Florida Foreclosure Defense Lawyers
Arsenal of Foreclosure Defenses
Through experience, dedication to our clients and an ever expanding knowledge base, the South Florida foreclosure defense attorneys at the Law Offices of Evan M. Rosen, have accumulated a long list of potential defenses that can help people facing foreclosure keep their home, stay in it longer or work out a viable foreclosure alternative such as a loan modification, deed-in-lieu of foreclosure, short sale or principal reduction.
If you or someone you know is facing foreclosure, the South Florida foreclosure defense attorneys at the Law Offices of Evan M. Rosen, can help. You are welcome to read more below about foreclosure defense. However, for a FREE CONSULTATION with one of our experienced foreclosure defense attorneys, call us now at 855-55-ROSEN or fill out our online form.
Here are some of the “defenses” we have in our arsenal for defending foreclosure actions:
- Standing: Due to the complexities of today’s secondary mortgage market and mortgage securitization, standing has become one of the most successful defenses against a pending foreclosure. The issue is also quite complicated and has many different aspects. The Uniform Commercial Code addresses many of the standing defenses, as well as these statutes: Negotiable Instruments (Florida Statutes Ch. 673), Secured Transactions (Florida Statutes Ch. 679), Assignments and Transfers of Mortgages (Fl. Stat. Ch. 701), Florida Evidence Code (Fl. Stat. Ch. 90) and the Florida Rules of Civil Procedure.
- General transfer issues: Problems can arise during the process of transferring the mortgage between financial institutions, and that can affect the plaintiff’s standing in a foreclosure action. Some of those issues include improper assignments of the mortgage or improper indorsements on the notes, out-of-business banks that are unable to fix improper assignments or indorsements, inability to find the original note or mortgage and the inability to prove the required elements to reestablish either one. There have been numerous instances where lenders and lenders’ attorneys have been caught in an attempt to backdate and/or forge assignment documents in order to recreate that which never existed or was lost. The law is crystal clear on this issue, a Plaintiff must prove that it had standing AT THE TIME THE LAWSUIT WAS FILED, not after.
- Securitization: Mortgages are frequently bought and sold on secondary markets very soon after closing. Many of these loans end up as part of trusts, which are sold to investors in financial instruments called mortgage-backed securities (MBS). You can see for yourself how complicated this process is by looking at our securitization chart. A number of entities and agreements are involved in the process of moving the mortgage and note from the closing table to the trust. If a loan does not adhere to the correct process, it cannot be a part of the trust for several reasons, including significant tax ramifications. Strict deadlines dictate how long a trust can acquire mortgages and notes after it is formed. So, if the plaintiff is a trust or if another party such as a servicer is suing on the trust’s behalf, there are many measures that the parties were required to take in order to establish their ownership and right to foreclose. The foreclosure defense attorneys at the Law Offices of Evan M. Rosen aggressively examine these details, and we frequently find solid defenses to these types of foreclosure matters.
- MERS, Inc.: The Mortgage Electronic Registration Service, Inc., adds another wrinkle to the standing question. MERS, created in the 1990’s by the nation’s biggest lenders without any legislative approval, touts itself as a centralized repository for information about mortgages — a type of database that allows people to look up information about mortgages in one place. The problem is that not all institutions use MERS, and it wasn’t even mandatory for all MERS “members” to use it. In many situations, MERS will be listed on the mortgage as the party that received the mortgage as the actual lender’s “nominee.” These are called “MOM” mortgages or “MERS as original mortgagee.” If an agreement between the lender and MERS exists, there can be problems with MERS’s authority to enter into mortgages on behalf of the lender. If such problems are present, there can be more complications if MERS later assigned the mortgage. We have also seen situations where MERS assigns a mortgage days before, or even after, a foreclosure action is brought on behalf of a lender that is either in bankruptcy or out of business. Those types of assignments provide a homeowner with leverage and solid defenses because they are typically fraudulent and, in the case of bankrupt lenders, illegal without specific court order from the bankruptcy court. There are also issues pertaining to whether or not just the existence of MERS in a transaction impermissibly splits the mortgage and note in between two different parties.
- Negotiability/Secured Transaction/Article 9 of the UCC: Often the plaintiff does not have standing to bring the action because the “Note” upon which plaintiff relies is not a negotiable instrument. Florida Statutes Section 673.1041 defines a negotiable instrument as “an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it… (c) [d]oes not state any other undertaking or instruction by the person promising or ordering payment to do ANY act in addition to the payment of money…” However, most notes state, “[w]hen I make a prepayment, I will tell the Note Holder in writing that I am doing so.” This specific requirement/instruction is an “act in addition to the payment of money.” This simple sentence makes the note non-negotiable under Florida Statutes and not capable of being enforced with a mere signature or endorsement on the note. Further by definition, pursuant to Florida Statutes Section 671.201, the plaintiff in the suit cannot a “holder”, as that term only applies to “negotiable instruments.” Also, whether it is negotiable or not, the note is really a part of a “secured transaction” and must be transferred, not with an endorsement but, pursuant to Florida Statutes §679.2031. At a minimum, the plaintiff must prove that value was given when the mortgage was allegedly transferred to it, the transferor has rights in the property or the power to transfer rights in the property, and that the transferor authenticated a security agreement that provides a description of the property. If the Plaintiff does not have proof of same and therefore it does not have a valid claim to foreclose upon the subject note and mortgage.
- Service of process: Lenders are required to meet strict guidelines about how to serve a foreclosure lawsuit on the borrower. If the lender doesn’t follow the rules, the service will be “quashed” or thrown out. Rule 1.070 of the Florida Rules of Civil Procedure requires the complaint to be served with a summons within 120 days after the lawsuit was initially filed in court. The process server is required to give the borrower copies of the documents, inform them of the contents, and must mark the originals and the copies with the date and hour that they were served. The process server must also put his identification number and initials on the borrower’s copy, according to Florida Statute 48.031(5). There are also rules under the statute that spell out how borrowers can be served at their residences, workplaces, private mailboxes or by serving their spouse. Because of these service rules, there is a significant chance that the process server will make an error. For example, Florida Statute 48.20 bars process servers from serving you on a Sunday. If that happened, the service is deemed void and you might be entitled to damages.
- Failure to file a cost bond: Nonresident corporations are required to post a $100 bond under Florida Statute 57.011. The bond is designed to pay for any costs that the borrower could incur in the successful defense of the lender’s lawsuit. The law requires the nonresident corporation to file the bond within 30 days after initiating the lawsuit. The defendant must give the plaintiff 20 days notice before moving to dismiss the lawsuit or moving to hold the lender’s attorney liable for the costs of defending the case.
- Defects with the complaint: The form or the issues plead in the initial complaint can also give rise to a number of defenses. One example is found under Florida Rules of Civil Procedure 1.130, which requires the mortgage and the note to be attached to the complaint. Standing must also be shown within the “four corners” of the complaint and its attachments. For example, the complaint fails to state a cause of action if the plaintiff alleges that it owns and holds the note and mortgage, but the attached note and mortgage list another party as the owner and there is no endorsement or assignment to the plaintiff. Florida Rule of Civil Procedure 1.110 was amended on Feb. 11, 2010, to require the plaintiff in a foreclosure action to sign off on the complaint with this language: “Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.” We have developed a number of successful defenses just based on this verification rule alone. Ultimately, a plaintiff’s lawsuit could be dismissed if it fails to meet any of the statutory requirements listed above.
- Failure to fulfill all “conditions precedent”: The plaintiff in a foreclosure action must allege and prove that it has met all of the “conditions precedent” that are required before filing a lawsuit. A common example of a condition precedent is that the borrower must have been provided with written notice of “acceleration” under the mortgage and explain your right to reinstatement. The lender cannot foreclose on your home unless it can prove it has sent this document containing very specific terms detailed in the mortgage. There is also Florida Statutes Chapter 559 and specific condition precedent requirements for FHA mortgages as well.
- Amount of debt in dispute: The exact amount of the debt is an important entry on the list of things the foreclosure plaintiff must prove. A large number of errors and miscalculations can arise from failures to credit the borrower for past payments. Simple math, accounting and software glitches can also lead to an incorrect sum. The foreclosure defense lawyers at the Law Offices of Evan M. Rosen require the lender to prove their case down to the last cent. The “robo-signing” or “robo-signer” controversy plays an important role in the issue of establishing the correct debt owed. Lenders use affidavits to prove how much is still owed on the loan. Affidavits are sworn statements where the person signing the document attests that he or she has personal knowledge of the statements made and that the statements are true and accurate. Affidavits must be notarized, requiring a state-licensed official to observe the person sign the document and must either know the signer personally or receive valid proof of his or her identification. In a number of cases from around the nation, it has been proven that banks, their supporting companies and even their attorneys have had individuals sign affidavits where the signer did not have any personal knowledge about the contents. These people can sign thousands of affidavits in a month. They also can let other people sign on their behalf or they can be unaware that others are forging their signatures. There have also been cases where affidavits have been notarized without the signer present, without proper identification of the signer and by notaries who have expired commissions or their signatures were forged by someone else. Assembly line operations have been set up across the country to pull off this massive fraud on the courts, borrowers and the nation. If we find instances of this type of behavior during detailed discovery, such affidavits will no longer be used to prosecute you. On the contrary, they become evidence of false documents, and we use them in your defense against the lender. Further, the plaintiff is a foreclosure case must prove their case by a “preponderance of the evidence”. Part of their case is the amount of damages. The mortgage requires a very specific way in which your payments must be applied to your account. If not applied properly, a miscalculation snowball results due to interest compounding the mistake. The Law Offices of Evan M. Rosen has found misapplication of payments in many cases and has been successful in using that as a defense to foreclosure.
- Discovery practices: Information is formally exchanged between the parties to a lawsuit during a process called discovery. Some of the common forms of discovery include: 1) depositions upon oral examination, 2) depositions upon written questions, 3) written interrogatories, 4) requests for production of documents or things, 5) requests for permission to enter upon land or other property for inspection and other purposes, 6) physical and mental examinations, and 7) requests for admissions. All of these discovery devices can be particularly helpful in the process of defending most any foreclosure action. Every discovery request takes a specific amount of time, and discovery can be used to turn up evidence that the lender lacks or evidence that helps disprove the lender’s case. Every time the lender makes a vague, incomplete or ambiguous response, more time elapses during which we ask the court to compel the bank to provide a more concise answer and then we wait for the judge’s order before going forward.
- Evidentiary Issues: In most instances a foreclosing bank will have no one person who has personal knowledge of every fact they need to prove in order to win their case. As a general rule, a witness must have personal knowledge as to that which they testify. One of the exceptions pertains to the use of “business records.” However, business records are considered “hearsay” evidence, out of court statements being offered to prove the matter in the records. There is a very specific exception to hearsay as it pertains to business records, which can allow those records to come in, so long as a “records custodian” or “other qualified witness” can testify as to the manner in which the records were prepared and kept by the business. If a bank representative cannot meet that burden and the bank cannot get into evidence at trial various key documents needed to prove their case and they will lose.
- Procedural issues: There are specific guidelines under the Florida Rules of Civil Procedure that the parties must obey in every phase, motion, hearing and process. They must follow technicalities including notices, special forms, time lines and others. These provide a number of different ways that a competent lawyer can use the rules to defend a foreclosure action.
- Failure to mitigate: The plaintiff’s duty to mitigate damages is an inherent part of any case that deals with an alleged breach of contract. Damages can be offset against the lender’s recovery if the lender did something unreasonably or failed to take a reasonable action to reduce its damages. Our extensive knowledge of all the federal government programs like HAMP and HAFA can be used to help here.
- Bankruptcy: The most powerful consumer protection statute available. If you qualify for bankruptcy you can obtain relief from most, if not all of your debt, while keeping most, if not all of your property. In all but a few cases, just by filing you will temporarily stop a foreclosure case dead in its tracks! Also, the bankruptcy code allows people in certain circumstances to strip away second mortgages and even modify or “cram down” first mortgages.
- U.S. Truth In Lending Act (TILA), Regulation Z: The Federal Reserve issued the regulation referred to as “Reg Z” to implement the federal Truth in Lending Act, which is found under Title I of the Consumer Credit Protection Act. The goal of the act and Reg Z is to promote meaningful disclosure of credit terms to help consumers make informed decisions and to protect them from inaccurate and unfair credit billing practices. Criminal liability may be imposed for violations of the act, and in some rare situations the borrower might be able to undo the credit contract whose collateral is the borrower’s primary residence. However, this right of rescission does not apply to finance agreements like home equity lines of credit, if used to buy or build a home.
- U.S. Home Ownership Equity Protection Act (HOEPA): Section 32 of the Truth in Lending Act (TILA) contains this act, which applies to “high-cost loans.” The act defines high-cost loans as first liens with greater than 8 percent interest, second liens with greater than 10 percent interest or loans with closing fees and points that exceed either $583 or 8 percent of the loan’s total amount. Borrowers must be provided with certain disclosures within at least three days before the loan closing, as well as other disclosures that TILA requires. Violations can result in criminal liability under the act, and the loans can also be rescinded, except in situations where the loan was used to purchase or build a home and the home was the collateral for the loan. Reverse mortgages and home equity loans are not covered under the act.
- Florida Fair Lending Act: This act’s language is very similar to that in HOEPA. The act, located in Chapter 494 of the Florida Statutes, prohibits certain terms and requires timely disclosures. One key difference is that violations of Florida’s act can result in the lender forfeiting all of the interest charged or contracted to be charged or received. That leaves the lender able to enforce only the loan’s principal against the borrower.
- U.S. Real Estate Settlement Procedures Act: The primary focus of RESPA is regulation of the real estate closing process. The law requires a detailed closing statement form, called HUD-1, to be used at most real estate closings. RESPA also prohibits kickbacks and illegal referral fees, and it aims to reduce the amount of money a borrower must put in escrow. Under the law, a qualified written request (QWR) may be used to seek information from your loan’s servicer regarding the loan’s status, and it also allows you to request certain documents. The law allows the loan servicer 5 days to acknowledge receipt of the QWR and 30 days to respond. During the 30-day period, the loan servicer is barred from reporting any past-due payments to the credit bureaus. Borrowers can recover up to $2,000 for violations of RESPA. Lenders must also make certain disclosures when referring a borrower to an “affiliated” business. Fines of up to $10,000 and/or a year of jail time can be enforced for violations of the “affiliated business arrangement” disclosure requirement under RESPA.
- U.S. Fair Debt Collection Practices Act and Florida’s Consumer Collection Practices Act: State and federal laws govern what can — and cannot — be done during the debt collection process. Some of the forbidden acts include: use of profanity or obscenities, making threats, calling before 8 a.m. or after 9 p.m. or at other times they know will be inconvenient for you, as well as many others acts. The laws allow for actual damages and additional statutory damages of up to $1,000, plus punitive damages in certain circumstances. These damages, as well as your our attorney’s fees and costs can be recovered through a counterclaim against the plaintiff in the foreclosure action or in a separate suit.
- U.S. Home Affordable Modification Program (HAMP): Lenders and servicers that signed up for the program and/or those who accepted a bailout under TARP must modify loans to qualified borrowers to reduce the monthly payments to 31 percent of the borrower’s gross monthly income. HAMP provides various cash incentives to lenders to modify loans, and starts with an initial 90-day trial period if the borrower is eligible. Lenders are barred from starting a new foreclosure action if the borrower is taking part in a trial modification plan. Existing foreclosure actions must be halted for borrowers who are in their trial period and also if the borrower’s trial modification plan has failed. Finally, participating lenders cannot go forward with a foreclosure sale on an eligible loan until the borrower has been evaluated for HAMP, after a trial modification offer has been made, if the borrower is eligible for one, or until 30 days after a HAMP non-approval notice has been sent.
- U.S. Home Affordable Foreclosure Alternatives Program (HAFA): This program uses cash payments of up to $3,000 in relocation assistance to incentivize lenders and borrowers to enter into either a short sale or a deed in lieu of foreclosure. If they are approved for one of these transactions, HAFA requires borrowers to be released from future liability including a deficiency judgment. It also requires that short sales be reported to credit reporting agencies as paid or closed/zero balance. A deed in lieu of foreclosure is reported as such. Lenders must pay 6 percent or up to $6,000 toward satisfying subordinate liens.
- Miscellaneous: Including fraud, duress, unconscionability, waiver and estoppels.
Contact Our Florida Foreclosure Defense Attorneys Today
These defenses all rely on the specific facts of each individual case and which makes it all that more important to hire a lawyer who has significant experience with foreclosure defense law and who is passionate about aggressively representing your best interests.
To find out more about foreclosures or to inquire about how our Florida foreclosure defense attorneys can help, contact us today for a FREE CONSULTATION at 855-55-ROSEN or through our online form. Our country’s history is filled with examples of people who have struggled financially but then have gone on to become famously wealthy. They all reclaimed their part of the American Dream and we want to help you reclaim yours! Let the lawyers and staff of the Law Offices of Evan M. Rosen, serve you!