Plain English Summary:
Florida law contains a statute, 559.715, which states that anytime one of your creditors sells the debt you owe to another creditor/company, they are supposed to send you written notice by mail telling you about the assignment of the debt. If they did not send it at the time the debt was assigned to the new creditor, then at least 30 days before the filing of any lawsuit to collect that debt.
This is not a new issue for appellate courts, as a previous decision (Brindise as cited below) already held that a mortgage lender foreclosing did not have to send such notice when assigning the loan to a new servicer or bank before filing foreclosure; and that the failure to do so was not a defense to foreclosure.
This decision simply completely removes the defense of lack of notice of assignment of the mortgage debt before filing suit that foreclosure defense lawyers were using previously; albeit rather unsuccessfully.
The 2nd District Court of Appeal (DCA) recently affirmed prior cases that found that Florida Statute § 559.715, part of the Florida Consumer Collection Practices Act (“FCCPA”), does not apply to the note holder in a mortgage foreclosure proceeding. Deutsche Bank Nat. Trust Co. v. Hagstrom, 2D14-5254, 2016 WL 3926852, at *1 (Fla. 2d DCA 2016) opinion here.
The 2nd DCA in essence removed an affirmative defense that borrowers had that the lender did not send notice to the borrower 30 days before assigning the loan/debt to a new owner or servicer; which Fla. Stat. § 559.715 requires for debts that are “consumer debts.”
Section 559.715 states as follows:
[The FCCPA] does not prohibit the assignment, by a creditor, of the right to bill and collect a consumer debt. However, 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 this case as the trial court level, the borrowers argued that Plaintiff, who was not the original lender, failed to provide written notice of the assignment of debt and therefore failed to comply with a condition precedent to foreclosure. The trial court agreed and granted summary judgment for the borrowers.
The 2nd DCA examined the plaint text of the statute itself, and the plaintiff’s relationship to the debt. The Court found that per the language, the statute applies to any assignees of the right to bill and collect a debt, but not to an assignee of the debt in and itself. ““Section 559.715 requires no action by the creditor or the note holder.”
The Court reasoned that the note holder has the right to enforce the note regardless of any assignment to bill and collect the debt. The Court also reasoned that in foreclosures that more than one party could be the real party in interest; the note owner/holder and the assignee of the right to bill and collect, usually a loan servicer.
Therefore, the Court concluded that because Plaintiff had proven that it was the holder of the note at the time the lawsuit was filed, § 559.715 was not applicable to foreclosure. The court stated that § 559.715 “simply does not apply to holders of notes secured by mortgages on real property. Neither is it an affirmative defense to foreclosure actions; it does not establish a condition precedent and in no other way avoids the claims to foreclose a mortgage and enforce a note.”
This case, along with Brindise v. U.S. Bank Nat. Ass’n, 183 So. 3d 1215, 1216 (Fla. 2d DCA 2016), in which the Court held that compliance with § 559.715 is not a condition precedent to foreclosure, all but eliminate the § 559.715 affirmative defense.
If you are battling with a foreclosure, please contact us today for a consultation at 754-900-1LAW (1529) or at [email protected]