Foreclosures are escalating at an alarming rate. Florida has consistently been among the top 5 states with the highest foreclosure rate ever since the subprime mortgage mess exploded. Currently, approximately one in every 135 Florida housing units receives a foreclosure filing each month, more than 2.7 times the national average. The current economic turndown and resulting loss of jobs and income, illness, unforeseen circumstances together with improper loans have all contributed to this crisis. This essay addresses foreclosure in Florida.
Some Basics: Mortgage and Note
When you purchased your home you signed many documents at closing. Two of those documents were the Mortgage and the Note. The Mortgage pledges the property as security for the debt which is owed to the bank. The Note is your promise to pay. The Mortgage is the tool the bank uses to take back the property in the event you do not pay.
The Foreclosure Process
Unless you live in a State that allows non-judicial foreclosure (Florida does not), in order to foreclose on your property, the lender must file a lawsuit to foreclose its loan and obtain a judgment for foreclosure and damages for failure to pay the debt underlying the mortgage. The initial papers that start the lawsuit and which must be served upon you, consist of a summons (letting you know that a legal action has been filed), a complaint (which alleges the party bringing the lawsuit, i.e., the plaintiff owns the mortgage and has not been paid) and a lis pendens (a notice to anyone examining the title to the property that a lawsuit has been filed.)
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You have or will be served a copy of the foreclosure complaint by a process server or the sheriff. You typically have only 20 days to respond to the mortgage company’s complaint, so you need to see an attorney immediately if you wish to defend against the foreclosure. If you are beyond the twenty days, there are still defenses that can be raised.
In response to the Complaint, your attorney will file an Answer or a Motion to Dismiss with the Clerk of the Circuit Court. A Motion to Dismiss challenges the form or propriety of the Complaint and asks the Court to throw it out or forces the Plaintiff amend it. An Answer is a legally sufficient response to the allegations that have been laid out against you in the Complaint. An Answer is not “I’ve been laid off from work and cannot make my payments.” In the lender’s (and Court’s) eyes, this is an insufficient excuse and does not justify your lack of payment. Instead, an Answer might be, “I never had a mortgage with this lender; they have confused me with someone else.” Alternatively, “I have made all my payments and am not in Default” would also be an adequate answer and potential defense. It is an opportunity to show why you shouldn’t be foreclosed upon.
Your mortgage company may have filed an improper or defective foreclosure lawsuit, but your time is limited.
Why Defend the Foreclosure? Because You Have Rights Too!
What if you learned that your mortgage company was deliberately lying to you in order to take your home away from you?
What if the bank didn’t own the mortgage anymore but conveniently “forgot” about it?
Or if the bank heaped on bogus fees and charges just to drain your equity and keep it in their pocket?
Would you fight for your home, or would you just let the bank throw you and your family to the curb?
An experienced law firm, such as Hoffman, Larin and Agnetti, PA will raise a variety of defenses in a Motion to Dismiss or in an Answer. Below are some examples of available defenses:
DEFENSE: Predatory Loans
Many foreclosures stem from what’s called a predatory loan which occurs when a lender misleads, tricks and sometimes pressures a consumer into taking out home loans at excessive costs without regard to their ability to repay. Does your loan have legal violations? Are you the victim of predatory lending? Did you know that 90% of victims do not even know they are victims?
The Florida Fair Lending Act, Chapter 494, Florida Statutes, prohibits predatory tactics on high cost home loans, including:
- Charging prepayment penalties for longer than three years
- Increased interest on loans going into default
- Balloon payments on loans that mature in less than 10 years
- Extending credit regardless of a borrower’s ability to pay
- Making direct payments to home improvement contractors
- Calling a loan due even though the borrower has complied with the terms of the loan
- Refinancing a loan during the first 18 months, unless there is a benefit to the borrower
- Offering to originate a loan at the borrower’s home without a prearranged appointment
- Charging late fees that exceed five percent of the payment
DEFENSE: The Mystery of the Invisible Lender
During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed. Very often, the Plaintiff is not the lender the homeowner gave the mortgage to. It is often an entity that purchased your mortgage and may have bundled the mortgage with a billion dollars worth (not an exaggeration) of other mortgages into a trust and sold shares in the trust.
If the Plaintiff has failed to attach exhibits showing its right to bring the foreclosure or that it owns or was assigned the note and mortgage is grounds for dismissal.
Recently, we have learned that lenders may have prepared fraudulent documents and/or had affidavits prepared by so-called robo-signers. Following several adverse court decisions throughout the country and the Florida Attorney General’s well publicized investigation into the Florida Default Law Group, the Law Offices of Marshall C. Watson, P.A.; the Law Offices of David J. Stern, P.A.; and Shapiro & Fishman, LLP., JP Morgan Chase temporarily suspended mortgage foreclosure proceedings in 23 states, including Florida. Executives at JP Morgan Chase have confessed to signing tens of thousands of foreclosure documents without reading them, causing these banks to also halt foreclosures in the 23 states that require judicial involvement to consummate a foreclosure and evict the former homeowner. Chase took this extraordinary action because it could not determine whether it had committed perjury or had submitted false affidavits in pending foreclosure matters. Unfortunately, foreclosures have resumed.
As part of the foreclosure process, mortgage lenders routinely file sworn affidavits that employees have reviewed bank records for completeness and accuracy. At Chase, employees have now admitted that they almost never review bank records prior to executing an affidavit. The attorneys for the Plaintiff admitted that affidavits of the type filed in the present case were not made on personal knowledge and cannot verify the facts in a foreclosure complaint.
Doctored or dubious records presented in court as proof of a bank’s ownership have become such a problem that Bill McCollum, the Florida attorney general, announced that his office was investigating the State’s three largest foreclosure law firms representing lenders. McCollum stated on the record that “On numerous occasions, false affidavits and fabricated documents have allegedly been presented to courts in foreclosure actions to obtain final judgments against homeowners.” In order to process cases on a wholesale basis, Plaintiffs have utilized midlevel bank executives who would sign thousands of affidavits (so-called ‘robo-signers’) attesting that they had personal knowledge of the facts of a case when they could not possibly have that knowledge.
Further complicating the action before the Court and presenting newly discovered issues of fact is the specific finding by the Circuit Court of Duval County based on clear and convincing evidence, that Plaintiff’s counsel herein, Shapiro and Fishman LLP, committed fraud upon the Court and created false documents, including an assignment of mortgage, and that such action set in motion an unconscionable scheme calculated to interfere with the judicial system’s ability to adjudicate the action.
DEFENSE: Plaintiff has not given Proper Notice
Many mortgages require the Mortgage holder to give the homeowner thirty days notice before filing a foreclosure action. This affords the borrower an opportunity to bring the loan current, request a loan modification, contest the arrearage, etc. The failure of the Plaintiff to file the proper notice or to comply with the federal law set out in 15 U.S.C. 1692 may allow the foreclosure action to be dismissed.
DEFENSE: Loss Mitigation
The Plaintiff’s failure to comply with Federal Law which requires Loss Mitigation (providing an alternative to foreclosure, including actions such as special forbearance, loan modification, pre-foreclosure sale, deed in lieu of foreclosure, borrower housing counseling, subordinate lien resolution, and borrower relocation) may allow the foreclosure action to be dismissed.
DEFENSE: Unclean Hands
Because mortgage foreclosures are equitable proceedings, if the lender has been guilty of participation in illegal or fraudulent conduct, foreclosure may be denied. A charge of fraud may allow the case to be decided by a jury or judge after a full hearing. In one case, an allegation was made that the lender thwarted efforts to repay the mortgage by refusing to provide pay-off information needed for the exercise of an option: the court found that unclean hands was set forth in sufficient terms to force a full trial.
You may be able to turn the tables by filing a counterclaim (a lawsuit against the Plaintiff in the Foreclosure action) alleging violations of the law, such as the Florida Consumer Collection Practices Act (FCCPA) which was enacted to protect Florida consumers from creditors and debt collectors who seek to collect debts through illegal means.
Protect Your Rights
If you have been served with a complaint in a foreclosure action, seek competent legal representation. Don’t give up – learn what your options are and protect your rights. Contact Hoffman, Larin and Agnetti, PA for a free consultation.
Hoffman, Larin and Agnetti, PA offers a free consultation and reasonable payment plans. At your free consultation, we will discuss with you not only Foreclosure Defense, but all other options, such as Chapter 7 and Chapter 13 Bankruptcy and Loan Modification.