2nd DCA Refuses to Bar New Foreclosure under Statute of Limitations Utilizing Original Default and “All Subsequent Payments”

After the Bartram opinion allowing banks to re-file older foreclosure cases that were thought to be barred by the statute of limitations, the Florida Supreme Court left quite a few holes open.

One such hole left was when the banks re-file their cases, what do they have to allege?  Typically the bank must allege a date of default and that all payments sine have not been made.  But what if the bank alleges a default date over 5 years old and that all money since was due?  And what about the default letter the bank must send out before filing foreclosure; do they need to send a new one with a new default date and new amount due?

The 2nd DCA recently decided this is Desylvester v. Bank of New York Mellon, et al. in which the appellate court found that lenders do not need to send a new default letter in a new foreclosure action when a borrower did not cure the original default.

In this case Bank of New York Mellon filed foreclosure against the borrowers in November 2012.  The bank alleged in its complaint that the borrowers defaulted on October 1, 2008 and failed to make “all subsequent payments” due, thus accelerating the full loan balance due.  The case was eventually dismissed without prejudice (with leave to file again).

In December 2014, the bank filed a new foreclosure action, more than 5 years after the October 1, 2008 default.  The bank alleged in the complaint in its new case that the default was the same October 1, 2008 and failed to make “all subsequent payments” due.  The borrowers alleged a statute of limitations defense but the bank prevailed and were awarded a final judgment of foreclosure.

On appeal, the 2nd DCA held that “the dismissal of the Bank’s earlier foreclosure action did not trigger the statute of limitations to bar the Bank’s subsequent foreclosure action based on separate defaults.”   The reason being that borrowers were in default for every payment since under the language of “all subsequent payments” and in a continuing state of default.

The court did not address the issue of whether the final judgment of foreclosure here could include the full amount of the unpaid principal and interest, or if it was limited the amount due and owing looking back only 5 years from the filing of the second foreclosure action.

Full opinion here.

Florida 2nd DCA Holds 559.715 Does NOT Apply to Deficiency Judgment

The 2nd DCA recently held that 559.715 Florida Statutes, which requires a creditor to send debtor a notice of assignment of a consumer debt 30 days before filing an action, did not apply to foreclosure deficiency actions.

Borrower defaulted on her mortgage loan and the property was foreclosed upon and sold at a foreclosure sale.  The judgment was then assigned to a debt collector, who filed a complaint against the borrower seeking a deficiency judgment.

Borrower raised as an affirmative defense the plaintiff debt collector’s alleged failure to comply with a supposed condition precedent under FCCPA section 559.715.

Borrower argued that she received notice of the assignment only 13 days before the deficiency action was filed instead of 30 days as supposedly required.   The trial court agreed and ruled in her favor, and lender/creditor appealed.

Citing its recent ruling in Aluia v. Dyck-O’Neal, the court explained that “[a] deficiency suit is not a ‘legal action on’ the note; it is an action on the final judgment of foreclosure.  The final judgment of foreclosure is not ‘an obligation … of a consumer to pay money,’ nor does it arise from a business dealing or consensual obligation. The final judgment of foreclosure is a judgment in rem or quasi in rem which arises from the foreclosure proceeding.”

The Court of Appeal agreed with the debt collector’s argument that section 559.715 does not apply to deficiency actions.