"Foreclosure Defense" - Now What ?

On December 17, 2014,  the Florida Third District Court of Appeals in Miami, made an important ruling regarding mortgage foreclosures, including statute of limitation related issues.   It may be prudent for many Miami homeowners with mortgage foreclosure issues to review their situation in light of this decision.

Court's Apparent Framework and Ruling  

Action and Cause of Action

• an "action" for foreclosure must be commenced within five years after the accrual of the foreclosure "cause of action" upon which it is founded (section 95.11(2)(c))

• a foreclosure "cause of action" accrues, and the statute of limitations to bring it commences,  upon the default and optional acceleration of the installment mortgage note  

Declerated and Accelerated Mortgage Note

• an installment mortgage note remains accelerated unless the note is "decelerated" 

• while a mortgage note remains accelerated, there are no "new" installment payments coming due upon which a "new" foreclosure "cause of action" could possibly accrue 

• while a mortgage note is in a state of being decelerated, each new default creates a new cause of action and commences a new statute of limitations period installment payment 

Dismissal With or Without Prejudice

• dismissal of a foreclosure action without prejudice - does not "decelerate" the accelerated mortgage note 

• dismissal of a foreclosure action with prejudice - is an "adjudication on the merits" which includes the implication that "there was no valid default (and by extension, no valid or effective acceleration of the debt")" (i.e. a cause of action never arose in the first place) - the parties are placed back into the original mortgage note contractual relationship

Effect of Expiration of Statute of Limitations    

• Mortgage Note Debt Not Cancelled - the expiration of the statute of limitations to bring the action, does not render the mortgage note cancelled 

• Mortgage Lien Not Null and Void - the temporal validity of the mortgage lien is governed by the mortgage statute of repose of section 95.281, the expiration of the statute of limitations to bring a particular foreclosure action does not render the mortgage and its lien null and void

• No Quieting of Title - no quieting of title in favor of the homeowner as the mortgage note and mortgage continue valid 

  
Review of Situation May be Considered
Due to the Court's ruling, a homeowner may need to consider its implications for their particular factual situation. Perhaps some may be proceeding under the assumption that the statute of limitations to bring a foreclosure action on the mortgage note has expired, when it has not. Also some may have assumed that the statute of limitations did not expire, when it actually has. Some may have erroneously assumed that the expiration of the statute of limitations on the mortgage note means that the mortgage note is cancelled or mortgage lien is void. Some may have the false assumptions that they are entitled to a quieting of title. 

There may be other present alternatives that better serve the economic and personal benefits of the homeowner and their family. One alternative may be consider available mortgage modification programs, including HAMP and in-house modification programs. Many mortgage modifications are targeted at about 31% of gross wages. The targeted 31% amount would include coverage of principal, interest, property taxes, insurance, and association fees.   
A homeowner should also consider that the available mortgage modification programs are not permanently in place.  Other favorable factors for a mortgage modification also may not be present in the future. 

Jordan E. Bublick - Miami Bankruptcy Lawyer - Kendall & Aventura Offices - (305) 891-4055 - www.bublicklaw.com