Florida Foreclosure Cases Get Crazy

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MORTGAGE EXPERT
4 · 10 · 13

Among some of the strange recent rulings emanating from Florida courts was a decision that Florida lenders can withdraw a foreclosure action in order to avoid penalties for submitting fraudulent documents. In another case, the judge — on her own — dismissed a lawsuit after hearing testimony from the lender’s first witness. A mortgage servicer in yet another case asked that a foreclosure be reversed because it had made an error, while a trial court judge’s denial of a lender’s request to dismiss a foreclosure on a loan that was cured was reversed at the appellate level.

The Florida Supreme Court ruled on Feb. 7 in Pino v. The Bank Of New York that judges can not stop lenders from voluntarily withdrawing mortgage foreclosure cases as a ploy to avoid being penalized for submitting fraudulent documents under current judicial rules.

A March 20 ruling in The Bank of New York Mellon, et al., v. Miguel Reyes, et. al., centers around an appeal by the Bank of New York in a foreclosure involving denial of its motion to set aside a default judgment nullifying an unpaid promissory note.

The appellate court reversed finding that the default final judgment was void. The borrowers, Miguel and Desiree Reyes, responded to the complaint claiming that the mortgage at issue had been modified in September 2008 and that it was not in default. They also filed a counterclaim alleging that the Bank had breached its contract with them by seeking to foreclose the mortgage and sought to nullify the mortgage.

A final default judgment on the Reyeses’ breach of contract claim was entered on Feb. 2, 2011. However, that judgment made no mention of the mortgage the Reyeses claimed was null and void and instead declared the promissory note executed by the Reyeses “null and void” and obligated the bank to hold the Reyeses harmless thereon. Depending on a ruling from another court, the Reyes court ruled that a judgment which grants relief wholly outside the pleadings is void. “Because the judgment below grants relief wholly outside the pleadings on which the default was entered, it is void and should have been vacated by the court below,” the court said.

Alexander and Peter Philippou challenged a final summary judgment of foreclosure entered in favor of Chase Home Finance LLC, a nonparty. The plaintiff, J.P. Morgan Mortgage Acquisition Corp., confessed error relating to the entry of the final summary judgment and requested that the final judgment be reversed and the case remanded to the trial court for further proceedings. “Upon consideration of J.P. Morgan’s confession of error, we reverse the final summary judgment of foreclosure and remand this case to the trial court for further proceedings,” the court said in the March 1 decision.

In its lawsuit against Burke and Nancy Prevratil, Deutsche Bank National Trust Co. sought review of a non-final order dismissing its foreclosure action against the Prevratils and granting Deutsche Bank sixty days to amend its complaint. “We conclude that the trial court departed from the essential requirements of law by requiring Deutsche Bank, not its loan servicer, to verify the foreclosure complaint. Accordingly, we grant the petition for writ of certiorari and quash the trial court’s order,” the court said in the March 8 decision.

The trial judge in Deutsche Bank National Trust Company, etc. v. Janice Santiago, et al., dismissed the case on her own initiative during the presentation of the first witness in the foreclosure action, apparently based on her conclusion that the bank would be unable to prove all of the facts necessary to support its claim. But the appellate court reversed, finding that the dismissal was premature.

Deutsche Bank, as trustee, brought a foreclosure suit against Santiago and Segarra, and the case proceeded to a bench trial. The bank’s first witness was Minerva Flowers, an employee of American Home Mortgage Servicing Inc., which serviced the loan. Through Flowers’ testimony, the bank introduced the mortgage and note into evidence.

As Flowers began to testify about the acceleration letter, however, the case took an unusual turn. Over the borrowers’ objection, the trial court provisionally admitted the acceleration letter into evidence. But before the bank finished its direct examination of Flowers, the trial court permitted the borrowers to cross-examine Flowers about the letter. After the borrowers’ counsel asked some questions, the trial court also interrogated Flowers. The trial court then excluded the acceleration letter from evidence. Without a motion being made by the defendant, the trial court immediately dismissed the case. A written order of dismissal with prejudice was entered the same day. The bank appealed.

“In these facts, the trial court erred when it ordered an involuntary dismissal of the foreclosure action before the bank had rested its case,” the appellate court said in the March 13 decision.

Ari and Daphna Shahar appealed the trial court’s entry of final summary judgment of foreclosure in favor of Green Tree Servicing. The homeowners asserted various defenses and filed various counterclaims, which they argued precluded the entry of summary judgment. The counterclaims did not set forth viable causes of action, the court concluded. In addition, the court affirmed that portion of the summary judgment that found in favor of Green Tree as to the homeowners’ counterclaims. However, it reversed the remainder of the summary judgment because Green Tree neither factually nor legally refuted the homeowners’ defense of “unclean hands,” thereby precluding the entry of a final judgment of foreclosure.

In Nadia Charley And Elysee Charley V. Green Tree Servicing, LLC, the defendants appealed the trial court’s order granting summary judgment of foreclosure in favor of Green Tree. The court reversed on March 6, finding that there issues that needed to be tried, including the issue of whether Green Tree had standing to foreclose.

Gil L. Serrano, Onelia Serrano and Tiulang Valdes appealed a final summary judgment of foreclosure in favor of HSBC Bank USA, N.A., as trustee for Wells Fargo Asset Securities Corporation, Mortgage Asset-Backed Pass-Through Certificates, Series 2007-PA1. The court reversed summary judgment on Feb. 20 because there remains a genuine issue of material fact regarding whether Wells Fargo complied with the condition precedent contained in the mortgage to provide pre-suit notice of acceleration.

In its lawsuit against Michael J. Giglio, Wells Fargo Bank, N.A., sought reversal of the trial court’s order in a foreclosure action denying its requests to: (a) approve a dismissal of the case; (b) set aside the previously entered final judgment; (c) cancel the notice of lis pendens; and (d) direct the clerk to return the original loan documents upon which the foreclosure was based. Wells Fargo sought this relief because, on the eve of the foreclosure sale, the pro se defendant delivered — and Wells Fargo accepted — funds sufficient to reinstate the mortgage, thereby obviating the need to sell the collateral or continue with the litigation.

“Put simply, Giglio cured the default and the parties settled their dispute, an outcome the law favors,” the appeals court noted in the March 13 decision. As a result, the case was sent back to the trial court with instructions that the trial court enter such orders necessary to effectuate the parties’ settlement.

James K. Lindsey appealed the final summary judgment entered in favor of Wells Fargo Bank in a mortgage foreclosure case. The court reversed and remanded on Feb. 27 for further proceedings because Wells Fargo failed to establish its standing to foreclose and failed to refute Lindsey’s defense contesting Wells Fargo’s standing.

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