender may file a notice of foreclosure to safeguard its stake, it is not uncommon for banks to deliberately delay the process of taking back the property. Often because the delinquent home is worth less than the outstanding debt or in order to avoid paying association assessments and property taxes.

Florida has led the nation in foreclosures for the past three years and is third in the nation for the longest foreclosure times. Florida foreclosures take an average of 944 days to complete, more than twice the national average. The foreclosure crisis in Florida has had a profound effect on Florida’s homeowner and condo associations as well as the Floridians who reside in those neighborhoods.

Currently, Florida law allows a purchasing lender to escape the vast majority of the delinquent assessments, much of them accruing during the lender’s own foreclosure process.

“Mounting pressures from these unnecessary delays pile on stress for people already going through a tough situation. These same problems negatively impact associations’ ability to comply with state-mandated fiscal requirements and undermining the delivery of services critical to the upkeep, repair and safety of Florida’s associations,” Rep. Edwards said.

SB 1066 a companion bill was filed in the Senate by State Senator Aaron Bean (R-Jacksonville).

If signed into law the bill would go into effect July 1, 2015.


Black Knight: 1st Time, Repeat Foreclosure Starts at 12-month High

The latest mortgage monitor from Black Knight Financial Services shows that both first-time and repeat foreclosure starts reached 12-month highs, although there was clear separation in the levels of increase between the two.

Separation also continues to be seen between judicial and non-judicial foreclosure states across multiple performance indicators,” according to Trey Barnes, Black Knight’s senior vice president of Loan Data Products.

“Overall foreclosure starts hit a 12-month high in January, and that held true when looking at both first-time and repeat foreclosure starts individually,” Barnes said. “Repeat foreclosure starts made up 51% of all foreclosure starts and increased 11% from December. In contrast, first-time foreclosure starts were up just a fraction of a% from the month prior.” 

Black Knight found that January foreclosure starts jumped about 10% from December in judicial states as compared to just a 1.7% increase in non-judicial states. Judicial states are also seeing higher levels of both new problem loans and serious delinquencies (loans 90 or more days delinquent, but not yet in foreclosure) than non-judicial states, although volumes are down overall in both categories.

Florida Still Ranked #3 in the Nation in Foreclosures Despite Decrease

Florida’s foreclosure activity has declined by more than a third from a year ago but it still ranks as one of the highest in the nation. 


The research firm Realty Trac reports that Florida has one out of 570 homes with a foreclosure filing last February. 

That figure put Florida with the third highest rate, only behind Maryland and Nevada. 

Florida’s foreclosure activity has declined by 35 percent in the past year.

Revised Servicing Rules for Fannie/Freddie Loans

On March 2, 2015, the Federal Housing Finance Agency (FHFA) announced new requirements for sales of non-performing loans (in default) by Freddie Mac and Fannie Mae that will reduce risk to taxpayers by transferring it to the private lenders and servicers.

The loans included in NPL sales will generally be severely delinquent – typically more than one year past due.


Of significant weight to homeowners, during loss mitigation servicers must apply a waterfall of resolution tactics that includes evaluating borrower eligibility for a loan modification (HAMP and/or proprietary modification), a short sale, and a deed-in-lieu of foreclosure.  Foreclosure must be the last option in the waterfall.  


There are also new loan modification requirements.  The new servicer will be required to evaluate all pre-2009 borrowers (other than those whose foreclosure sale date is imminent or whose property is vacant) for the U.S. Department of the Treasury’s Making Home Affordable programs, including the Home Affordable Modification Program (HAMP).  


All post-January 1, 2009 borrowers (other than those with an imminent foreclosure sale date or vacant property) must be evaluated for a proprietary modification.  Proprietary modifications must not include an upfront fee or require prepayment of any amount of mortgage debt, and must provide a benefit to the borrower with the potential for a sustainable modification.


http://www.fhfa.gov/Media/PublicAffairs/Pages/Non-Performing-Loan-%28NPL%29-Sale-Requirements.aspx

US Supreme Court rules on TILA Rescission Issue

The Truth in Lending Act (TILA) gives borrowers a 3 day rescission period to cancel the loan transaction for any reason.  After that, the borrower has the right to rescind only if the lender has failed to satisfy TILA’s disclosure requirements; and the right expires after 3 years.


On January 13, 2015, the U.S. Supreme Court ruled that a borrower’s written notice to the lender within 3 years was enough to satisfy the rescission requirement; the borrower did not have to file a lawsuit within 3 years.
In 2007, the Jesinoskis borrowed money from Countrywide Home Loans to refinance their home. Three years later they mailed a correspondence to Countrywide requesting rescission of the loan. This rescission was disregarded by Countrywide’s successor, Bank of America.


A year later they filed a federal lawsuit asserting their right to rescission.  Both the federal trial court and the federal appellate court sided with the bank and dismissed the lawsuit because the Jesinoskis did not sue within 3 years of the original loan transaction.  The courts seemingly overlooked the fact that TILA states that a borrower “shall have the right to rescind . . . by notifying the creditor . . . of his intention to do so.”


The U.S. Supreme Court found differently, and this provision to mean that all a borrower needs to do is to provide written notice of rescission within 3 years, not necessarily file a lawsuit to rescind.


This means that all homeowners that are granted new loans or refinance going forward, who feel that the lender has not satisfied TILA’s disclosure requirements, can rescind the loan transaction up to 3 years after the loan transaction.  The Court did not provide guidance as to whether a borrower in default has the right to rescind the loan, and whether that borrower would owe the missed payments.