On June 7, 2013, Gov. Rick Scott signed HB 87 ("Bill"). With Scott’s signature, the Bill became effective. The Legislature intends for this Bill to help expedite the foreclosure process. Supporters of the Bill believe it addresses the problem of blighted neighborhoods from vacant properties locked in foreclosure litigation, cases becoming log jammed in the courts, and the difficulty of junior lien holders to enforce their liens. Detractors believe the Bill infringes on the Supreme Court’s procedural rulemaking authority and limits a homeowner who was wrongly foreclosed to monetary damages.
Adverse possession is a means of attempting to gain legal title to property by continuous possession of the property for at least seven consecutive years in an open, notorious, and visible manner such that it conflicts with the owner’s right to the property. Fla. Stat. § 95.18. The adverse possessor must pay all taxes for the seven year period and enclose, cultivate, or improve the property. The adverse possessor must file a DR-452 form with a proper legal description to the property appraiser of the county where the property is located within one year of entering into possession.
In Boca Raton, Florida, Andre de Paula Barbosa (“Barbosa”) is attempting adverse possession of a $2.5 million mansion. The adverse possession paperwork was filed by him in July 2012, the same month that Bank of America became the owner through foreclosure. Local news sources indicate that neighbors called police to the home in December, but Barbosa was not removed because he presented the proper paperwork and no one saw him break-in.
The applicable Florida statute provides that in order to remove the adverse possession claim from the property: (a) The person claiming adverse possession notifies the property appraiser in writing that the adverse possession claim is withdrawn; (b) The owner of record provides a certified copy of a court order, entered after the date the return was submitted to the property appraiser, establishing title in the owner of record; (c) The property appraiser receives a certified copy of a recorded deed, filed after the date of the submission of the return, from the person claiming adverse possession to the owner of record transferring title of property along with a legal description describing the same property subject to the adverse possession claim; or (d) The owner of record or the tax collector provides to the property appraiser a receipt demonstrating that the owner of record has paid the annual tax assessment for the property subject to the adverse possession claim during the period that the person is claiming adverse possession. Fla. Stat. § 95.18(7).
In this particular case, Bank of America has filed suit against Barbosa in the Circuit Court of the 15th Judicial Circuit of Palm Beach County, Florida in the form of an ejectment action. The suit was filed January 23, 2013, and the case is currently pending before the Honorable John Kastrenakes.
South Florida has seen an increase in adverse possession claims in recent years as a result of the many foreclosures in the area. Some people are trying to take advantage of empty homes by filing claims for adverse possession. Those filing adverse possession claims take a risk when they trespass, break-in, or collect rents at properties they do not own.
The Consumer Financial Protection Bureau (“CFPB”) released new rules to protect consumers from mortgage servicing companies. The new rules have nine major topics that cover periodic billing statements, interest-rate adjustment notices for adjustable rate mortgages, prompt payment crediting and payoff statements, force-placed insurance, error resolution and information requests, general servicing, early intervention with delinquent borrowers, continuity of contact with delinquent borrowers, and loss mitigation procedures. CFPB Director Richard Cordray said that the new rules “will provide a fairer more effective process for troubled borrowers who face the potential loss of their homes.”
Mortgage servicing companies have been targeted by the CFPB because they are responsible for foreclosing on homes when people fail to make payments. Servicers buy the right to collect payments from the original lenders. Borrowers have suffered from servicers charging excessive late fees, foreclosing without completing the required paperwork and failing to help people stay in their homes by changing their loan terms. The new rules aim to eliminate some of the problems between servicers and borrowers.
Servicers will not be allowed to seek foreclosure on a person’s home while that person is trying to arrange lower monthly payments. Servicers have been beginning foreclosure proceedings on borrowers that were actively seeking a loan modification. The new rules provide that servicers cannot file the first foreclosure notice until the borrower is 120 days or more behind on payments. Servicers must consider all alternatives for loss mitigation, not just those favorable to the servicer.
Also, servicers must provide billing statements that explain how much of a payment is going to pay down principal, how much to interest and how much to fees. If an interest rate is set to adjust, the borrower will receive an early estimate of the new payment amount, which would allow them to consider refinancing if they don’t like the new rates.
Additionally, borrowers won’t be forced to pay excessive premiums on homeowners’ insurance that servicers require them to carry. Servicers were charging excessive premiums when they believed the homeowner’s coverage had lapsed. Now, servicers must notify homeowners twice before charging them the insurance premium and have to cancel the insurance within 15 days if the homeowner proved the insurance was not needed.
The new rules take effect January 10, 2014. Their implementation will provide consumers with better tools and information when dealing with mortgage servicers.
In Anson St., LLC v. Rosado, 4D12-253 (Fla. 4th DCA, Nov. 21, 2012), Anson Street, LLC (“Plaintiff”) sought review of the trial court’s order dismissing the mortgage foreclosure action against Franklin Rosado and Maricruz Ayala (“Defendants”).
In March 2010, Plaintiff filed a complaint to foreclose its mortgage on the Defendants’ property. The Defendants then filed a motion to dismiss. Because no further action occurred in the case, the trial court sent a notice of lack of prosecution with a hearing date in August 2011. Before the hearing, the trial court dismissed the action for deficiencies in the pleading. The trial court later vacated the dismissal on the Plaintiff’s motion, which indicated that the pleading was not deficient. However, the trial court ordered that the Plaintiff was required to prosecute the case to final disposition within 60 days or the case would be sua sponte dismissed by the trial court. In compliance with the order, the Plaintiffs motioned for summary judgment and set the motion for hearing within the 60 days allowed. The Defendants then filed an answer and affirmative defenses, demanded a jury trial, and filed requests for discovery. In response, the Plaintiff sought an extension of time and relief from the trial court’s 60-day deadline. The Plaintiff indicated that the Defendants had answered and demanded discovery which could not be completed by the 60-day deadline. Nevertheless, the trial court sua sponte dismissed the case because the appellant failed to prosecute the case to final disposition within the 60 days. The Fourth District Court of Appeal reversed the order of dismissal.
In its reasoning, the Fourth District Court of Appeal discussed the trial court’s use of a dismissal as a remedy and a sanction:
“It is uniformly held that dismissal is a drastic remedy which courts should employ only in extreme situations.” [citation omitted] In using dismissal as a sanction, a court must find that the party’s conduct is “willful or contumacious,” and it must make such a finding in the written order. [citation omitted]… “As a general rule, ‘a court should not enter summary judgment when the opposing party has not yet completed discovery.’ ” [citation omitted] Id.
The trial court failed to make any finding of willfulness. No willfulness could be shown on the record as the Plaintiff was not willfully delaying the proceedings where the Defendants actions required the cancellation of the summary judgment hearing. The Fourth District Court of Appeal stated, “[f]or the [Plaintiff] to have gone ahead with the summary judgment while [the Defendants’] demands for discovery were outstanding would merely have invited an appeal from any judgment entered by the court.” Id.
To read the entire opinion, click here.
In Vargas v. Deutsche Bank Nat. Trust Co., 3D11-554 (Fla. 3d DCA, Nov. 28, 2012), Rogelio Vargas (“Defendant”) appealed an order approving a general magistrate’s report and recommendations which denied his “Motion to Enforce Loan Modification Agreement Enter Into in Open Court.”
Deutsche Bank National Trust Company (“bank”) received a final judgment for foreclosure against the Defendant. The property’s sale date was rescheduled twice at the bank’s request. During this time, Ocwen Loan Servicing, LLC (“servicer”) made a written offer to modify the mortgage loan. The offer required an initial down payment and acceptance of the offer by October 24, 2008, its expiration date. The Defendant did not accept the offer before the expiration date. The Defendant then filed two motions. In both motions, the Defendant acknowledged his refusal to accept the offer in its original form and requested the trial court to compel the bank to make an offer that the Defendant would accept. The motions were denied.
The Defendant then filed a third motion alleging that at the hearing on the second motion, the parties agreed “in open court” to the terms of the offer with only one issue pending and that he signed the offer “in open court,” attaching the initial payment. Soon after, the Defendant filed for bankruptcy. While the bankruptcy was pending, the Defendant sent monthly checks to the servicer in the amount stated in the offer. Some checks were accepted and others were returned with notices stating that the checks sent did not cure the Defendant’s default. Ultimately, all of the checks were returned after the bankruptcy proceeding terminated. The Defendant made the same allegations in a fourth motion. At an evidentiary hearing on the fourth motion, no transcript of the hearing on the second motion was entered, only the Defendant testified. The general magistrate issued a report and recommendation stating that the Defendant failed to offer any credible evidence to support his claim that the parties had agreed to a loan modification at the hearing on the second motion. On appeal, The Third District Court of Appeal (“Court”) agreed.
The Court held, in part, that the lower court had no authority to consider the Defendant’s motions to enforce a loan modification agreement after the foreclosure judgment became final because the foreclosure judgment did not mention a loan modification agreement or a forbearance package or require the bank to provide the Defendant with a forbearance package, as the Defendant alleged. The foreclosure judgment merely determined the amount of principal and interest due through the judgment date, the amounts due for other costs associated with the property and the foreclosure action and ordered the property to be sold at a public sale to satisfy the total amount due to occur no sooner than 90 days from the judgment date.
In its reasoning, the Court discussed basic contract law. Under basic contract law, the offer expired on October 24, 2008; therefore, nothing existed for the Defendant to accept. Furthermore, the Defendant twice made outright rejections of the offer in his first two motions, stating that he could not agree to the offer unless the “unreasonable terms” were modified. Nor was there evidence that the servicer or the bank modified the offer or agreed to be bound by the offer at the hearing on the second motion.
Finally, the Court held that the Defendant’s claim that he entered into a loan modification agreement “in open court” was barred by the statute of frauds. The Florida Statute § 687.0304(2), required that the loan modification agreement be in writing, express consideration, set forth the relevant terms and conditions, and be signed by the creditor and the debtor in order for the loan modification agreement to be actionable. The loan modification did not conform to the requirements of the statute of frauds. Furthermore, the loan modification agreement could not be removed from the statute of frauds by partial performance – the payments made by the Defendant – because “the acts done in furtherance of partial performance must be referable exclusively to the oral contract sought to be enforced and nothing else.” Here, all of the documents in evidence indicated that the assigned loan number remained the same at all relevant times, and the payments made were returned with letters referencing only the original loan.
To read the entire opinion, click here.
Bank of America, along with five other banks, has recently foreclosed on 51 units in the Parc Central Aventura condominium development in Aventura, Florida. The other banks involved in the litigation were Wells Fargo Bank and Charter One Bank, each with a 25% stake, and Lakeside Bank and Emigrant Realty Finance with a 12.5% interest.
Parc Central Aventura was originally bought by the developers Mcz/Centrum Florida XV, LLC, a partnership between Chicago developers McZ and Centrum Florida XV, in 2006 for $105 Million. The developers then converted 352 units into condos while making substantial improvements to the building, funded by a $108 million mortgage provided by the plaintiffs.
The foreclosure action was originally filed in October of 2009. At that time, the defendant still owed $23.3 million on the mortgage and had still had 65 unsold units. The developers have since sold 14 additional units reducing the balance on the loan.
Bank of America’s awarded judgment against MCZ/Centrum was in the amount of $14.3 Million, plus interest and fees. The remaining unsold units will go to auction online on July 2nd, 2012.
If you’re a corporation of individual facing foreclosure, Schecter Law is here to help. We have over three decades of experience serving corporate and individual litigants in the South Florida market and are just a phone call away. Schecter Law is a dynamic litigation firm that handles a range of litigation disputes serving the specialized needs of individual and corporate clients, small and medium businesses, and large entities. Serving the South Florida community for 37 years, Schecter Law is equipped to address your most challenging litigation needs with highly skilled legal services and solutions while providing a level of unmatched client commitment combined with reasonable legal fees.
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