In a rather surprising move, the Second District Court of Appeal (2nd DCA) has ruled (full opinion here) that a bank DOES NOT have to send a borrower written notice prior to filing foreclosure of assignment of their mortgage to another bank.
The basis for this argument lies in FL Statute 559.715 which states in part: “. . . the assignee must give the debtor written notice of such assignment as soon as practical after the assignment is made, but at least 30 days before any action to collect the debt. The assignee is a real party in interest and may bring an action to collect a debt that has been assigned to the assignee and is in default.”
In plain English, when a creditor assigns your debt to another creditor, that new creditor is supposed to mail you notice 30 days before filing a lawsuit to collect that debt. Foreclosure defense lawyers have equated this collecting a debt to foreclosing of a mortgage seeking to collect the money on the loan. They have argued that 559.715 should be a condition precedent, a requirement to be done before filing the foreclosure, or else the foreclosure should be dismissed.
The 2nd DCA recently held that 559.715 was NOT a defense to foreclosure and the bank foreclosing is NOT required to send the borrower a written notice of assignment of the mortgage 30 days before the foreclosure is filed.
The Court reasoned that the intent of the statute was to streamline collections of consumer debts that are often sold to debt collectors; to ensure that only one creditor is collecting any one debt. In this case the Court found that only 1 bank forecloses in foreclosure and do not assign the debt to debt collectors where there could be multiple parties trying to collect.
The court also found that the standard form mortgage states that the bank can assign the note and mortgage without any prior notice to the borrower, and thus the contract already stated the conditions fully.
The 2nd DCA upheld the judgment against the borrowers in this case and the case will return to the trial court for the auction date to continue.
Federal National Mortgage Association (“Fannie Mae”) is planning to reboot the lending industry which may produce the same predictable consequences of the prior housing crash when the mortgage agency loaned so much money to people who had not enough income or credit to qualify for a traditional loan.
The Obama administration proposes the HomeReady program, a new mortgage program largely targeting high-risk immigrants. This program would allow a borrower to count the income of the entire household rather than solely the borrower(s). Changing the word “subprime” to “alternative” mortgages is supposed to be more acceptable to the public, but no different in essence.
Traditionally, one’s mortgage worthiness was supposed to be based on the income of the borrower(s), the person or people named on the loan and deed to the property with a personal investment in the property (or at least their credit). Under this new scheme, the combined income of everyone living in the house will be considered for a conventional home loan backed by Fannie. One may even claim income from people not living in the home, such as the borrower’s parents.
This is purportedly to target non-traditional family types where multiple generations live in one home, such as Hispanic families, but will likely lead to large numbers of defaults when the expected income is not there to pay the monthly payment; or exaggerated by the “borrower(s).”
Under this latest proposal, no credit? No problem. An immigrant can qualify with a credit score as low as 620; a subprime loan at the end of the day. And the borrower has only to put 3% down.
What could possibly go wrong lending to people with poor credit scores, make up any income they want, and little money down, right?
A new trend is occurring at an alarming rate- “investors” offering you money for your house during foreclosure advertising that you can walk away. They advertise that it will “stop foreclosure.” The promise you to walk away free and clear. They litter sites like Craigslist preying on the uneducated in the legal system. They typically all have the “$” symbol in the ad title as well.
Recently the Florida 2nd District Court of Appeal (DCA) ruled on a case like this. A homeowner sold their house during a foreclosure, likely to one of these “investor scammers.” The third party purchaser tried to substitute in as the real party in interest in the case or to intervene, saying that the homeowner has sold them the property. The court denied this.
The court further did not allow this third party purchaser from participating at trial because they were not a party to the case and entered judgment against the likely unsuspecting homeowner.
The third party purchaser appealed the judgment and the bank moved to dismiss the appeal. The 2nd DCA found that the appeal must be dismissed because the third party purchaser was not a party and lacked standing.
So end result is there is a money judgment, and potential deficiency judgment, against this homeowner who took a few thousand bucks cash and disappeared. This investor likely leased out the property and recouped much more than he/she paid out to the homeowner during the time the case and appeal ran.
These types of arrangements are purely scams, do not fall for them. These investors don’t care about you our your home. Their interests are to pay you as little as possible renting out your property and ending up with a net profit at the end of the day when the bank takes your house away; leaving you on the hook for a possible 5-6 figure deficiency judgment.