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The December 17, 2014 Third District Court of Appeals decision in Harry Beauvais case addresses important mortgage foreclosure issues. The Court certified the case to the Florida Supreme Court, where Bartram is already pending. Beauvais .jpg)
may give reason for many Miami homeowners with mortgage foreclosure issues to re-evaluate their position. It may given indication to many that some "foreclosure defense" measures are not going to truly "save my home" from foreclosure and that efforts would be better directed towards achieving a mortgage modification under the present opportunities offered by HAMP or other programs. A mortgage modification may be the only way for most to truly "save my home."
“Technical” (Procedural) Legal Arguments
Since 2008, certainly a lot of interesting legal issues have been raised, "won" or lost about standing, chain of assignment of notes, lost notes, mortgage-backed securities, MERS, robo-signing, bearer instruments, hearsay and business record rules of evidence, statutes of limitations, and statutes of repose. But in view of Harry Beauvais, these "wins," for many homeowners, may just be a win of a "battle" but not a win of the "war." That is, they will not be the source of what truly "saves my home" from foreclosure.
Aside from the possible unproductive costs to the homeowner, who may be better served with the non-judicial remedy of mortgage modification, "foreclosure defense" that does not truly "save" the home from foreclosure, has a cost to the judicial system and the Florida taxpayer. Many economists also argue that the delay in resolving the mortgage foreclosure crisis has delayed recovery of real estate market and the availability of mortgages to new home buyers.
Delay Counter-Productive?
Another item that may be overlooked is that a monthly mortgage payment includes, aside from principal ("p") and interest ("i"), includes property taxes ("t") and the various types of property insurance ("i"). That is, the mortgage lender is not the source of a large portion of the monthly mortgage payment. The taxes and insurance remain unaffected by any changes to the principal and interest.
Furthermore, a homeowner should consider that if the present home is lost, the mortgage interest rate for the new home - if the person is able to obtain a mortgage - is likely to be much higher than that in a mortgage modification. The property taxes on a replacement home would likely be higher as the assessed value on the present home may be locked in at a low value and the taxes on a replacement home would be based on the new higher purchase price.
What Did "Foreclosure Defense" in Harry Beauvais Achieve?
What did all the efforts of "foreclosure defense" in Harry Beauvais ultimately achieve? The answer is probably - ultimately not much at all. The homeowner only won of a "battle" and not the "war." While the Court upheld the trial court's ruling that this particular foreclosure action, on the record and arguments before it, was barred by the statute of limitations - - of greater significance, the Court held that the mortgage note and mortgage including its lien, remain valid, and there was no quieting of title in favor of the homeowner. The homeowner is left somewhat in limbo.
The "big picture" may be that the homeowner may be spending significant amounts and efforts on "foreclosure defense," but the most that can be achieved on an statute of limitations argument is to bar filing of a second foreclosure second - which would leave the mortgage note and mortgage still valid. In the meanwhile the mortgage debt - at what is probably a rate of interest higher than what would be in a modified mortgage, monthly late fees and advanced property taxes and insurance accrue. It should be noted, that in a many cases, the lender is required to buy "forced placed insurance" which is sometimes triple or more the cost of a regular policy and does not even fully cover the homeowner's interests. Furthermore, the homeowner would not be able to sell or refinance the property without paying off, the continuing to accrue mortgage debt in full.
Also to note note, as referenced below, even if a foreclosure action could not be filed on the expired mortgage note default, the homeowner may still face a "new" foreclosure action - based on a breach of covenants in the mortgage, aside from the mortgage note, which also may provide a "new" foreclosure cause of action that is not barred by the statute of limitations.
Modification of Mortgage
Typically, a modified mortgage payment is targeted to be at about 31% of one's monthly income. The 31% would normally include the property taxes, property insurance, and association fees - which amount in some cases could be about 1/2 of the 31% figure - leaving only 1/2 of the 31% for principal and interest. For example, a case may be that, if the new payment is $1,500.00, $800.00 might be for property taxes, property insurance and association fees and $700.00 for principal and interest. With possible income tax benefits, the actual cost may even be less.
Statute of Limitations and Deceleration Issues
The Court in Harry Beauvais decision teaches much about "deceleration." The decision undercuts statute of limitations arguments to a large degree. The case only held that the statute of limitations came into play in this foreclosure action as the previously accelerated mortgage note had not been decelerated as the prior dismissal had been "without" prejudice. The Court held that under the applicable rule of Florida Rules of Civil Procedure, a dismissal "without prejudice"is not a "determination on the merits" and did not decelerate the mortgage note back to its original installment terms. That is, the statute of limitations ran on this "old" foreclosure cause of action before the lender filed the second action.
But the Court also held that a dismissal "with" prejudice is a "determination on the merits" indicative that the any alleged default or acceleration in the first foreclosure action was invalid or ineffective. That is, the statute of limitation never even began to run ab initio. Thereby, there would not be any issue of statute of limitations coming into play in the second foreclosure action. A second foreclosure action could be properly brought on a "new" installment payment, with a "new" default, with a "new" acceleration, which gives rise to a "new" cause of action, filed in a "new" action governed by a "new" five-year statute of limitations.
May Dismissal "Without Prejudice" Trigger Deceleration Indirectly ?
The Harry Beauvais decision held that a dismissal without prejudice does not, in and of itself, effect a deceleration. But the Court's decision did give reference on page ten to the notion that although the dismissal without prejudice in itself does not effect deceleration (i.e. is not an "affirmative act"), it could "trigger" deceleration in a different manner.
Here the Court referenced that in this instance that "[n]either the note or mortgage provides that dismissal without prejudice of the foreclosure action would negate the acceleration of the debt or otherwise reinstate the installment nature of the loan." Perhaps, this is an indication to lenders that with focus on this notion, a Court may be convinced that there is a contractual provision in the mortgage note or mortgage that is automatically triggered by the order of dismissal without prejudice.
"Legal Significance" of Language in a Complaint - Does it Also Apply to the Homeowner's Allegations? Judicial Estoppel
Otherwise references by the Court may also defeat the defense of the statute of limitations by the homeowner in a second foreclosure action. In footnote four, the Court stated that the lender's allegations in the first foreclosure complaint of acceleration were not simply "mere factual allegations", but "carried independent legal significance". This, or a similar notion, may also apply to the allegations made by the homeowner in his "foreclosure defense" in the first foreclosure action, i.e. that they too may not not be "mere factual allegations" but also carry "independent legal significance" or be otherwise of import.
If the factual allegations of the homeowner in the first foreclosure actions are also of "legal significance," they may support estoppel or otherwise defeat efforts by the homeowner in the second foreclosure action to raise a statute of limitations defense. That is, the homeowner may have alleged facts that there had not been a valid or effective default and acceleration of the mortgage note prior to the first foreclosure action. If there had not been a valid or effective default and acceleration in the first foreclosure action, the statute of limitations would not have even begun to run in the first instance and could not have run before the second foreclosure action.
It is noted that the doctrine of "judicial estoppel" generally prohibits, a litigant from taking inconsistent positions in different courts.
Foreclosure Cause of Action on Other Mortgage Covenants
One should note that Florida case law and commentators review that there are many covenants by the homeowner in the mortgage itself - aside from the covenant to pay the mortgage note installment payments. Examples of such covenants are to protect the collateral by keeping it insured or paying the property taxes. With the mortgage and its lien continuing to be valid - even if a foreclosure action on the "old" mortgage note cause of action is barred - for a very extended period of time pursuant to its statute of repose, there would in a typical case, be breaches of these separate mortgage covenants giving rise to "new" foreclosure causes of action upon which a "new" foreclosure action may be filed with "new" statute of limitations.
Conclusion
In summary, the Harry Beauvais case, although being a cold dose of reality, may prompt distressed homeowners to focus their efforts on what will truly "save my home." The opportunities to achieve a modification of a mortgage are presently probably as good as they ever will be and may, if not seized now, not be available later.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The December 17, 2014 Third District Court of Appeals decision in Harry Beauvais case addresses important mortgage foreclosure issues. The Court certified the case to the Florida Supreme Court, where Bartram is already pending. Beauvais may give reason for many Miami homeowners with mortgage foreclosure issues to re-evaluate their position. It may given indication to many that some "foreclosure defense" measures are not going to truly "save my home" from foreclosure and that efforts would be better directed towards achieving a mortgage modification under the present opportunities offered by HAMP or other programs. A mortgage modification may be the only way for most to truly "save my home."
“Technical” (Procedural) Legal Arguments
Since 2008, certainly a lot of interesting legal issues have been raised, "won" or lost about standing, chain of assignment of notes, lost notes, mortgage-backed securities, MERS, robo-signing, bearer instruments, hearsay and business record rules of evidence, statutes of limitations, and statutes of repose. But in view of Harry Beauvais, these "wins," for many homeowners, may just be a win of a "battle" but not a win of the "war." That is, they will not be the source of what truly "saves my home" from foreclosure.
Aside from the possible unproductive costs to the homeowner, who may be better served with the non-judicial remedy of mortgage modification, "foreclosure defense" that does not truly "save" the home from foreclosure, has a cost to the judicial system and the Florida taxpayer. Many economists also argue that the delay in resolving the mortgage foreclosure crisis has delayed recovery of real estate market and the availability of mortgages to new home buyers.
Delay Counter-Productive?
Another item that may be overlooked is that a monthly mortgage payment includes, aside from principal ("p") and interest ("i"), includes property taxes ("t") and the various types of property insurance ("i"). That is, the mortgage lender is not the source of a large portion of the monthly mortgage payment. The taxes and insurance remain unaffected by any changes to the principal and interest.
Furthermore, a homeowner should consider that if the present home is lost, the mortgage interest rate for the new home - if the person is able to obtain a mortgage - is likely to be much higher than that in a mortgage modification. The property taxes on a replacement home would likely be higher as the assessed value on the present home may be locked in at a low value and the taxes on a replacement home would be based on the new higher purchase price.
What Did "Foreclosure Defense" in Harry Beauvais Achieve?
What did all the efforts of "foreclosure defense" in Harry Beauvais ultimately achieve? The answer is probably - ultimately not much at all. The homeowner only won of a "battle" and not the "war." While the Court upheld the trial court's ruling that this particular foreclosure action, on the record and arguments before it, was barred by the statute of limitations - - of greater significance, the Court held that the mortgage note and mortgage including its lien, remain valid, and there was no quieting of title in favor of the homeowner. The homeowner is left somewhat in limbo.
The "big picture" may be that the homeowner may be spending significant amounts and efforts on "foreclosure defense," but the most that can be achieved on an statute of limitations argument is to bar filing of a second foreclosure second - which would leave the mortgage note and mortgage still valid. In the meanwhile the mortgage debt - at what is probably a rate of interest higher than what would be in a modified mortgage, monthly late fees and advanced property taxes and insurance accrue. It should be noted, that in a many cases, the lender is required to buy "forced placed insurance" which is sometimes triple or more the cost of a regular policy and does not even fully cover the homeowner's interests. Furthermore, the homeowner would not be able to sell or refinance the property without paying off, the continuing to accrue mortgage debt in full.
Also to note note, as referenced below, even if a foreclosure action could not be filed on the expired mortgage note default, the homeowner may still face a "new" foreclosure action - based on a breach of covenants in the mortgage, aside from the mortgage note, which also may provide a "new" foreclosure cause of action that is not barred by the statute of limitations.
Modification of Mortgage
Typically, a modified mortgage payment is targeted to be at about 31% of one's monthly income. The 31% would normally include the property taxes, property insurance, and association fees - which amount in some cases could be about 1/2 of the 31% figure - leaving only 1/2 of the 31% for principal and interest. For example, a case may be that, if the new payment is $1,500.00, $800.00 might be for property taxes, property insurance and association fees and $700.00 for principal and interest. With possible income tax benefits, the actual cost may even be less.
Statute of Limitations and Deceleration Issues
The Court in Harry Beauvais decision teaches much about "deceleration." The decision undercuts statute of limitations arguments to a large degree. The case only held that the statute of limitations came into play in this foreclosure action as the previously accelerated mortgage note had not been decelerated as the prior dismissal had been "without" prejudice. The Court held that under the applicable rule of Florida Rules of Civil Procedure, a dismissal "without prejudice"is not a "determination on the merits" and did not decelerate the mortgage note back to its original installment terms. That is, the statute of limitations ran on this "old" foreclosure cause of action before the lender filed the second action.
But the Court also held that a dismissal "with" prejudice is a "determination on the merits" indicative that the any alleged default or acceleration in the first foreclosure action was invalid or ineffective. That is, the statute of limitation never even began to run ab initio. Thereby, there would not be any issue of statute of limitations coming into play in the second foreclosure action. A second foreclosure action could be properly brought on a "new" installment payment, with a "new" default, with a "new" acceleration, which gives rise to a "new" cause of action, filed in a "new" action governed by a "new" five-year statute of limitations.
May Dismissal "Without Prejudice" Trigger Deceleration Indirectly ?
The Harry Beauvais decision held that a dismissal without prejudice does not, in and of itself, effect a deceleration. But the Court's decision did give reference on page ten to the notion that although the dismissal without prejudice in itself does not effect deceleration (i.e. is not an "affirmative act"), it could "trigger" deceleration in a different manner.
Here the Court referenced that in this instance that "[n]either the note or mortgage provides that dismissal without prejudice of the foreclosure action would negate the acceleration of the debt or otherwise reinstate the installment nature of the loan." Perhaps, this is an indication to lenders that with focus on this notion, a Court may be convinced that there is a contractual provision in the mortgage note or mortgage that is automatically triggered by the order of dismissal without prejudice.
"Legal Significance" of Language in a Complaint - Does it Also Apply to the Homeowner's Allegations? Judicial Estoppel
Otherwise references by the Court may also defeat the defense of the statute of limitations by the homeowner in a second foreclosure action. In footnote four, the Court stated that the lender's allegations in the first foreclosure complaint of acceleration were not simply "mere factual allegations", but "carried independent legal significance". This, or a similar notion, may also apply to the allegations made by the homeowner in his "foreclosure defense" in the first foreclosure action, i.e. that they too may not not be "mere factual allegations" but also carry "independent legal significance" or be otherwise of import.
If the factual allegations of the homeowner in the first foreclosure actions are also of "legal significance," they may support estoppel or otherwise defeat efforts by the homeowner in the second foreclosure action to raise a statute of limitations defense. That is, the homeowner may have alleged facts that there had not been a valid or effective default and acceleration of the mortgage note prior to the first foreclosure action. If there had not been a valid or effective default and acceleration in the first foreclosure action, the statute of limitations would not have even begun to run in the first instance and could not have run before the second foreclosure action.
It is noted that the doctrine of "judicial estoppel" generally prohibits, a litigant from taking inconsistent positions in different courts.
Foreclosure Cause of Action on Other Mortgage Covenants
One should note that Florida case law and commentators review that there are many covenants by the homeowner in the mortgage itself - aside from the covenant to pay the mortgage note installment payments. Examples of such covenants are to protect the collateral by keeping it insured or paying the property taxes. With the mortgage and its lien continuing to be valid - even if a foreclosure action on the "old" mortgage note cause of action is barred - for a very extended period of time pursuant to its statute of repose, there would in a typical case, be breaches of these separate mortgage covenants giving rise to "new" foreclosure causes of action upon which a "new" foreclosure action may be filed with "new" statute of limitations.
Conclusion
In summary, the Harry Beauvais case, although being a cold dose of reality, may prompt distressed homeowners to focus their efforts on what will truly "save my home." The opportunities to achieve a modification of a mortgage are presently probably as good as they ever will be and may, if not seized now, not be available later.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The December 17, 2014 Florida Third District Court of Appeals decision in Harry Beauvais case addresses important mortgage foreclosure issues. The primary discussion of the Court was that a dismissal "with" prejudice is "on the merits" and a disposition of the parties rights. On the other hand, a dismissal "without" prejudice is not "on the merits" and the parties "are simply placed back in the same contractual relationship with the same continuing obligations."
In this case, since the first foreclosure case was dismissed without prejudice, the existing "same contractual relationship" they were placed back into was that of an accelerated mortgage note with the statute of limitations running. The statute of limitations to bring this foreclosure action had expired prior to the filing of the second foreclosure action.
The Court further held that since the mortgage note remains accelerated "there were no 'new' payment due, there could be no 'new' default upon wich a 'new' cause of action (and newly-commenced statute of limitations) could be based"
But, the Court reversed the portion of the lower court's order "which canceled the note and mortgage and quieted title in favor of the property owner. That is, the Court held that the determination regarding the statute of limitations bar on the foreclosure cause of action, "does not compel a conclusion that the mortgage itself is null and void." The Court held that the continued validity, enforceability and termination of the mortgage is governed by Florida statute of repose.
That is, until the time limit of the statute of repose, there can arise foreclosure causes of action. Neither the lien nor the debt were extinguished.
Dismissal With Prejudice is "On the Merits", Lender and Borrower's Issues, Claims, and Defenses Whether Actually Adjudicated or Not
The Court reviews on page 15, that a dismissal with prejudice, disposes of issues "actually adjudicated" and "every justiciable issue as well," that it is "on the merits", and further cites case law that "judgment on the merits does not require a determination of the controversy after a trial or hearing on controverted facts. It is sufficient if the record shows that the parties might have had their controversies determined according to their respective right if they had presented all their evidence and the court applied the law." That is, an order of dismissal with prejudice served to "adjudicate" the "merits of the lender's claims" as well as "the borrower's defenses."
Dismissal Without Prejudice is Not "On the Merits"
On page 16, the Court explains that since a dismissal without prejudice is not "on merits." That is, it does not dispose of the rights and issues of the parties. The rights referred to are the lender's rights expressed as a foreclosure cause of action and the borrower's rights expressed as defenses.
That is, the issues of the rights and issues of the parties regarding default, acceleration and foreclosure were not disposed in the first case as the order was without prejudice. Without such a disposition, the cites the Supreme Court's statement in Singletary v. Greymar Associates, 882 So. 2d 1004, 1007 (Fla. 2004) that the parties "are simply placed back in the same contractual relationship with the same continuing obligations." The contractual relationship the parties in this case were placed back into was that of an accelerated mortgage note upon with the statute of limitations running.
Summary
In short, the Court's decision in this case is based on whether or not there was a determination of the rights and issues of the parties in the first case - that is, whether there was a determination "on the merits" or not. The Court explained that "with prejudice" is "on the merits" and "without prejudice" is not "on the merits".
The Court's review of to Olympia Mortg. Corp. v. Pugh, 774 So. 2d 863 (Fla. 4th DCA 2000), indicates that the "voluntary" or "involuntary" nature of the dismissal is not of import.
Mortgage Note and Mortgage Not Invalidated
Of most importance, the Court held that, even though the statute of limitations barred this foreclosure cause of action, the mortgage debt remained valid and the mortgage lien remained valid as its continued validity is governed by the mortgage statute of repose statute.
The implications of this holding may be that in virtually all cases the lender will be able to bring a new foreclosure action - not on the old cause of action, but on a "new" cause of action on the mortgage. It appears that most or all typical residential lenders will quickly hold a "new" foreclosure cause of action based on the breach of the mortgage covenants to pay "new" property taxes and "new" insurance premiums. If so, it appears that it is virtually impossible for a statute of limitations consideration to ever bar a "new" foreclosure action as there will always be "new" foreclosure causes of action arising until the very long mortgage statute of repose - in the typical case 20 to 25 more years - has expired on the mortgage lien.
Mortgage Modification
Beauvais, and similar recent decision by other courts,
may give reason for many Miami homeowners with mortgage foreclosure situations to re-evaluate what is the best course of action to "save" their home from foreclosure. It is clear now that many "foreclosure defense" measures in foreclosure court are not going to truly "save" their home" from foreclosure and that efforts would be better directed towards achieving a mortgage modification, which is available without court action and even without the expenditure on hiring a lawyer. The opportunities to obtain a mortgage modification under HAMP or other programs may not exist in the future or if they exist, the terms may not be as favorable.
Mortgage Modification Application
A person may complete the mortgage modification application documents online at www.documods.com and upload, fax or mail them to their lender. In many cases, the HAMP rules require the lender to stop the mortgage foreclosure while the mortgage modification application is being considered.
“Technical” (Procedural) Foreclosure Defense
That is, In most cases, winning a foreclosure defense "battle" in court is not going to win the "war" to save the home. Since 2008, certainly a lot of interesting legal issues have been raised, "won" or lost about standing, chain of assignment of notes, bearer instruments, lost notes, mortgage-backed securities, MERS, robo-signing, hearsay and business record rules of evidence, acceleration, deceleration, statutes of limitations, and statutes of repose. But in view of Harry Beauvais, "wins" on these issues, are in most cases just a win of a "battle" but not a win of the "war."
Costs to Homeowner of Not Obtaining a Mortgage Modification
Another item that is often overlooked is that a monthly mortgage payment includes, aside from principal ("p") and interest ("i"), county property taxes ("t") and the various types of property insurance ("i"). That is, the mortgage lender is not the source of a large portion of the monthly mortgage payment.
Furthermore, a homeowner should consider the economic costs of delay in the obtaining of a mortgage modification or the losing of their present home with well-intentioned, but unproductive foreclosure defense. A person should considered
- what would be the interest rate on a modified mortgage - typically starting at around 2%
- what would be the interest rate on a new mortgage on a replacement home - if the person is even able to obtain one
- what is the amount of the property taxes on their present home - is the "assessed value" being capped at a low historical amount by Florida's constitution
- will the property taxes on a new home be much higher as the "assessed" value will be closer to the market value
- the costs of moving from the old house
- the closing costs of a new real estate purchase, mortgage broker, points, and taxes on a new mortgage instrument
- accruing high costs of "forced place property insurance" until the mortgage modification is achieve - these may impact the amount of a modified mortgage payment and will increase the overall payoff due at the time of sale
- raising real estate values may increase the amount of the monthly modified mortgage payment
- costs of renting vs. ownership, including its possible income tax savings
Statute of Limitation - Dismissal With Prejudice Does Decelerate
Many prior foreclosure action may have been dismissed "with" prejudice - they thinking being that this was good for the homeowner and bad for the lender. But Beauvais indicate that it is just the opposite. A homeowner would be better off with a dismissal "without" prejudice and a lender better off with a dismissal "with" prejudice.
May a "Not on the Merits" Dismissal "Without Prejudice" Trigger Deceleration, Althought Not "In and Of Itself ?
The Harry Beauvais decision held that an dismissal without prejudice does not, "in and of itself", effect a deceleration. But that is only ruling that it does not "in and of itself", which give indication that deceleration may be triggered in a different manner. The Court reviewed that an "affirmative act" is required to decelerate a accelerate note.
On page ten of the decision, the Court reviewed the provisions of the mortgage and/or note, apparently on the possible notion that the dismissal without prejudice (although not "in and of itself") could trigger (constitute an "affirmative act") deceleration of the the note and thereby reinstate the original installment payment terms.
Here the Court referenced that in this instance that "[n]either the note or mortgage provides that dismissal without prejudice of the foreclosure action would negate the acceleration of the debt or otherwise reinstate the installment nature of the loan."
Issues of Estoppel?
The Court also made reference that the "factual allegations" of the lender "carried independent legal significance." This raises questions of the legal significance of the "factual allegations" of the homeowner in the "foreclosure defense" efforts.
That is, some foreclosure defenses are allegations that the plaintiff was not the holder of the note and have standing to bring the first foreclosure action, it may. If the involuntary dismissal without prejudice was based on such a finding by the court, this may raise some type of equitable estoppel for the homeowner to take the inconsistent position in the second foreclosure action that there actually had been an acceleration in the first action - without a prior acceleration, there was accrual of a cause of action and the statute of limitations never began to run.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The December 17, 2014 Florida Third District Court of Appeals decision in Harry Beauvais case addresses important mortgage foreclosure issues. The primary discussion of the Court was that a dismissal "with" prejudice is "on the merits" and a disposition of the parties rights. On the other hand, a dismissal "without" prejudice is not "on the merits" and the parties "are simply placed back in the same contractual relationship with the same continuing obligations."
In this case, since the first foreclosure case was dismissed without prejudice, the existing "same contractual relationship" they were placed back into was that of an accelerated mortgage note with the statute of limitations running. The statute of limitations to bring this foreclosure action had expired prior to the filing of the second foreclosure action.
The Court further held that since the mortgage note remains accelerated "there were no 'new' payment due, there could be no 'new' default upon wich a 'new' cause of action (and newly-commenced statute of limitations) could be based"
But, the Court reversed the portion of the lower court's order "which canceled the note and mortgage and quieted title in favor of the property owner. That is, the Court held that the determination regarding the statute of limitations bar on the foreclosure cause of action, "does not compel a conclusion that the mortgage itself is null and void." The Court held that the continued validity, enforceability and termination of the mortgage is governed by Florida statute of repose.
That is, until the time limit of the statute of repose, there can arise foreclosure causes of action. Neither the lien nor the debt were extinguished.
Dismissal With Prejudice is "On the Merits", Lender and Borrower's Issues, Claims, and Defenses Whether Actually Adjudicated or Not
The Court reviews on page 15, that a dismissal with prejudice, disposes of issues "actually adjudicated" and "every justiciable issue as well," that it is "on the merits", and further cites case law that "judgment on the merits does not require a determination of the controversy after a trial or hearing on controverted facts. It is sufficient if the record shows that the parties might have had their controversies determined according to their respective right if they had presented all their evidence and the court applied the law." That is, an order of dismissal with prejudice served to "adjudicate" the "merits of the lender's claims" as well as "the borrower's defenses."
Dismissal Without Prejudice is Not "On the Merits"
On page 16, the Court explains that since a dismissal without prejudice is not "on merits." That is, it does not dispose of the rights and issues of the parties. The rights referred to are the lender's rights expressed as a foreclosure cause of action and the borrower's rights expressed as defenses.
That is, the issues of the rights and issues of the parties regarding default, acceleration and foreclosure were not disposed in the first case as the order was without prejudice. Without such a disposition, the cites the Supreme Court's statement in Singletary v. Greymar Associates, 882 So. 2d 1004, 1007 (Fla. 2004) that the parties "are simply placed back in the same contractual relationship with the same continuing obligations." The contractual relationship the parties in this case were placed back into was that of an accelerated mortgage note upon with the statute of limitations running.
Summary
In short, the Court's decision in this case is based on whether or not there was a determination of the rights and issues of the parties in the first case - that is, whether there was a determination "on the merits" or not. The Court explained that "with prejudice" is "on the merits" and "without prejudice" is not "on the merits".
The Court's review of to Olympia Mortg. Corp. v. Pugh, 774 So. 2d 863 (Fla. 4th DCA 2000), indicates that the "voluntary" or "involuntary" nature of the dismissal is not of import.
Mortgage Note and Mortgage Not Invalidated
Of most importance, the Court held that, even though the statute of limitations barred this foreclosure cause of action, the mortgage debt remained valid and the mortgage lien remained valid as its continued validity is governed by the mortgage statute of repose statute.
The implications of this holding may be that in virtually all cases the lender will be able to bring a new foreclosure action - not on the old cause of action, but on a "new" cause of action on the mortgage. It appears that most or all typical residential lenders will quickly hold a "new" foreclosure cause of action based on the breach of the mortgage covenants to pay "new" property taxes and "new" insurance premiums. If so, it appears that it is virtually impossible for a statute of limitations consideration to ever bar a "new" foreclosure action as there will always be "new" foreclosure causes of action arising until the very long mortgage statute of repose - in the typical case 20 to 25 more years - has expired on the mortgage lien.
Mortgage Modification
Beauvais, and similar recent decision by other courts,
may give reason for many Miami homeowners with mortgage foreclosure situations to re-evaluate what is the best course of action to "save" their home from foreclosure. It is clear now that many "foreclosure defense" measures in foreclosure court are not going to truly "save" their home" from foreclosure and that efforts would be better directed towards achieving a mortgage modification, which is available without court action and even without the expenditure on hiring a lawyer. The opportunities to obtain a mortgage modification under HAMP or other programs may not exist in the future or if they exist, the terms may not be as favorable.
Mortgage Modification Application
A person may complete the mortgage modification application documents online at www.documods.com and upload, fax or mail them to their lender. In many cases, the HAMP rules require the lender to stop the mortgage foreclosure while the mortgage modification application is being considered.
“Technical” (Procedural) Foreclosure Defense
That is, In most cases, winning a foreclosure defense "battle" in court is not going to win the "war" to save the home. Since 2008, certainly a lot of interesting legal issues have been raised, "won" or lost about standing, chain of assignment of notes, bearer instruments, lost notes, mortgage-backed securities, MERS, robo-signing, hearsay and business record rules of evidence, acceleration, deceleration, statutes of limitations, and statutes of repose. But in view of Harry Beauvais, "wins" on these issues, are in most cases just a win of a "battle" but not a win of the "war."
Costs to Homeowner of Not Obtaining a Mortgage Modification
Another item that is often overlooked is that a monthly mortgage payment includes, aside from principal ("p") and interest ("i"), county property taxes ("t") and the various types of property insurance ("i"). That is, the mortgage lender is not the source of a large portion of the monthly mortgage payment.
Furthermore, a homeowner should consider the economic costs of delay in the obtaining of a mortgage modification or the losing of their present home with well-intentioned, but unproductive foreclosure defense. A person should considered
- what would be the interest rate on a modified mortgage - typically starting at around 2%
- what would be the interest rate on a new mortgage on a replacement home - if the person is even able to obtain one
- what is the amount of the property taxes on their present home - is the "assessed value" being capped at a low historical amount by Florida's constitution
- will the property taxes on a new home be much higher as the "assessed" value will be closer to the market value
- the costs of moving from the old house
- the closing costs of a new real estate purchase, mortgage broker, points, and taxes on a new mortgage instrument
- accruing high costs of "forced place property insurance" until the mortgage modification is achieve - these may impact the amount of a modified mortgage payment and will increase the overall payoff due at the time of sale
- raising real estate values may increase the amount of the monthly modified mortgage payment
- costs of renting vs. ownership, including its possible income tax savings
Statute of Limitation - Dismissal With Prejudice Does Decelerate
Many prior foreclosure action may have been dismissed "with" prejudice - they thinking being that this was good for the homeowner and bad for the lender. But Beauvais indicate that it is just the opposite. A homeowner would be better off with a dismissal "without" prejudice and a lender better off with a dismissal "with" prejudice.
May a "Not on the Merits" Dismissal "Without Prejudice" Trigger Deceleration, Althought Not "In and Of Itself ?
The Harry Beauvais decision held that an dismissal without prejudice does not, "in and of itself", effect a deceleration. But that is only ruling that it does not "in and of itself", which give indication that deceleration may be triggered in a different manner. The Court reviewed that an "affirmative act" is required to decelerate a accelerate note.
On page ten of the decision, the Court reviewed the provisions of the mortgage and/or note, apparently on the possible notion that the dismissal without prejudice (although not "in and of itself") could trigger (constitute an "affirmative act") deceleration of the the note and thereby reinstate the original installment payment terms.
Here the Court referenced that in this instance that "[n]either the note or mortgage provides that dismissal without prejudice of the foreclosure action would negate the acceleration of the debt or otherwise reinstate the installment nature of the loan."
Issues of Estoppel?
The Court also made reference that the "factual allegations" of the lender "carried independent legal significance." This raises questions of the legal significance of the "factual allegations" of the homeowner in the "foreclosure defense" efforts.
That is, some foreclosure defenses are allegations that the plaintiff was not the holder of the note and have standing to bring the first foreclosure action, it may. If the involuntary dismissal without prejudice was based on such a finding by the court, this may raise some type of equitable estoppel for the homeowner to take the inconsistent position in the second foreclosure action that there actually had been an acceleration in the first action - without a prior acceleration, there was accrual of a cause of action and the statute of limitations never began to run.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
Although the December 17, 2014 Third District Court of Appeals decision in Harry Beauvais case may seem like a cold dose of reality to some Miami homeowners, it is better regarded as a very timely "blessing is disguise." The decision may indicate that many Miami homeowners would be better served by directing their legal efforts, sometimes heroic and idealistic, to what will truly "save my home" from foreclosure - that is a HAMP or other mortgage modification. These programs are not in place permanently.
That is, "technical" legal arguments to defeat a foreclosure are in many or most cases not going to be what truly resolves a homeowner's situation. Also notable, the economic and after-tax cost of a modified mortgage payment may in some instances be the same or less than paying legal fees for "foreclosure defense."
Certainly a lot of interesting legal issues have been raised - and "won" and revered on appeal - about standing, chain of assignment of notes, lost notes, mortgage-backed securities, MERS, robo-signing, bearer instruments, hearsay and business record rules of evidence, statutes of limitations, and statutes of repose. But in view of Harry Beauvais, these "wins," for many homeowners, will not be the source of them truly "saves my home" from foreclosure.
The "big picture" may be that the homeowner are spending significant amounts on "foreclosure defense", which may in some case - at best - bar enforcement of the mortgage note cause of action. In the meanwhile the mortgage debt - at what is probably a rate of interest higher than what would be in a modified mortgage plus monthly late fees and advanced property taxes and insurance - is increasing anyways. It should be noted, that in a typical case, the lender is required to buy "forced placed insurance" - based on an overstated value - which is sometimes triple or more the cost of a regular policy and does not even fully cover the homeowner's interests.
The shifting of efforts to better focus on mortgage modification instead of "foreclosure defense" would also have the benefit of lessening the burden on the sometimes over-whelmed court system and to allow it to better apply its judicial resources.
What Did "Foreclosure Defense" in Harry Beauvais Achieve?
What did all the efforts of "foreclosure defense" in Harry Beavais ultimately achieve? The answer is probably - not much at all. The homeowner only won of a "battle" and not the "war." While the Court upheld the trial court's ruling that that this particular foreclosure action, on the record and arguments made, was barred by the statute of limitations, of more significance, the Court held that the mortgage note and mortgage including its lien, remain valid, and there was no quieting of title in favor of the homeowner. The homeowner (the condominium association in this case) is left in limbo.
Generally, such a homeowner would not be able to sell or refinance the property without paying off, the continuing to accrue mortgage debt in full. Furthermore, as referenced below, the homeowner may still face a "new" foreclosure action - based on the mortgage covenants which remain valid, such as the requirement to pay property taxes and maintaining insurance.
Better Status of a Modification of Mortgage
The after-tax cost to a homeowner of paying a modified mortgage payment may not be very much more than paying the costs of "foreclosure defense" and avoiding the accrual of a "new" foreclosure cause of action. Even though a second foreclosure action on the "old" cause of action is barred, to avoid accrual of a "new" foreclosure action, a homeowner may be required to pay anyways, property taxes, property insurance, any association amount, and legal fees for "foreclosure defense."
Typically, a modified mortgage payment is targeted at about 31% of one's monthly income. The 31% would normally include the property taxes, property insurance, and association fees - which amount in some cases could be about 1/2 of the 31% figure - leaving only 1/2 of the 31% for principal and interest. For example, a case may be that, if the new payment is $1,500.00, $800.00 might be for property taxes, property insurance and association fees and $700.00 for principal and interest. With possible tax benefits, the actual cost may even be less.
Statute of Limitations and Deceleration Issues
The Court in Harry Beuvais decision teaches much about "deceleration." The decision undercuts statute of limitations arguments to a large degree. The case only held that the statute of limitations came into play in this foreclosure action as the previously accelerated mortgage note had not been decelerated as the prior dismissal had been "without" prejudice. The Court held that under the applicable rule of Florida Rules of Civil Procedure, a dismissal "without prejudice"is not a "determination on the merits" and did not decelerate the mortgage note back to its original installment terms. That is, the statute of limitations ran on this "old" foreclosure cause of action before the lender filed the second action.
But the Court also held that a dismissal "with" prejudice is a "determination on the merits" indicative that the any alleged default or acceleration in the first foreclosure action was invalid or ineffective. That is, the statute of limitation never even began to run ab initio. Thereby, there would not be any issue of statute of limitations coming into play in the second foreclosure action. A second foreclosure action could be properly brought on a "new" installment payment, with a "new" default, with a "new" acceleration, which gives rise to a "new" cause of action, filed in a "new" action governed by a "new" five-year statute of limitations.
May Dismissal "Without Prejudice" Trigger Deceleration Indirectly ?
The Harry Beauvais decision held that a dismissal without prejudice does not, in and of itself, effect a deceleration. But the Court's decision did give reference on page ten to the notion that although the dismissal without prejudice in itself does not effect deceleration (i.e. is not an "affirmative act"), it could "trigger" deceleration otherwise.
Here the Court referenced that in this instance that "[n]either the note or mortgage provides that dismissal without prejudice of the foreclosure action would negate the acceleration of the debt or otherwise reinstate the installment nature of the loan." Perhaps, this is an indication to lenders that with focus on this notion, a Court may be convinced that there is a contractual provision in the mortgage note or mortgage that is automatically triggered by the order of dismissal without prejudice.
"Legal Significance" of Language in a Complaint - Does it Also Apply to the Homeowner's Allegations? Judicial Estoppel
Otherwise references by the Court may also defeat the defense of the statute of limitations by the homeowner in a second foreclosure action. In footnote four, the Court stated that the lender's allegations in the first foreclosure complaint of acceleration were not simply "mere factual allegations", but "carried independent legal significance". This, or a similar notion, may also apply to the allegations made by the homeowner in his "foreclosure defense" in the first foreclosure action, i.e. that they too may not not be "mere factual allegations" but also carry "independent legal significance" or be otherwise of import.
If the factual allegations of the homeowner in the first foreclosure actions are also of "legal significance," they may support estoppel or otherwise defeat efforts by the homeowner in the second foreclosure action to raise a statute of limitations defense. That is, the homeowner may have alleged facts that there had not been a valid or effective default and acceleration of the mortgage note prior to the first foreclosure action. If there had not been a valid or effective default and acceleration in the first foreclosure action, the statute of limitations would not have even begun to run in the first instance and could not have run before the second foreclosure action.
It is noted that the doctrine of "judicial estoppel" generally prohibits, a litigant from taking inconsistent positions in different courts.
Foreclosure Cause of Action on Other Mortgage Covenants
One should note that Florida case law and commentators review that there are many covenants by the homeowner in the mortgage itself - aside from the covenant to pay the mortgage note installment payments. Examples of such covenants are to protect the collateral by keeping it insured or paying the property taxes. With the mortgage and its lien continuing to be valid - even if a foreclosure action on the "old" mortgage note cause of action is barred - for a very extended period of time pursuant to its statute of repose, there would in a typical case, be breaches of these separate mortgage covenants giving rise to "new" foreclosure causes of action upon which a "new" foreclosure action may be filed with "new" statute of limitations.
Conclusion
In summary, the Harry Beuvais case, although being a cold dose of reality, is a blessing in disguise to homeowners to focus their efforts on what will truly "save my home." The opportunities to achieve a modification of a mortgage are presently probably as good as they ever will be and may, if not seized now, not be available later.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The December 17, 2014 Third District Court of Appeals decision in Harry Beauvais case addresses important mortgage foreclosure issues. It may give reason for many Miami homeowners with mortgage foreclosure issues to re-evaluate their position. It may be that some should put more efforts towards the direction of achieving a mortgage modification under the present opportunities offered by HAMP or other programs as a possible better resolution of their mortgage foreclosure situation.
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That is, "technical" legal defensive arguments in a foreclosure case are in many cases less likely going to be what truly resolves a homeowner's mortgage foreclosure situation and saves their home.
Since 2008, certainly a lot of interesting legal issues have been raised, "won" or lost about standing, chain of assignment of notes, lost notes, mortgage-backed securities, MERS, robo-signing, bearer instruments, hearsay and business record rules of evidence, statutes of limitations, and statutes of repose. But in view of Harry Beauvais, these "wins," for many homeowners, may not be the source of what truly "saves my home" from foreclosure.
The Court certified the case to the Florida Supreme Court where the appeal from the 5th DCA's opinion in Bartram is already pending. It appears that the Court in Bartram reached the same result as Harry Beauvais did, but with a partially different reasoning.
What Did "Foreclosure Defense" in Harry Beauvais Achieve?
What did all the efforts of "foreclosure defense" in Harry Beavais ultimately achieve? The answer is probably - ultimately not much at all. The homeowner only won of a "battle" and not the "war." While the Court upheld the trial court's ruling that this particular foreclosure action, on the record and arguments before it, was barred by the statute of limitations - - of greater significance, the Court held that the mortgage note and mortgage including its lien, remain valid, and there was no quieting of title in favor of the homeowner. The homeowner is left somewhat in limbo.
The "big picture" may be that the homeowner may be spending significant amounts and efforts on "foreclosure defense," but the most that can be achieved on an statute of limitations argument is to bar filing of a second foreclosure second - which would leave the mortgage note and mortgage still valid. In the meanwhile the mortgage debt - at what is probably a rate of interest higher than what would be in a modified mortgage, monthly late fees and advanced property taxes and insurance accrue. It should be noted, that in a many cases, the lender is required to buy "forced placed insurance" which is sometimes triple or more the cost of a regular policy and does not even fully cover the homeowner's interests. Furthermore, the homeowner would not be able to sell or refinance the property without paying off, the continuing to accrue mortgage debt in full.
Furthermore, as referenced below, even if a foreclosure action could not be filed on the expired mortgage note default, the homeowner may still face a "new" foreclosure action - based on a breach of covenants in the mortgage, aside from the mortgage note, which also may provide a "new" foreclosure cause of action that is not barred by the statute of limitations.
Modification of Mortgage
Typically, a modified mortgage payment is targeted to be at about 31% of one's monthly income. The 31% would normally include the property taxes, property insurance, and association fees - which amount in some cases could be about 1/2 of the 31% figure - leaving only 1/2 of the 31% for principal and interest. For example, a case may be that, if the new payment is $1,500.00, $800.00 might be for property taxes, property insurance and association fees and $700.00 for principal and interest. With possible income tax benefits, the actual cost may even be less.
Statute of Limitations and Deceleration Issues
The Court in Harry Beuvais decision teaches much about "deceleration." The decision undercuts statute of limitations arguments to a large degree. The case only held that the statute of limitations came into play in this foreclosure action as the previously accelerated mortgage note had not been decelerated as the prior dismissal had been "without" prejudice. The Court held that under the applicable rule of Florida Rules of Civil Procedure, a dismissal "without prejudice"is not a "determination on the merits" and did not decelerate the mortgage note back to its original installment terms. That is, the statute of limitations ran on this "old" foreclosure cause of action before the lender filed the second action.
But the Court also held that a dismissal "with" prejudice is a "determination on the merits" indicative that the any alleged default or acceleration in the first foreclosure action was invalid or ineffective. That is, the statute of limitation never even began to run ab initio. Thereby, there would not be any issue of statute of limitations coming into play in the second foreclosure action. A second foreclosure action could be properly brought on a "new" installment payment, with a "new" default, with a "new" acceleration, which gives rise to a "new" cause of action, filed in a "new" action governed by a "new" five-year statute of limitations.
May Dismissal "Without Prejudice" Trigger Deceleration Indirectly ?
The Harry Beauvais decision held that a dismissal without prejudice does not, in and of itself, effect a deceleration. But the Court's decision did give reference on page ten to the notion that although the dismissal without prejudice in itself does not effect deceleration (i.e. is not an "affirmative act"), it could "trigger" deceleration in a different manner.
Here the Court referenced that in this instance that "[n]either the note or mortgage provides that dismissal without prejudice of the foreclosure action would negate the acceleration of the debt or otherwise reinstate the installment nature of the loan." Perhaps, this is an indication to lenders that with focus on this notion, a Court may be convinced that there is a contractual provision in the mortgage note or mortgage that is automatically triggered by the order of dismissal without prejudice.
"Legal Significance" of Language in a Complaint - Does it Also Apply to the Homeowner's Allegations? Judicial Estoppel
Otherwise references by the Court may also defeat the defense of the statute of limitations by the homeowner in a second foreclosure action. In footnote four, the Court stated that the lender's allegations in the first foreclosure complaint of acceleration were not simply "mere factual allegations", but "carried independent legal significance". This, or a similar notion, may also apply to the allegations made by the homeowner in his "foreclosure defense" in the first foreclosure action, i.e. that they too may not not be "mere factual allegations" but also carry "independent legal significance" or be otherwise of import.
If the factual allegations of the homeowner in the first foreclosure actions are also of "legal significance," they may support estoppel or otherwise defeat efforts by the homeowner in the second foreclosure action to raise a statute of limitations defense. That is, the homeowner may have alleged facts that there had not been a valid or effective default and acceleration of the mortgage note prior to the first foreclosure action. If there had not been a valid or effective default and acceleration in the first foreclosure action, the statute of limitations would not have even begun to run in the first instance and could not have run before the second foreclosure action.
It is noted that the doctrine of "judicial estoppel" generally prohibits, a litigant from taking inconsistent positions in different courts.
Foreclosure Cause of Action on Other Mortgage Covenants
One should note that Florida case law and commentators review that there are many covenants by the homeowner in the mortgage itself - aside from the covenant to pay the mortgage note installment payments. Examples of such covenants are to protect the collateral by keeping it insured or paying the property taxes. With the mortgage and its lien continuing to be valid - even if a foreclosure action on the "old" mortgage note cause of action is barred - for a very extended period of time pursuant to its statute of repose, there would in a typical case, be breaches of these separate mortgage covenants giving rise to "new" foreclosure causes of action upon which a "new" foreclosure action may be filed with "new" statute of limitations.
Conclusion
In summary, the Harry Beuvais case, although being a cold dose of reality, is a blessing in disguise to homeowners to focus their efforts on what will truly "save my home." The opportunities to achieve a modification of a mortgage are presently probably as good as they ever will be and may, if not seized now, not be available later.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
As the holiday season gets fully into swing here in midtown Manhattan, we at Shenwick & Associates wanted to take this time to wish you a happy, safe and warm holiday season and a very happy and healthy 2015. We also wanted to thank you for your friendship, your business, your referrals and your trust in us. Personal and business bankruptcies and workouts are keeping us busy as 2014 draws to a close. We're here for you now and in the upcoming year, and we look forward to working with you.
We also wanted to update you on the fascinating case of Santiago-Monteverde v. Pereira (In re Santiago-Monteverde), which we've previously discussed here. When we last wrote about this case, the Second Circuit Court of Appeals had certified the following question to the New York State Court of Appeals:
Whether a debtor‐tenant possesses a property interest in the protected value of her rent‐stabilized lease that may be exempted from her bankruptcy estate pursuant to New York State Debtor and Creditor Law Section 282(2) as a "local public assistance benefit"?
In a decision issued on November 20th, the New York State Court of Appeals held in a 5-2 vote to answer the question in the affirmative. Writing for the majority, Judge Abdus-Salaam held that "[t]he rent-stabilization program has all of the characteristics of a local public assistance benefit" and "[w]hile the rent-stabilization laws do not provide a benefit paid for by the government, they do provide a benefit conferred by the government through regulation aimed at a population that the government deems in need of protection."
The 2nd Circuit Court of Appeals still needs to issue its decision in the next few months, but this ruling finally settles that rent–stabilized and rent–controlled tenants in New York State no longer have to fear losing their leases when considering a Chapter 7 bankruptcy. Any persons having questions about personal bankruptcy or the Santiago-Monteverde v. Pereira (In re Santiago-Monteverde) case should call Jim Shenwick.
Happy holidays and happy 2015 from Shenwick & Associates!
The issuance of the Third District Court of Appeals recent decision in Deutsche Bank Trust Company Americas, etc. v. Harry Beauvais, et al., Case No. 3D14-575, may be an appropriate time to review what actions a Miami homeowner that seeks to save their home from foreclosure should consider. If upheld, the Court's decision may indicate that some notions of "foreclosure defense" may be based on assumption that now appear false. A homeowner may be better served on directing his or her efforts towards the modification of their mortgage.
Present Modification Opportunities
If a homeowner seeks to save their home from foreclosure, solely focusing on "delaying foreclosure" is not likely to solve their proble. The federal government, the mortgage lenders, and the general economic climate, present good opportunities to modify your mortgage that may not exist in years to come.
Costs
For many, the after-tax benefit cost of paying a modified mortgage payment may not be significantly more than paying for a "foreclosure defense".
Possible Rising Real Estate Price and Interest Rates
A homeowner may be making a error in not taking the opportunity to modify their mortgage based on present real estate values and interest rates. Real estate prices may be rising, causing the new modification payment to be higher.
If a person has a first and second mortgage, a rise is in real estate prices would not help. If their second mortgage is wholly "underwater", it maybe avoidable in bankruptcy. If real estate prices go up enough that the second mortgage is even $1 "above water," it could not be avoided at all.
"Winning" Foreclosure
There may not exist much of a thing as "winning" a foreclosure case. For many, simply getting a foreclosure case dismissed, "with" or "without" prejudice is not much of a "win". In most instances, a new foreclosure action may be filed on a new default.
For example, "winning" a foreclosure case on a rule of "hearsay" or other rule of evidence, is not much of a "win" - it only means that the lender did not establish a sufficient evidentiary record - this time around.
Statute of Limitations
Even if the statute of limitations has run to bring a foreclosure action on the mortgage note, the mortgage note remains valid and the mortgage and its liens remains valid (until the mortgage statute of repose runs).
"Lost Mortgage Note"
Getting your foreclosure case dismissed on the grounds that the mortgage note is "lost" or the plaintiff cannot prove standing may only effects a dismissal of the foreclosure case. Another foreclosure could be filed. The mortgage note and mortgage lien remains valid.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
The issuance by the Third District Court of Appeals in Miami of the recent decision in Deutsche Bank Trust Company Americas, etc. v. Harry Beauvais, et al., Case No. 3D14-575, may be an appropriate time to review what actions a Miami homeowner that seeks to save their home from foreclosure should consider. If upheld, the Court's decision may indicate that some notions of "foreclosure defense" may be based on assumptions that are contrary to what the Court's appears to have ruled. A homeowner seeking to save their home from foreclosure may be better served on directing his or her efforts towards the modification of their mortgage instead of "winning" a foreclosure case. For example, it appears that in most cases, arguments regarding statute of limitatations issues will not result in a "quiet title" judgment.
Present Modification Opportunities
If a homeowner seeks to save their home from foreclosure, focusing primarily on "foreclosure defense" is not likely to be the solution. The federal government, the mortgage lenders, and the general economic climate, present good opportunities to modify your mortgage that may not exist in years to come. For many, the after-tax benefit cost of paying a modified mortgage payment may not be significantly more than paying for a "foreclosure defense".
Possible Rising Real Estate Price and Interest Rates
A homeowner may be making a error in not taking the opportunity to modify their mortgage based on present real estate values and interest rates. Real estate prices and interest rates may be rise, causing the new modification payment to be higher the longer a person waits to pursue a modification.
Also, if a person who has a first and second mortgage, it would be better to address their situation before there is a rise is in real estate prices. If the second mortgage is wholly "underwater", it may be avoidable in a bankruptcy case. If real estate prices go up enough that the second mortgage is not wholly "underwater," the second mortgage could not be avoided at all.
"Winning" Foreclosure
There may not exist much of a thing as "winning" a foreclosure case. For many, simply getting a foreclosure case dismissed, "with" or "without" prejudice may not be much of a "win". In most instances, a new foreclosure action may be filed on a new default almost immediately.
For example, "winning" a foreclosure case by getting the case dismissed on a on rule of evidence, is not much of a "win" - it only means that the lender did not establish a sufficient evidentiary record at the trial. In most cases, the lender can simply file another case.
Statute of Limitations
Even if the statute of limitations has run to bring a foreclosure action on the mortgage note, generally the mortgage note remains valid and the mortgage and its liens remains valid. The continued validity of the mortgage and its lien is governed by the time period set forth in the statute of repose.
"Lost Mortgage Note"
Getting your foreclosure case dismissed on the grounds that the mortgage note is "lost" or the plaintiff cannot prove standing only effects a dismissal of the foreclosure case. In most cases, this simply buys time until the lender refills another case. The mortgage note and mortgage lien remains valid.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
May a second foreclosure action be brought after a first foreclosure action was dismissed and the statute of limitations has expired on the cause of action upon which the first action was brought? Apparently, based on the Florida Third District Court of Appeal's recent decision in Deutsche Bank Trust Company Americas, etc. v. Harry Beauvais, et al., Case No. 3D14-575, the key is something "new."
"New" Things
A "new" second foreclosure action may be brought upon a
- a "new" mortgage note installment payment
- upon which there is a "new" default and optional acceleration
- upon which a "new" cause of action arises
- brought before its "new" five year statute of limitations periods expires
Deceleration
After acceleration, "new" mortgage note installment payment can come due only if the mortgage note is "decelerated." If the first foreclosure case was dismissed "with" prejudice, there is an indication that the default and acceleration never happened in the first instance (or the dismissal otherwise decelerates the mortgage note).
The Court makes reference that deceleration may be effected by an "affirmative act" by the lender or holder of the note. Such affirmative acts include contractual reinstatement or modification by the parties. The decision make reference to the notion that deceleration make also be effected by revocation, which may or may not require a contractual provision in the mortgage note allowing such.
Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com
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