The U.S. Supreme Court recently ruled in Henson v. Santander Consumer USA Inc. that a purchaser of a debt is not a debt collector as defined by the Fair Debt Collection Practices Act (“FDCPA”) if it is regularly collecting debts that it owns. This includes if the debts were originated by a third party and purchased after default; as long as the party collecting owns the debt and collecting on its own behalf.
In doing do the Court held that a debt buyer must be collecting debts owned by/owed to a third party in order to be considered a “debt collector” and therefore subject to the FDCPA.
This new opinion curbs many debt collection lawsuits brought by consumers under the FDCPA for debt collection practices as the ONLY time a consumer now has a cause of action under the FDCPA is if a debt collector is collecting a debt on behalf of another party/creditor. ANY debt owned by that creditor that it is attempting to collect on itsof behalf takes the matter out of the FDCPA definition of a “debt collector” and a consumer cannot sue under that statute.
An estoppel certificate provides an overview of the assessments and fees that a seller may owe to their HOA/condo association to date and is provided by the association when a property is being sold. Prior to these new laws, Florida law allowed associations to charge a “reasonable” fee to prepare an estoppel certificate; without any guidance as to what was a “reasonable” amount.
HB 483/SB 398 cap the fees that can be charged for estoppel certificates at $250 for unit owners who are current in their assessments. An additional $100 can be charged for “expedited” estoppel certificates (delivered within three business days), and another $150 can be charged for owners who are delinquent in their assessments. This is a maximum of $500 for an expedited, delinquent estoppel certificate.
HB 483/SB 398 also require certificates to be valid for 30 days and provide for a standard estoppel certificate form to ensure the same information is provided to owners across Florida.
This will likely put an end to over-inflated estoppel fees changes by associations and law firms alike.
Florida lawmakers passed a bill this week placing oversight on condo boards that imposes criminal penalties for some board violations.
This bill was drafted upon recommendations of a Miami-Dade grand jury and Florida’s DBPR after the uncovering of massive condo board fraud by various news outlets in 2016.
To become law, the bill, CS/CS/HB 1237, still needs Gov. Scott’s signature. If signed, it becomes effective on July 1, 2017.
CS/CS/HB 1237 covers a number of condo oversight rules, but high-profile ones include:
- If a condo association has more than 150 units, it must publish its financial reports on a password-protected web page.
- If owners are denied documents and if fraud is proven, the people responsible for the fraud could face felony charges after July 2018.
- Condo board directors are limited to eight years unless they get a super-majority of votes in later elections.
- Directors can’t receive payments from the condo association, nor can they hire relatives.
Following the 5th DCA and 3rd DCA recently discussed here, the 4th DCA in Nationstar Mortgage LLC v. Glass, No. 4D15-4561, similarly held that when a borrower successfully argues that the lender did not have standing to foreclosure, that borrower is not entitled to prevailing party attorney’s fees.
The 4th DCA used a similar rationale that if the lender had no standing to foreclose, there was not a contract between that lender and borrower. The borrower moved for attorney’s fees as the prevailing party i the lawsuit pursuant to Fla. Stat. § 57.105(7), which allows reciprocity of a one sided attorney’s fee provision in a contract; the mortgage contract provides attorney’s fees to the lender to enforce the contract.
To be entitled to attorney’s fees under Fla. Stat. § 57.105(7), the party moving to get fees must be the prevailing party and the parties to the suit must also be parties to the contract containing the fee provision. And if the named lender in the foreclosure lawsuit was not the proper lender to enforce the contract and it could not enforce the contract/mortgage and foreclosure, then the contract clause regarding attorney’s fees to the prevailing party did not apply against the named lender.
On March 16, 2017, the FL Supreme Court denied all pending motions for rehearing made by the borrowers and other groups who filed briefs on behalf of homeowners in the landmark Bartram case, thus making the opinion issued in November 2016 official and final (as all pending motions for rehearing were denied).
This finalizes the state of the law in Florida with regard to the statute of limitations as foreclosure. The Florida Supreme Court’s opinion in Bartram now officially holds that the involuntary dismissal of a prior foreclosure action, with or without prejudice, does not prevent the filing of a new foreclosure action based on new, and continuing, monthly defaults in payment.
This will surely start a whole new wave of foreclosure filings as many banks were awaiting Bartram to become final before proceeding with many old foreclosures that were dismissed for one reason or another and the borrower(s) still in default since.
In a rather perplexing decision, Bank of New York Mellon Trust Co. v. Fitzgerald, Case No. 3D16-981, at *2 (3d DCA Mar. 1, 2017), the 3rd DCA recently rules that when a lender sues and loses the case because it cannot prove its standing to foreclose, the borrower cannot claim his/her attorney’s fees paid to defend as the prevailing party per 57.105(7). Typically in a foreclosure case, when the borrower “wins” the case (or lender does not prove its case), the borrower can claim his/her attorney’s fees paid to defend the case under the mortgage (contract) and 57.105 (7) providing that if there is a prevailing party clause, it is reciprocal and each party can claim it against the other.
In this case, at trial the court determined that plaintiff failed to establish its standing as owner/holder of the note to foreclose based on the fact that there was no assignment or mortgage or other document showing transfer of the note to plaintiff from the original lender.
The borrower moved for attorney’s fees and was granted as it is routinely done.
The lender appealed arguing that it cannot possibly be liable for borrower’s attorney’s fees as the trial court held that it was not even a party to the note and mortgage; and thus if not a party was not bound by the terms of the note/mortgage to pay anyone attorney’s fees. The court followed a recent opinion with a similar holding out of the 5th DCA in HFC Collection Ctr., Inc. v. Alexander, 190 So. 3d 1114 (Fla. 5th DCA 2016); but was merely not in the mortgage foreclosure context.
The 3rd DCA held that since there was no contract between borrower and plaintiff per the trial court’s judgment in favor of defendant, borrower could not use the contractual terms to collect attorneys fees from plaintiff.
In essence, this line of cases now allows any lender to sue a borrower whether it can prove its case or not without fear of paying borrower’s attorney’s fees. The lenders can sue anyone they want without repercussion or fear of having to pay out, and likely will be more cavalier with their case filings knowing such.
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.
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.
Previously as discussed here, Florida’s 4th DCA held that the lis pendens expired at final judgment of foreclosure. This meant that any liens filed between the final judgment of foreclosure and the foreclosure auction/sale date were not extinguished by the foreclosure sale and remained on the property. This causes controversy as parties (like city liens, contractor liens, etc) could simply wait until after the final judgment of foreclosure and then file their lien making it survive the foreclosure auction; which typically wiped out all junior liens to the one being foreclosed.
In the case after final judgment of foreclosure but before the sale, the town filed numerous liens upon the property. A third party purchaser bought the property at the bank foreclosure. The purchaser filed a lawsuit to remove the town liens, but judgment was granted in favor of the town holding that the liens on the property survived as the lis pendens terminated at the final judgment of foreclosure.
The 4th DCA revised it’s decision finding the the recording of a lis pendens operates as a bar to the enforcement of all interests and liens, even if they were unrecorded liens or interest existed before or after the final judgment of foreclosure. The Court held that the final judgment of foreclosure is not the final resolution in a foreclosure proceeding, but rather the foreclosure auction. Further, the lis pendens statute references the occurrence of the judicial sale.
Doing so ends a potential controversy that a junior interest or lien could wait until after final judgment to record its lien and have it survive the foreclosure auction upon the property taxable to the new owner of the property.
In a recent Middle District of Florida federal case, Garrison v. Caliber Home Loans, Inc., Case No. 6:16-cv-978-Orl-37DCI, a mortgage borrower sued their lender after receiving a mortgage statement showing that the full balance of the mortgage was still in effect. Borrower’s contention was that as the foreclosure case brought in 2009 was dismissed in 2014, per the recent Bartram decision and independent default reasoning that the bank could name a new default but only within 5 years going back from current date, that the amounts beyond 5 years back were not collectible. Which said argument makes sense; those amounts likely are not collectible in a future foreclosure action (although there is no case law on the issue yet).
The borrower alleged that attempting to collect an uncollectible debt was a Fair Debt Collection Practices Act violation and sued under federal law in federal court for these alleged violations.
The court found that statute of limitations was a defense to foreclosure, but not an independent cause of action that one could sue upon. While the borrower may be able to defend the amount due in a subsequent foreclosure action, it was not a FDCPA violation to send a mortgage statement showing the full mortgage balance still due. The borrowers remedy was to use this argument as a defense if lender tried to foreclose and reduce the amount of the judgment owed to lender.