Florida Foreclosure Gone Wild

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MORTGAGE EXPERT
6 · 23 · 11

A Florida couple along with their attorney created fictitious loan documents to halt the foreclosure on their home and wipe out the debt they owed — successfully convincing the trial court to rule in their favor.

Florida residents Marianne and Carlos Hernandez executed a mortgage note with Washington Mutual Bank in 2005, according to a copy of the court decision.

In April 2008, WaMu — which was acquired by JPMorgan Chase & Co. in September 2008 — filed a complaint to re-establish the note, which had been lost, and foreclose on the property.

The borrowers filed a demand for validation of debt/claim with the court but failed to respond to the complaint. So the court granted a summary judgment in favor of WaMu.

On Sept. 9, 2009, just a month before the foreclosure was scheduled, the borrowers recorded a new, unilateral promissory note which purported to change WaMu into a borrower and the debtors into lenders — a move the appeals court referred to as inexplicable.

In December 2009, the court granted a motion by WaMu to reschedule the foreclosure sale for the following February.

“The events that followed the rescheduling of the foreclosure sale are just as mind-boggling as the creation, recording and filing of the unilateral note,” the District Court of Appeal of Florida, Third District, said in its June 22 opinion.

Just a few days before the foreclosure sale was scheduled, the borrowers filed a notice of intent to file discharge. The document was dated Sept. 9, 2009, suggesting it was filed simultaneously with the unilateral note. In addition, the notarization of the document was dated three days after the court filing — as was the case for a notice of discharge filed on the same day as the notice of intent.

The debtors then filed an emergency motion to cancel the pending sales. The court entered a handwritten order putting off the foreclosure sale until May 24, 2010, and scheduling a hearing for April 14, though “the intended subject of the April 14, 2010, hearing remains unclear and the record reflects that there were no pending motions at the time the hearing was set.”

A day before the scheduled hearing, the borrowers filed a verified motion to vacate the final judgment, cancel the May 24 foreclosure sale, discharge the lis pendens and dismiss the case with prejudice. Problem was, WaMu never got a copy of the motion, which had no certificate of service accompanying it, and missed the hearing.

“During the April 14, 2010, hearing, debtors and their counsel, Attorney Paul B. Woods, managed to convince the trial court that a mere letter of ‘tender’ and a fabricated unilateral note, without payment of any kind, were sufficient to discharge the entire debt owed to Washington Mutual,” the decision said. “Judge Adrien, in turn, granted the motion to vacate, vacated the final judgment, discharged the lis pendens, and dismissed Washington Mutual’s complaint with prejudice.”

So WaMu appealed the case, and the decision was reversed.

“Despite the nonsensical terms of the unilateral note, the debtors amazingly claim that they are satisfying ‘any amount due plaintiff pursuant to original promissory note’ by tendering this newly concocted document, and therefore, owe nothing to Washington Mutual,” the decision stated. “The absurdity of this argument notwithstanding, there is absolutely no evidence in the record that Washington Mutual ‘negotiated and agreed [to]’ the unilateral note, nor is there any evidence that Washington Mutual ever considered a possible pre-judgment modification of the mortgage or renegotiation of the promissory note.

“Moreover, other than the debtors’ self-serving, unsupported statements, the record is devoid of any evidence demonstrating that the final judgment, much less the promissory note or the mortgage, were ever satisfied.”

WaMu was also granted its motion for appellate attorney’s fees and sanctions against both the Debtors and their attorney.

The court said it referred Woods, the borrowers’ attorney, to the Florida Bar to determine whether professional discipline is warranted.

Mortgage Expert

Mortgage Daily Staff

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