Will Florida’s Supreme Court protect the Homeowner or Bank?

Florida Supreme Court to rule on the Five Year Statute of Limitations

by William Hudson

In Florida, a five-year statute of limitations rule may prevent banks from being able to foreclose despite ongoing litigation.  As a result of this rule, mortgage servicers are actively attempting to preserve their right to foreclose pending the Florida Supreme Court Decision.  The Florida Supreme Court is reviewing the case, U.S. Bank v. Bartram, and will decide if servicers can restart foreclosures after five years, or if they will be barred by the Florida statute of limitations. The key question in Bartram is: When does the clock start ticking to sue to foreclose on a mortgage?  Mortgage servicers are prepared that they may not be able to collect on accounts where the homeowner has not made a payment for over five years and will be barred from pursuing foreclosure or other debt collection activity.

The Supreme Court will also determine if servicers can restart the clock.  If they are prevented from pursuing the outstanding debt, it is possible that banks will start making earnest attempts to modify loans by lowering the monthly payment or attempt to get the borrower to short-sale the property.  However, the real issue is that these homeowners will be able to live mortgage free in their homes indefinitely.  The banks had an opportunity to modify mortgages in good faith and failed to do so.  If the Florida Supreme Court upholds the five-year statute of limitations on debt collection it is probable that other states will institute the same consumer protection.

Moody’s Investor Service stated that, “The court ruling will have only a minor impact on overall RMBS performance because the number of previously dismissed foreclosure actions that are seriously delinquent or in foreclosure is minimal,” the report said. “Only approximately 3% of private label loans backed by properties in Florida had a prior foreclosure dismissed and are greater than 60 days delinquent or in foreclosure.”  Moody’s brought up the fact that only 3% of private label loans had a prior foreclosure dismissed, when the real question should be how many GSE (Government Sponsored Enterprise) loans guaranteed by Fannie Mae or Freddie Mac are near or beyond the five year statute of limitations?  The GSE loans have a higher portion of subprime loans on their books.  As usual, we hear only part of the true story.

Does the clock start ticking with the bank’s acceleration and pursuit of foreclosure, and end after five years, as the law had been in Florida prior to the Fifth DCA’s Bartram decision? In almost every other state in the country that has a mortgage foreclosure statute of limitations the clock starts ticking when the loan is accelerated leaving the bank only five years to take action.  The Bantram case will clarify if a lender can restart the clock by simply declaring a new default date- even if the statute of limitations is past the lenders original acceleration date of the loan.

Statute of limitation timelines are generally straightforward. In personal injury or fraud the right to sue expires after four years in Florida (check your state’s statutes). In written contracts, the law in Florida states the statute of limitations is five years and this includes the collection of rental payments and mortgages.  Every plaintiff knows if you fail to take action, you are out of luck if you fail to file a claim prior to the statute of limitations running out.  However, in the eyes of the Florida judiciary,  the law is not the law when it comes to mortgage claims.  As we have seen in foreclosure litigation, mortgage forgery is labeled “robosigning”, while a bank’s criminal trespass into an occupied home is called a “civil” matter.  When it comes to matters of foreclosure there is a tendency to make presumptions in favor of the bank- let’s hope the Supreme Court rules according to law.

According to Florida law, when the borrower defaults, the lender accelerates the debt and then files to foreclose.  If the Supreme Court rules for the lenders, Florida would be the only state permitting a judicial exception to the statute of limitations for mortgages. It is inevitable that this decision would unleash an explosion of litigation against homeowners in default while also inspiring banks to abandon their offers to modify mortgage loans.  The end result would be chaos for the Florida housing market.

The Bartram case is from the resulting fallout from the fraudulent robosigning (forgery) practices of the Law Offices of David J. Stern that began May 16, 2006, when U.S. Bank filed a mortgage foreclosure action against Lewis Bartram of Ponte Vedra Beach through their counsel David J. Stern. On May 4, 2011, nearly five years after the original suit, U.S. Bank missed a conference and the court dismissed the foreclosure.

In March 2011 Bartram’s ex-wife instituted a series of cross-claims against U.S. Bank and Bartram.  Eventually in July 2012, the trial court entered summary judgment in Bartram’s favor because the five-year statute of limitations had expired. The bank appealed and in 2014 the Fifth District ruled in favor of the bank concluding that a new five-year clock starts to tick with each mortgage payment that is missed. However, the Fifth District ignored the fact that there are no more mortgage payments due once a lender elects to accelerate the mortgage, as was the case in Bartram.

Acceleration is the key to understanding how a mortgage foreclosure action is supposed to work.  The Fifth District showed their bias in favor of the banks and should have ruled in favor of Bartram.  Standard mortgage contracts typically carry an acceleration clause that gives the lender two options in the event that a borrower defaults: 1) sue for missed payments or 2) call the entire loan due immediately.  As we know, the banks prefer to accelerate the debt so that they can auction the property. However, acceleration requires that the lender has five years from the debt acceleration to take legal action.

The Florida Fifth District effectively ruled in Bartram that a lender could restart the clock any time they wanted.  Interestingly, the mortgage contract doesn’t permit such an action by a lender.  It is noteworthy that apparently res judicata does not apply and that the Fifth District found that each missed payment creates a new cause of action, thereby permitting a lender to sue again and again and literally make a homeowner’s life a living hell- indefinitely if desired.

The Fifth District’s erroneous interpretation of the mortgage foreclosure statute of limitations is yet another attempt to legislate from the bench. It is the judge’s job to enforce the rules of the legislature.  If the Supreme Court upholds the Fifth District’s ruling, the Florida legislature will need to remove the mortgage foreclosure statute of limitation from the Florida Statutes because it will no longer be relevant.  Maybe they could do away with all statutes that protect homeowners while they are at it- because apparently that is what the judges’ would do if they weren’t constrained by an annoying legislative branch.


15 Responses

  1. Oh, and Always get the Most expensive, meanest, best attorney to use as a legal hitman against these banksters foreclosing on you because the Plaintiffs is payning these massive law firms chump change to foreclose on you. These firms are ALL filled with horribly paid, overworked, under skilled, extremely unhappy Attorneys that take a beating from the High Paid Hitman which you can put against them!!!
    They fold like a bad suit in court under pressure and then you sue them to get your attorney fees back! After you do that> they will leave you alone and move on to easier prey!! bankster hate to pay back 20k to 40k of your fees especially since they only pay their foreclosure mill attorneys a few grand to fight you..lol So wear out the plaintiffs firm and make them work for $5.00 bucks and hour with the fixed rate the banksters give them to come after you! I have watched it work over and over against these foreclosure mills.. look up on Glass Door and other sites what the previous attorneys that had worked for the firms have said and you will get a huge laugh at how much they hated it.. The banksters are the hitmen that do all kinds of illegal and immoral things to get you so yo better damn well use a high paid hitman attorney to fight them back or your finished..

  2. Beauvais out of the 4th District. assumes it automatically reverts back to status quo after acceleration when the banksters lose even thought its not written in the mortgage agreement.. No need to decelerate legally, just assume its automatic.. If the banksters don’t feel like showing up for hearings, if they give up, if they cant cross the finish line and trip and fall, or if they have a head ache> they get endless chances like no other civil or criminal law in history..lol THE FRAUD IN THE JUDICIAL SYSTEM FAVORING BANKSTERS IS RIDICULOUS..
    On the wall of the Supreme Court of Florida its should read
    “In Banksters We Trust” !!

  3. Surprisingly, Neil fails to mention the very real , very recent, and very devastating decision in Beauvais out of the 4th District. That en banc decision in Beauvais (5-4) brings into harmony ALL Florida districts in the State of FL which have ruled on the acceleration and statute of limitations issue. The state of the law at this moment is that the 5 year statute of limitations will not apply even after an affirmative acceleration by the lender…in a nutshell, every missed payment starts the clock anew. The FL S Ct would now have to overrule the decisions of ALL the Florida district courts of appeal to hold otherwise. The Fl S Ct would also have to disavow its own holding in Singleton- though that case deals with res judicata not S/L.Very unlikely that this would ever occur. The majorities sitting in these courts simply cannot stomach the idea of a borrower walking away with a “free home” no matter what the misfeasance or malfeasance by the lender, the servicers and their counsel has been and no matter how long the lenders have sat idly on their rights.

  4. I haven’t made a payment on my home since 2008. The bank tried to foreclose in 2011 and it was dismissed without predjudice for them taking to long and not having what they needed when they got to court. It was dismissed June 27th, 2011. It will be 5 years June 27 of this year 2016. I received notice of Countrywide requesting original mortgage and note a month ago and June 7 received a notice from Carrington, the servicer of their intent to foreclose, I have a feeling there is a problem with the documents or them proving who really owns the note or something. Why else would it be 8 years. They have been paying the escrowed items and home insurance on the house the whole time.

  5. Yea ok this is my saying. Fool me once but not twice

  6. I haven’t made a mortgage payment since 2008. My 2009 foreclosure case was dismissed in 2011. Haven’t lived in the house since 2010, bought another house that was owner financed and paid it off. HOA lien foreclosed the title in 2013. BNY sold my CW/BOA loan to SPS, who has done nothing but threaten to foreclose me and send me mortgage statements for the past 3 years. The delinquency has dropped off of my credit report, and I now have a 733 credit score…LMAO. Stupid banks…serves them right.

  7. I’m going through the same. Limitless attempts to get help from the different services. This has been a total life nightmare. They do it to auction the home. Judges should look at us the borrowers as the victims and not take this matter as their personal opinions while institutions keep building empires on victims.

  8. Is there a time limit on this decision? My home hangs in the balance. What takes so long? Its a decision SO DECIDE!!!!!!!!!!

  9. http://www.chadbourne.com/rescap

    ResCap Examiner Report

    JUNE 26, 2013
    Chadbourne & Parke represented court-appointed examiner Arthur J. Gonzalez in his investigation and evaluation of a wide array of potential state and federal law claims and causes of action that were proposed to be released by Residential Capital, LLC and its parent, Ally Financial, Inc., including the proposed broad and nonconsensual release of claims against Ally and its affiliates held by third parties, arising from dozens of prepetition transactions involving many billions of dollars in value.

    The Examiner’s Report is the product of an exhaustive analysis of almost nine million pages of documents produced by twenty-three different parties as well as ninety-nine formal interviews of eighty-three witnesses. The Report consists of nine sections, totaling over 1,800 pages, and an appendix.

    The Examiner in this matter was Arthur J. Gonzalez, Professor and Senior Fellow at New York University School of Law and former Chief Judge of the United States Bankruptcy Court for the Southern District of New York.

  10. Reblogged this on AXJ USA NEWS.

  11. Wait and see how they will screw the homeowner and ordinary citizen.

  12. Many briefs filed…can see oral argument on Supreme Court website. This was done in OCT! Still no decission…does anyone have any idea when the Court will rule???

  13. If the court f***s over the homeowner, that will begin the revolution before Bernie begins one. All eyes on the Florida decision and the judges. This one may bring back the guillotine to many locales.

  14. The GSE Business Model fatally flawed for a million reasons. The Model was wrought solely by financial institutions (not borrowers) and it simply does not work. Their remedy—–jurists making law which is the purview of the legislature.A clear assault on the separation of powers.

    Exactly what SCOTUS Judge Scalia was warning us about the fallacy of a “living constitution” (otherwise known as the church of whats happening now).

    A slippery slope indeed.

  15. Are their any amicus briefs that have been filed into this case?

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