Floirda 4th DCA Holds That After Voluntary Dismissal a New Notice of Default NOT Needed

The Fourth District District Court of Appeal (4th DCA) recently held that a foreclosing lender was not required to send a new notice of default after dismissing its first foreclosure lawsuit but before filing a new foreclosure action. Typically, a notice of default is required before a foreclosure action is filed; a condition precedent. 

The defendants/borrowers were sent a notice of default before the filing of a first foreclosure action pursuant to Paragraph 22 of the mortgage; which stated that the borrower had 30 days to cure the default otherwise the loan would be accelerated. The borrower failed to cure the default and a foreclosure action was filed.
After the filing of the first foreclosure action, the lender voluntarily dismissed its case, but immediately refiled weeks later based upon the same default and without a new notice of default. The lower court entered final judgment which the borrowers appealed.
The 4th DCA found that a second notice of default was not required because the complaints involved the “same facts, parties and causes of action.” Therefore a new notice served no purpose as it was based upon the same original default. 
Furthermore, the instant first case was dismissed without prejudice which did not act as an adjudication on the merits of the case, and the borrower made no payments on the loan before the filing of the new foreclosure action. 
Thus, the 4th DCA held that the notice of default “remained valid and a second notice of default was not required before filing the second complaint based on the same default.”

Bank of America Launches 3% Down Loans

A new loan program from Bank of America (“BOA”) will allow low and medium income borrowers to get loans up to $417,000 with only 3% down instead of the traditional 20%.

Borrowers can’t make more than the medium income for their area and need a credit score of at least 660. And the home must be the borrower’s primary residence. 
Borrowers will not have to pay private mortgage insurance (PMI) that was typically required on loans with down payments of less than 20%. First-time buyers will have to attend a homebuyer education program.
As with most mortgages, borrowers must still have a debt-to-income (“DTI”) ratio of no more than 43%. But Bank of America will also consider non-traditional forms of credit, like daycare expenses, health club memberships and rental history, to help determine credit history.
Interest rates on the loans will be determined by a borrower’s creditworthiness and score, but BOA’s loan option will be cheaper than FHA’s rate (around 3.85% right now for a 30-year fixed rate)
Putting less money down means you’re financing more, which leads to higher monthly payments and more money paid out in interest over the life of the loan.  It also means you have less equity in the home, which could make you more vulnerable if home prices drop and to foreclosure as well.

HOA/Condo Foreclosures During Lender Foreclosure May Be No More

In the past, when a homeowner stopped paying mortgage payment, he or she generally stopped paying condo/HOA assessments as well.  This caused a default with the HOA/condo who after some time would file their own foreclosure action to sell the property, subject to the mortgage and possible bank foreclose of course.

The 4th DCA recently turned this concept on its head, ruling that once the lender records a lis pendens that only that court has jurisdiction to adjudicate all liens on the property, including HOA and condo assessment liens.

In the recent opinion in Jallali v. Knightsbridge Village Homeowners Association, Inc.,  2016 WL 320601 (Fla. 4th DCA Jan. 27, 2016), the homeowner appealed the lower court’s refusal to vacate a final judgment by a HOA.  On appeal, the borrower argued that the lender had a 2007 mortgage foreclosure case pending and that there was no jurisdiciton in the HOA’s 2012 foreclosure to enter a final judgment or conduct a foreclosure sale.  The 4th DCA found U.S. Bank National Association v. Quadomain Condominium Association, 103 So. 3d 977 (Fla. 4th DCA 2012), applicable to this case.

In Quadomain, the lender filed a mortgage foreclosure complaint and obtained a final judgment.  Then the condo association recorded a lien and filed for foreclosure as well selling the property after judgment.  The lender intervened moving to vacate the condo judgment arguing that it was void being filed after the lender had filed its lis pendens.  The 4th DCA found that the lender’s lis pendens created exclusive jurisdiction in one court to determine any lien or encumbrance on the property from the date the lis pendens was recorded through final judgment.

In this case, the lender had filed its lis pendens in May 2007, with the HOA recording its lis pendens in 2011.  Applying Quadomain, the 4th DCA found that the foreclosure by the HOA was void for lack of jurisdiction and that the lender’s foreclosure was the property place to adjudicate all liens on the property.  The court found that the HOA has to intervene in the lender mortgage foreclosure to enforce it’s lien rights.  While Section 720 of the Florida Statutes permits a HOA to lien a property and foreclose on it, it can only do so if the lender has not recorded a lis pendens on the property yet.

HOA and condominium associations should take careful note of this if they have pending foreclosures on properties with concurrent lender mortgage foreclosure active.  Investors should also be very careful buying properties from HOA/condo auctions as they may have bought void title now.

If you need assistance with a condo/HOA foreclosure issue, or want to determine if we can get the condo/HOA case dismissed in a situation like this, please contact out office

Loan Modification vs. the Courts TRAP Awaiting

Here is a trap waiting to happen. Often we have clients who come and say, the bank offered me a modification (that our office submitted and worked on, but the documents are very often sent to the property address). Great, but now what with the court or an upcoming sale date?

In Cowen Loan Servicing, LLC v. Jean Marie Delvar, 4D14-763, 2015 WL 8347300 (Fla. 4th DCA Dec. 9, 2015), the defendant/borrower alleged that he had been offered and accepted a loan modification by the bank; and was even making payments on this purported modification. The trial court judge found that this was a defense to the foreclosure action and ordered that the mortgage be altered per the terms of the purported loan modification.

The 4th DCA reversed though. The 4th DCA found that the trial court violated the Statute of Frauds (725.01) which says that “No action shall be brought . . . upon any agreement that is not to be performed within the space of 1 year from the making thereof . . . unless the agreement or promise upon which such action shall be brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person by her or him thereunto lawfully authorized.” In plain English, if a contractual agreement cannot be performed in under 1 year, and may involve real estate, it MUST be in writing and signed by the parties.

Now, while most loan modifications are offered to the borrower in writing, this is an exercise that it is IMPERATIVE that when your attorney asks you for copies of documents that you get them in immediately. A court generally is not going to rule favorably upon an oral representation of some unknown agreement and some unknown timetable, as there must be and agreement in writing to be a valid modification of the obligation under the note and mortgage. 

Moral of the story using this case as a footing? When your attorney says “we have a hearing send me the documents I need to attach to my motion or for the hearing” get them in ASAP!!!