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Foreclosure by Nicole Bercume: Case Law

Foreclosure Research Guide

Litigation Steps

This article on West provides a clear and detailed analysis of the litigation process in Florida for foreclosures including background on mortgages, foreclosures and case law. 

  • Very clear and detailed step by step analysis of the whole foreclosure process.  

 125 Am. Jur. Trials 541 (Originally published in 2012)

Parties to a Foreclosure Action

The mortgagee or its assignee is the proper party to commence the foreclosure action. See, e.g., Taylor v. Deutsche Bank National Trust Co., 44 So.3d 618 (Fla. 5th DCA 2010).

In a foreclosure action, the titleholder is considered an “indispensable party.” Thus, the owner of the legal title to the property and all persons who claim an adverse interest to the lien being foreclosed are proper and necessary party defendants, including all subsequent mortgagees, judgment creditors, lienholders, tenants, and easement holders.

Lack of Notice, Affirmative Defense

Taylor v. Bayview Loan Servicing, LLC, 74 So. 3d 1115, 1118 (Fla. Dist. Ct. App. 2011)

  • The issue in this case was that the holder of promissory note, Bayview, failed to give proper notice of the default in payments on the note and mortgage to the mortgagors. 
  • Holder of promissory note brought foreclosure action against mortgagors. The Circuit Court, Hillsborough County, William P. Levens, J., awarded summary judgment to holder. Mortgagors appealed.
 

Foreclosure as Equitable Remedy

Swan Landing Dev., LLC v. Florida Capital Bank, N.A., 19 So. 3d 1068, 1071 (Fla. Dist. Ct. App. 2009)

  • This case states that foreclosure of a mortgage is an equitable remedy.
  • The Bank (mortgagee) is suing the mortgagor for breach of contract and foreclosure of mortgage when defendant stopped making payments on their mortgage to the bank. The mortgage contained language that allowed the bank to foreclose the mortgage if the mortgagor defaulted. 

Fraud Prevention Act


State Of Florida Office Of the Attorney General, Department Of Legal Affairs, v. FMA Servicing, Inc., a/k/a Financial Management Advisers; a Florida Corporation; and Edward Billings, an Individual; Joseph Esposito, an Individual; And Salvator Esposito, an Individual

  •  This case is one of the first in Florida filed under the new Foreclosure Rescue Fraud Prevention Act. 

  • “Companies and individuals who target homeowners in potentially desperate situations should not be operating in our state,” said Attorney General McCollum. “Florida will not tolerate businesses that prey upon those on the verge of foreclosure.”

 

Florida Fraud Prevention Act

The Foreclosure Rescue Fraud Prevention Act of 2008 requires that a foreclosure rescue consultant – a person who tries to arrange a new payment plan with lender or other alternative to foreclosure - provide a written agreement to the consumer and obtain the consumer's signature before beginning any services.

The legislation further requires the rescue consultant to include in the written agreement a specific notice of the homeowners’ right to cancel, including the procedure for cancelling, and a disclosure that the consumer should contact his or her lender first before signing because the lender may be willing to negotiate a payment plan free of charge.

  • Desperate homeowners need assistance
  • Too many peoples are falling victim to scam artists who say they can make thier foreclosure "go away" by signing a few papers but then people end up signing away the title to their home and wasting money on a scam.
  • This legislation provides a safeguard to assist families in staying in their homes and will protect homeowners from unscrupulous people who would try to prey upon them in their time of distress and help homeowners avoid costly mistakes.
  • In 2010, more than 245,000 mortgage foreclosures occurred in Florida. This ranks the Sunshine State second in the nation in the number of foreclosures. Florida also had the highest rate of mortgage fraud in 2010 and as the number of Floridians facing foreclosure increases, so does the number and variety of scams devised to defraud these vulnerable consumers.

Unsuccessful Affirmative Defense

Americana Associates, Ltd. v. Whud Real Estate Ltd. P'ship, 715 So. 2d 955 (Fla. Dist. Ct. App. 1998)
  • Mortgagor was estopped from raising economic coercion or business compulsion as defense to mortgage foreclosure action, where mortgagor performed under the terms of the loan for over eight years without raising its claim, and it entered into two subsequent agreements which acknowledged the debt, one with the original mortgagee.
  • To defeat the foreclosure action, Mortgagor raised the defense of economic duress, i.e., business compulsion.
  • Mortgagor asserted that Mortgagee had fraudulently misrepresented the terms by which it would loan Mortgagor $25.5 million and then, after Mortgagor had altered its economic situation to enter into the mortgage, the mortgagee changed the terms of the loan to Mortgagors detriment. Mortgagor argues it closed the loan only because it had no other choice financially. 
  • Assuming that Mortgagor was forced to close the loan due to economic duress, Mortgagor remedy was to file suit after closing for breach of the terms of the loan commitment agreement. Instead, however, Mortgagor performed under the terms of the loan for over eight years without raising its claim. Further, it entered into two subsequent agreements which acknowledged the debt, one with the original mortgagee and the other with the Department of Housing and Urban Affairs.
  • These agreements benefited Mortgagor by staying acceleration contingent upon Mortgagor compliance with the obligations of the agreements. Under these circumstances, we hold that Mortgagor was properly held estopped from raising the defense of economic coercion or business compulsion

Various Affirmative Defenses

Knight Energy Services, Inc. v. Amoco Oil Co., 660 So. 2d 786 (Fla. Dist. Ct. App. 1995)
  • Foreclosure action is equitable proceeding which may be denied if holder of mortgage note comes to court with unclean hands or foreclosure could be unconscionable.
  • Mortgagee failed to prove absence of genuine issue of material fact as to mortgagors' affirmative defenses of tortious interference and unclean hands, so that summary judgment of foreclosure was inappropriate; affidavits filed by mortgagee in support of motion for summary judgment merely refer to mortgage loan agreements, mortgagors' failure to make timely payment, and calculations of principal and interest allegedly due, but did not factually address affirmative defenses.
  • The Knight Entities answered the foreclosure complaint alleging numerous affirmative defenses including estoppel, waiver, fraudulent inducement, tortious interference, novation and release, set-off and unclean hands.
  • In the instant case, therefore, the Knight Entities' affirmative defenses of unclean hands and tortious interference are legally sufficient to preclude a final summary judgment of foreclosure. These affirmative defenses directly relate to the issues raised in Amoco's foreclosure action, specifically the enforcement of the underlying loan transaction and settlement agreement. Moreover, Amoco failed to factually refute the allegations raised by the Knight Entities' affirmative defenses.

Subject Guide

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