"Foreclosure Defense" - Now What ?
12/21/14
A few days ago, the Third District Court of Appeals in Miami, made an important ruling regarding mortgage foreclosures. It is important to note, what the Court generally did rule and did not rule. It may be prudent for many Miami homeowners in the midst of a foreclosure defense to do a new "cost-benefit" analysis.
What the Court Generally Did Rule
As to a Foreclosure Action on the Mortgage Note
- that a foreclose action based on a mortgage note default cause of action may be barred by expiration of the foreclosure statute of limitations set forth in section 95.11(2)(c)
- that the acceleration of an installment mortgage note remains in place until decelerated
- that while an installment mortgage note is in a state of acceleration, there are no new installment payments coming due upon which to base a "new" default and a "new" foreclosure cause of action
- that a dismissal of a foreclosure action with prejudice is a "determination on the merits" that there was no default and acceleration and that therefore the statute of limitations never began to run
- that a dismissal of a foreclosure action without prejudice is not a determination on the merits and that therefore the accelerated mortgage note is not decelerated and the statute of limitations continued to run
As to Validity of the Mortgage Note
- the expiration of the statute of limitations for a foreclosure action on the mortgage note, did not render the mortgage note debt cancelled
As to Validity of the Mortgage Lien
- the temporal validity of the mortgage lien is governed by the mortgage statute of repose of section 95.281 and not the statute of limitations for foreclosure actions set forth in 95.11(2)(c)
- the expiration of the statute of limitations for foreclosure of section 95.11(2)(c) does not render the mortgage lien null and void
As to Quieting Title
- no quieting of title in favor of the homeowner simply based on expiration of statute of limitations to bring action on mortgage note - such running does not, in itself render the mortgage note cancelled or the mortgage lien null and void
A New Cost-Benefit Analysis Should be Considered
Due to the Court's ruling, a homeowner should consider making a new "cost - benefit" analysis of the strengths and weaknesses of their alternatives. Some homeowners with defaulted mortgages or mortgages in foreclosure may be proceeding on assumptions that are contrary to the Court of Appeals new ruling. The apparent assumption of many may be that the expiration of the statute of limitation to bring a foreclosure action on the mortgage note renders the debt cancelled and the mortgage lien void - which positions the Court rejected.
There may be other present alternatives that better serve the economic and personal benefits of the homeowner and their family. One alternative may be consider available mortgage modification programs, including HAMP and in-house modification programs. Many mortgage modifications are targeted at about 31% of gross wages. The targeted 31% amount would include coverage of principal, interest, property taxes, insurance, and association fees.
A homeowner should also consider that the available mortgage modification programs are not permanently in place. Other favorable factors for a mortgage modification also may not be present in the future.
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