Yesterday November 3, 2016, the Florida Supreme Court finally issued its opinion in US Bank vs. Bartram concerning the statute of limitations of foreclosure cases in Florida. Full opinion here. As previously discussed here, the appellate courts in Florida were nearly unanimous that each new monthly default in non-payment of the mortgage was a new default that the bank could foreclose upon.
Yesterday, the Florida Supreme Court upheld this line of reasoning (based on an old case of Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004)).
How did we get here?
Lenders have 5 years to bring a foreclosure action against the borrower after the borrower defaults on the payments and the creditor accelerates the loan, meaning that it calls the full amount due. Lenders and borrowers agree to this in the mortgage. If the borrower does not pay the full balance of the accelerated loan, the the bank forecloses on the house to settle the debt owed and takes the home to sell it to pay the debt. Before, the statute of limitations allows a 5-year window for such a lawsuit. Beyond 5 years the right to collect the debt is cut off.
Judges differ in opinion and some think it is “inequitable” (not fair) to the banks that the borrower gets off free from the debt owed and gets to keep the house. Those judges accepted the lenders’ arguments that the 5 year limit applies only to the monthly payments overdue by more than 5 years, even after the creditor accelerated the loan.
The Florida Supreme Court claimed that this acceleration did not become effective until final judgment of foreclosure. The Court pointed out that the lender never said in its letters to the borrower that it had exercised its right to accelerate, but only said that it retained the right to accelerate.
The language of the mortgage allows the borrower to “reinstate” the original loan repayment schedule by bringing the loan current and going back to the regularly monthly payments, thus “de-accelerating” the acceleration. The Supreme Court pointed out that the right to reinstate disappears upon the foreclosure final judgment (the borrower can only then pay off the full loan balance before the sale date).
This will mean that the bank may dismiss a case and then re-file forever essentially until the default in the loan is cured, or the bank forecloses on the home. This will surely re-awaken many old cases that were dismissed and borrowers thought forgotten and uncollectible by the banks.
Of course there is much more to this 35 page opinion that is hyper-technical, so if you require assistance with your foreclosure case please contact us at 754-900-1LAW (1529) or [email protected] for further evaluation of the facts of your case.