Arsenal of Defenses

Arsenal of Foreclosure Defenses

Through experience, dedication to our clients and an ever expanding knowledge base, the Hollywood and Fort Lauderdale foreclosure defense attorneys at the Law Offices of Evan M. Rosen, have accumulated a long list of potential defenses that can help people facing foreclosure keep their home, stay in it longer or work out a viable foreclosure alternative such as a loan modification, deed-in-lieu of foreclosure, traditional sale, short sale, or principal reduction.

If you or someone you know is facing foreclosure, the South Florida foreclosure defense attorneys at the Law Offices of Evan M. Rosen, can help. You are welcome to read more below about foreclosure defense. Or, for a consultation with one of our experienced foreclosure defense attorneys, call us now at 754-400-5150 or fill out our online form.

Here are some of the “defenses” we have in our arsenal for defending foreclosure actions:

• Standing: Due to the complexities of today’s secondary mortgage market and mortgage securitization, standing has become one of the most successful defenses against a pending foreclosure. The issue can be complicated depending on how the bank alleges to be entitled to enforce. The Uniform Commercial Code and other statutes can address standing: Negotiable Instruments (Florida Statutes Chapter 673), Secured Transactions (Florida Statutes Chapter 679), Assignments and Transfers of Mortgages (Florida Statutes Chapter 701), Florida Evidence Code (Florida Statutes Chapter 90) and the Florida Rules of Civil Procedure.
  • General transfer issues: Problems can arise during the process of transferring the loan between financial institutions, and that can affect the plaintiff’s standing in a foreclosure action. Some of those issues include improper assignments of the mortgage or improper indorsements on the notes, out-of-business banks that are unable to fix improper assignments or indorsements, inability to find the original note or mortgage, and the inability to prove the required elements to reestablish either one. There have been numerous instances where lenders and lenders’ attorneys have been caught in an attempt to backdate and/or forge assignment documents in order to recreate that which never existed or was lost. The law is crystal clear on this issue, a plaintiff must prove that it had standing at the time the lawsuit was filed. It must also prove standing at the time of judgment.
  • Securitization: Mortgages are frequently bought and sold on secondary markets very soon after closing. Many of these loans end up as part of trusts, which are sold to investors in financial instruments called mortgage-backed securities (MBS). You can see for yourself how complicated this process is by looking at our securitization chart. Many entities and agreements are involved in the process of moving the mortgage and note from the closing table to the trust. If a loan does not adhere to the correct process, it cannot be a part of the trust for several reasons, including significant tax ramifications. Strict deadlines dictate how long a trust can acquire mortgages and notes after it is formed. So, if the plaintiff is a trust or if another party such as a servicer is suing on the trust’s behalf, there are many measures that the parties were required to take in order to establish their ownership and right to foreclose. Unfortunately, most courts have overlooked this but it still can be a viable defense in the right scenario.
  • MERS, Inc.: The Mortgage Electronic Registration Service, Inc., can add another wrinkle to the standing question. MERS was created in the 1990’s by the nation’s biggest lenders without any legislative approval. It acts as a centralized repository for information about mortgages—a type of database that allows people to look up information about mortgages in one place. The problem is that not all institutions use MERS, and it wasn’t even mandatory for all MERS “members” to use it. In many situations, MERS will be listed on the mortgage as the party that received the mortgage as the actual lender’s “nominee.” These are called “MOM” mortgages or “MERS as original mortgagee.” If an agreement between the lender and MERS exists, there can be problems with MERS’s authority to enter into mortgages on behalf of the lender. If such problems are present, there can be more complications if MERS later assigned the mortgage.
  • Negotiability/Secured Transaction/Article 9 of the UCC: Often the plaintiff does not have standing to bring the action because the “Note” upon which plaintiff relies is not a negotiable instrument. Section 673.1041, Florida Statutes, defines a negotiable instrument as “an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it… (c) [d]oes not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money . . . .” However, many notes and loan agreements, like home equity lines of credit are not negotiable instruments. If they can be transferred, the method of doing so is not like a traditional negotiable instrument. There are also instances in which Article 9 titled, “Secured Transactions,” applies. This is codified in Florida Statute, Chapter 679 and sets up a completely different paradigm burden for banks to be able to foreclose.
• Service of process: Lenders are required to meet strict guidelines to serve a foreclosure lawsuit. If the lender doesn’t follow the rules, service will be “quashed” or thrown out. Florida Rule of Civil Procedure 1.070 also imposes a 120-day timeline for service. Generally, the process server is required to personally hand you papers. The originals and copies must be marked with the date and hour that they were served and the process server must put their identification number and initials on your copy. In some instances, the process server must inform the person being served of the contents. There are also rules that detail how and when borrowers can be served at their residences, workplaces, private mailboxes or via “substitute” or “constructive” service. Service defects are common. And if service is defective, any resulting judgment is generally void.
• Defects with the complaint: The form or the issues pleaded in the initial complaint can also give rise to a number of defenses. One example is found under Florida Rule of Civil Procedure 1.130, which requires the mortgage and the note to be attached to the complaint. Standing must also be properly alleged within the “four corners” of the complaint and its attachments. For example, the complaint fails to state a cause of action if the plaintiff alleges that it owns and holds the note and mortgage, but the attached note and mortgage list another party as the owner and there is no endorsement or assignment to the plaintiff. Florida Rule of Civil Procedure 1.110 was amended on Feb. 11, 2010 to require the plaintiff in a foreclosure action to sign off on the complaint with this: “Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.” Later, Rule 1.115 titled, “Pleading Mortgage Foreclosures” was created. This created even more special rules for banks. We have had numerous cases dismissed just based on defects in the way the way banks plead their cause of action. In other instances, we wait to expose the pleading defect until we are at trial. Whether to expose a pleading defect in a motion to dismiss or at trial depends on a few factors, which we will discuss in confidential communications with our clients.
• Failure to fulfill all “conditions precedent”: The plaintiff in a foreclosure action must allege and prove that it has met all of the “conditions precedent” that are required before filing a lawsuit. A common example of a condition precedent is that the borrower must have been provided with written notice of default that explains, among other things, your right to reinstate. The lender cannot foreclose on your home unless it can prove it has sent this document. There are specific condition precedent requirements for FHA and VA loans as well.
• Amount of debt in dispute: Generally, a bank must prove the exact amount of the debt owed. Many errors and miscalculations can arise from failures to credit past payments. Simple math, accounting, and software glitches can also lead to an incorrect sum. The foreclosure defense lawyers at the Law Offices of Evan M. Rosen require the lender to prove their case down to the last cent. The “robo-signing” or “robo-signer” controversy plays an important role in the issue of establishing the correct debt owed. In certain situations, servicers/lenders can use affidavits to prove how much is still owed on the loan. Affidavits are sworn statements where the person signing the document attests that he or she has personal knowledge of the statements made and that the statements are true and correct. Affidavits must be notarized, requiring a state-licensed official to observe the person signing the document. The notary must either know the signer personally or receive valid proof of their identification. In several cases around the nation, banks, servicers, their supporting companies, and even their attorneys have had individuals sign affidavits where the signer did not have any personal knowledge about the contents. These people can sign thousands of affidavits in a month. They also can let other people sign on their behalf or they can be unaware that others are forging their signatures. There have also been cases where affidavits have been notarized without the signer present, without proper identification of the signer, and by notaries who have expired commissions. Notary signatures have also been forged by someone else. Assembly line operations to process these documents were set up and we have found instances of this type of behavior in some of our cases. Lastly, the mortgage requires a very specific way in which your payments must be applied to your account. If not applied properly, a miscalculation snowball results due to interest compounding the mistake. The Law Offices of Evan M. Rosen has found misapplication of payments in many cases and has been successful in using that as a defense to foreclosure.
• Discovery practices: During a lawsuit, information can be formally exchanged between the parties in a process called discovery. Some of the common forms of discovery include: 1) depositions upon oral examination, 2) depositions upon written questions, 3) written interrogatories, 4) requests for production of documents or things, 5) requests for permission to enter upon land or other property for inspection and other purposes, 6) physical and mental examinations, and 7) requests for admissions. All of these discovery devices can be particularly helpful in the process of defending most foreclosure actions. The discovery process takes time to complete and can help uncover evidence to help expose problems in a bank’s case. Every time a bank, lender, servicer, or lawyer makes a vague, incomplete or ambiguous response, more time elapses while we we ask the court to compel the other side to provide better answers. In some instances, a bank’s answer can bind them at trial. We have won foreclosure cases at trial just by holding the bank accountable for the responses they give us in discovery.
• Evidentiary Issues: In most instances, the banks’ key witnesses will not have sufficient “personal knowledge” of the facts of each case. But to testify, personal knowledge is almost always required. Of course, there are exceptions. “Hearsay” testimony plays a significant role in foreclosure cases. And “business records” are part of a specific exception to the general rule which excludes any “hearsay” evidence. For that exception to apply, a “records custodian” or “other qualified witness” must testify (with personal knowledge) as to the way records were made and kept. If a witness cannot meet that burden, the bank cannot get key documents into evidence. And, the bank will lose. The majority of our trial wins have been based on evidentiary exclusions. And that comes as a result of extensive cross examination and argument, which prompts a judge to exclude evidence and/or strike the banks’ witnesses. There are many ways we have done this. No two cases or trials are the same.
• Procedural issues: There are specific guidelines under the Florida Rules of Civil Procedure that the parties must obey in every stage of a case. The rules are in place to help the courts make the right ruling, as efficiently and quickly as possible. They are critical to the administration of justice. All parties must follow technicalities including notices, special forms, timelines, and more. And banks and their lawyers regularly skip some part of the rules to push their cases through. Those instances provide opportunities for a competent lawyer to help their client while defending a foreclosure action. We have had cases dismissed due to banks’ failure to comply with procedural rules and orders from a court.
• U.S. Truth In Lending Act (TILA), Regulation Z: The Federal Reserve issued the regulation referred to as “Reg Z” to implement the federal Truth in Lending Act, which is found under Title I of the Consumer Credit Protection Act. The goal of the act and Reg Z is to promote meaningful disclosure of credit terms to help consumers make informed decisions and to protect them from inaccurate and unfair credit billing practices. Criminal liability may be imposed for violations of the act, and in some rare situations the borrower might be able to “rescind” the loan contract.
• U.S. Home Ownership Equity Protection Act (HOEPA): Section 32 of the Truth in Lending Act (TILA) contains this act, which applies to “high-cost loans.” The act defines high-cost loans as first liens with greater than eight percent interest, second liens with greater than ten percent interest or loans with closing fees and points that exceed either $583 or eight percent of the loan’s total amount. Borrowers must be provided with certain disclosures within at least three days before the loan closing, as well as other disclosures that TILA requires. Violations can result in criminal liability under the act, and the loans can also be rescinded, except in situations where the loan was used to purchase or build a home and the home was the collateral for the loan. Reverse mortgages and home equity loans are not covered under the act.
• Florida Fair Lending Act: This act’s language is very similar to that in HOEPA. The act, located in Chapter 494, Florida Statutes, prohibits certain terms and requires timely disclosures. One key difference is that violations of Florida’s act can result in the lender forfeiting all of the interest charged or contracted to be charged or received. That leaves the lender able to enforce only the loan’s principal against the borrower.
• U.S. Real Estate Settlement Procedures Act: The primary focus of RESPA is regulation of the real estate closing process. The law requires a detailed closing statement to be used at most real estate closings. RESPA also prohibits kickbacks and illegal referral fees, and it aims to reduce the amount of money a borrower must put in escrow. Under the law, a qualified written request (QWR) may be used to seek information from your loan’s servicer regarding the loan’s status, and it also allows you to request certain documents. Newer RESPA regulations allow you to seek additional information from your servicer. Borrowers can recover up to $2,000 for violations of RESPA. Lenders must also make certain disclosures when referring a borrower to an “affiliated” business. Fines of up to $10,000 and/or a year of jail time can be enforced for violations of the “affiliated business arrangement” disclosure requirement under RESPA.
• Miscellaneous: Payment, rejected payments, statute of limitations (as uniquely applied in foreclosures), res judicata (as uniquely applied in foreclosures), unclean hands (due to a number of different reasons), Servicemembers’ Civil Relief Act, force-placed insurance issues, fraud, unjust enrichment, duress, unconscionability, waiver, loan modification (we have made appellate law in Florida on this issue), failure to join an indispensable party, capacity, and estoppel.

Contact Our Hollywood and Fort Lauderdale Foreclosure Defense Attorneys Today

These defenses all rely on the specific facts of each individual case and which makes it all that more important to hire a lawyer who has significant experience with foreclosure defense law and who is passionate about aggressively representing your best interests.

To find out more about foreclosures or to inquire about how our Florida foreclosure defense attorneys can help, contact us today for a consultation at 754-400-5150 or through our online form. Our country’s history is filled with examples of people who have struggled financially but then have gone on to become famously wealthy. They all reclaimed their part of the American Dream and we want to help you reclaim yours! Let the lawyers and staff of the Law Offices of Evan M. Rosen serve you!