Arsenal of 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 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 can be complicated depending on how the bank alleges to be entitled to enforce. The Uniform Commercial Code and other statutes can address standing: 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 loan 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. It must also prove standing at the time of trial.
- 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. Unfortunately, most courts have overlooked this but it still can be a viable defense in the right scenario. The foreclosure defense attorneys at the Law Offices of Evan M. Rosen thoroughly examine these details to look for ways we can help best serve our clients.
- MERS, Inc.: The Mortgage Electronic Registration Service, Inc., can add another wrinkle to the standing question. MERS was created in the 1990’s by the nation’s biggest lenders without any legislative approval. It acts 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.
- 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, many notes and loan agreements, like home equity lines of credit are not negotiable instruments. If they can be transferred, the method of doing so is not like a traditional negotiable instrument. There are also instances in which Article 9 titled, "Secured Transactions," applies. This is codified in Florida Statute, Chapter 679 and sets up a completely different paradigm burden for banks to be able to foreclose.
- 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.
- 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 properly alleged 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.” Later, Rule 1.115 titled, "Pleading Mortgage Foreclosures" was created. This created even more special rules for banks. We have had numerous cases dismissed just based on defects in the way the way banks plead their cause of action. In other instances, we wait to expose the pleading defect until we are at trial. Whether to expose a pleading defect in a motion to dismiss or at trial depends on a few factors, which we will discuss in confidential communications with our clients.
- 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 specific condition precedent requirements for FHA and VA loans 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. The notary 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. Notary signatures have also been forged by someone else. Assembly line operations to process these documents were set up and we find instances of this type of behavior during some of our cases. Lastly, 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 foreclosure actions. The discovery process takes a fair amount of time to complete and can help uncover evidence to help expose problems in a bank's case. Every time a bank 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. In some instances, a bank's answer can bind them at trial. We have won foreclosure cases at trial just by holding the bank accountable for the responses they give us in discovery.
- 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 various key documents into evidence at trial, they will lose. Most of our wins at trial have been a result of excluding a bank's evidence. This has happened for many different reasons.
- 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. All parties 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. We have had cases dismissed due to banks' failure to comply with procedural rules and orders from a court.
- 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. (Please keep in mind that our firm no longer handles bankruptcy cases. But, we will gladly refer you to some excellent attorneys. Since we used to handle these types of cases, we have a firm understanding of what bankruptcy can and can't do.)
- 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 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. Newer RESPA regulations allow you to seek additional information from your servicer. 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.
- Miscellaneous: Payment, statute of limitations (as uniquely applied in foreclosures), res judicata (as uniquely applied in foreclosures), unclean hands (due to a number of different reasons), Servicemembers' Civil Relief Act, force-placed insurance issues, fraud, unjust enrichment, duress, unconscionability, waiver, loan modification defects, failure to join an indispensable party, capacity, and estoppel.
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 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!