The home could not be sold as a short sale and was foreclosed on. Before it foreclosed the bank which held both mortgages sold off the second mortgage to a debt collection agency.

I was unable to pay them and now they have served papers on me and are suing me for the sum of the second mortgage.

I have heard in other states that they cannot do this but am unsure about in Florida.

Any help would be greatly appreciated. Thanks!

Bonnie

——–

Hi Bonnie,

When a first mortgage forecloses and the property is worth less than the first mortgage balance, the second has its lien extinguished. 

With the seconds’ interest in the property now foreclosed by the first mortgage, the second is given the status the same as any defaulted consumer debt with a statute of limitations of five years on a written contract (F.S. 95.11(2)(b)). 

A lawsuit may be brought to collect the balance owed plus interest within five years of the default.  There are defenses and possibly counterclaims to such a lawsuit, but to answer your question directly, yes, it is possible (and likely) that a second mortgage would bring a lawsuit to collect the balance after foreclosure in Florida.  Whether or not it is a primary, second home, or investment property has no bearing in Florida.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

I now have a summons that has to be done b/4 Feb 1st. Not sure where to turn. I have been trying to resolve a issue with the lender still last year when the mortgage was transferred after the 2nd time. within 4 months apart from each other.

I hope someone can answer the question.

My friend is very help with you and your service.

Best Regards
Louise

————

Hi Louise,

First, there has to be the goal of either a loan modification or a short sale, because without such a goal, fighting foreclosure is simply delaying the inevitable.  You have twenty-days from in-hand service to file a response to the summons/complaint and if you let that time pass then you could lose by default and that would be precisely the outcome that the bank desires.

There are attorneys that can help you to file an answer or a motion; if you can’t afford an attorney then do a search in Google for ‘your county or city and legal aid’ (i.e. Tampa legal aid).

While it’s not my recommendation for consumers to defend themselves pro se; nevertheless, answering the complaint pro se is better than not answering at all.  The following is not directed to you but rather it is general information for all of those facing foreclosure in Florida.

In a foreclosure complaint there are allegations that have numbers on the left side of each item that is alleged.  Each number corresponds to an allegation and the answer that is filed should address each allegation with either a ‘denied’ or ‘admitted’ or language to that effect.  Generally speaking (and without lying) most would be ‘denied’ by the defendant and this may be the case even if the allegation is probably true or may be true because the borrower does not have specific knowledge of whether it IS true.  This is making them prove their case and not giving them a quickie default judgment.  For illustration, let’s examine two complaints in Florida foreclosure and their corresponding answers.

Take a look at page two, three and four of this complaint and compare that to page one and two of this answer.

Take a look at page one through four of this complaint and compare that to page one and two of this corresponding answer.

That’s pretty basic, but I wouldn’t leave it at that.  Now we’ll move onto affirmative defenses. 

Paragraph twenty-two of a typical mortgage has an acceleration clause.  Did they send that notice?  Look at affirmative defense #1 on page two of this answer.

Every homeowner is required to receive the homeownership counseling notice within forty-five days of delinquency.  If the borrower gets current and then is late again, they are required to be sent another notice within forty-five days once again.  You get the picture.  There are serious questions as to whether lenders are sending this notice.  This is listed as affirmative defense #2 on No HUD Counseling Notice on page two.

The borrower is a third-party beneficiary to the pooling and servicing agreement or at least the default loan servicing requirements of the P&S agreement.  Now the lender doesn’t want to give the borrower access to the P&S agreement, but that could be obtained later through discovery in the production of documents.  Here is affirmative defense #3 on page two and three: plaintiff failed to comply with applicable pooling and servicing requirements.

If the lender didn’t follow any or all of the above rules then the lender is guilty of #4 failure of good faith and fair dealing, #5 unclean hands, and #6 illegal charges added to balance (page thee and four), so definitely throw those defenses in there too.  If the lender didn’t provide proper notices or follow the default servicing requirements then all of the charges after that point are illegal charges added to the balance.

Many of these foreclosures do not have the assignments recorded properly or request the reestablishment of lost note.  This can be handled through a motion to dismiss or challenging the lender’s standing as in #7 on page four.  Here is an interesting challenge to reestablishing the lost note on page four and five #27 in the failure to state a claim for which relief may be granted and the motion to dismiss reestablishment of lost note in #29-34 on page five and six. 

Many non-purchase money mortgages still within three-years of origination on a consumer’s primary residence are subject to the TILA’s extended right to rescind.  If the TIL disclosure is defective because for example the finance charge is underestimated by over $35 and the borrower is served with a foreclosure complaint then the loan may be rescinded.  This is accomplished by sending a CMRRR rescission notice to the servicing lender, but I would also send it to the foreclosing attorney and of course whoever is listed as plaintiff in the foreclosure action.  In addition, this is listed as an affirmative defense on page three on #21.  Bear in mind that rescission also requires a tender of a remaining balance; however, it should be welcomed news that tender can be made through a short sale and we also have solid case law that tender can be made through a bankruptcy if necessary.  I would be sure to quote this case law reference in the rescission letter that: we are prepared to tender the remaining balance owed through the short sale that is in process or if necessary we can tender through a Chapter 13 please see Jaaskelainen v. Wells Fargo Bank, N.A. (In re Jaaskelainen), 391 B.R. 627 (Bankr. D. Mass. 2008).

Now, let’s look at counterclaims.  Page four through eight of this answer contains counterclaims requesting a declaratory judgment and for illegal consumer collection.  And finally, it concludes with a simple statement requesting a jury trial.  This answer requests the same on page forty-one. 

With regards to the jury trial, I wouldn’t worry too much about going in front of a jury – it’s not going to happen.  Foreclosures in Florida are not normally decided by a jury, although when there are questions of fact (i.e. was notice required under paragraph #22 of the mortgage sent?, was the Homeownership Counseling Notice sent within 45 days?, were the default servicing requirements of the P&S agreement followed?) and these facts are disputed between plaintiff and defendant then this may preclude summary judgment.  Summary judgment is generally appropriate when the relevant facts are either undisputed or there are no material issues of fact remaining for trial and the judge can make a decision as a matter of law.  When there are questions regarding the relevant facts then those questions can be decided by a jury.  But like I mentioned, that’s almost certain not to happen in a Florida foreclosure case.  The plaintiff lender would settle the case with the homeowner (i.e. give the best loan mod in the world, or accept the short sale and remove the tradeline).  

I always have my ‘I am not an attorney’ disclaimer at the bottom of these posts but this time I think it is important to write it more than once.  To be clear, I am not an attorney and this is not to be taken as legal advice.  I recommend that everyone find a qualified attorney to help them to answer the foreclosure complaint but above all I want to see that everyone files and answer – even if it’s not the best answer, it’s still an answer.

What happens after that answer is filed?  It will be time to negotiate that loan modification or short sale as a settlement.  And if a solid answer is filed that includes rescission of the loan and a short sale is pursued, then as part of the settlement IMO the tradeline should be deleted. 

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Florida Default Law Group — Tampa…….415

David J. Stern — Plantation………………..263

Marshall C. Watson — Fort Lauderdale…..182

Shapiro & Fishman — Tampa………………133

Smith, Hiatt & Diaz — Fort Lauderdale……75

Albertelli Law — Tampa………………………61

Daniel C. Consuegra — Tampa…………….47

Adorno & Yoss — Miami………………………41

Ben-Ezra & Katz — Fort Lauderdale……….33

Spear and Hoffman — Miami………………33

Attorney fees for these foreclosure mill attorneys by statute permit 3% of the principal balance as a “reasonable” fee in a foreclosure lawsuit; however, it seems that the foreclosing plaintiff/lenders have found law offices throughout the state that are willing to do the job for a flat fee of 1200 bucks and from what I’ve seen this doesn’t vary by loan amount.  Specifically, F.S. 702.065(2) reads (emphasis added):

“In a mortgage foreclosure proceeding, when a default judgment has been entered against the mortgagor and the note or mortgage provides for the award of reasonable attorney’s fees, it is not necessary for the court to hold a hearing or adjudge the requested attorney’s fees to be reasonable if the fees do not exceed 3 percent of the principal amount owed at the time of filing the complaint, even if the note or mortgage does not specify the percentage of the original amount that would be paid as liquidated damages. Such fees constitute liquidated damages in any proceeding to enforce the note or mortgage. This section does not preclude a challenge to the reasonableness of the attorney’s fees.”

So, the term “foreclosure mills” seems to be an accurate depiction and in my opinion, the reason these law offices are able to charge this nominal fee is because the vast majority of homeowners do not answer the complaint.  In Florida, you have twenty days to respond from date of in-hand service (thirty if by publication) and not filing a response is exactly what these law offices would prefer the homeowner did – nothing, ignore it, that’s it, game over. 

Foreclosure is a big deal and there’s a lot at stake.  Per FNMA guidelines a foreclosure takes the borrower out of the housing market for five-years whereas a completed short sale permits the borrower to purchase again in as few as two-years.  Additionally, Florida foreclosure permits deficiency judgments either at time of foreclosure or a deficiency judgment can be sought at a later date.  Specifically, F.S. 702.06 reads (emphasis added):

“Deficiency decree; common-law suit to recover deficiency.–In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound judicial discretion of the court, but the complainant shall also have the right to sue at common law to recover such deficiency, provided no suit at law to recover such deficiency shall be maintained against the original mortgagor in cases where the mortgage is for the purchase price of the property involved and where the original mortgagee becomes the purchaser thereof at foreclosure sale and also is granted a deficiency decree against the original mortgagor.”

So what to do when going up against Goliath the lender and the experienced foreclosure mills?  Once again, let me share with you my opinion that they do not want to have to deal with a homeowner who has filed an answer. 

Here’s a Florida foreclosure complaint and here’s an answer (and affirmative defenses, motion to dismiss, counterclaims, and demand for jury trial).  Here are Florida foreclosure pleadings in a case where the homeowner is defended by “the foreclosure killer” one of the Country’s leading foreclosure defense attorneys.

But I digress.  Don’t think that these foreclosure mills are perfect.  Take a look at the complaint in an affirmative action in Dongen v. Florida Default Law Group, P.L. et al (8:2007cv01568, M.D. Fla.) and the case was settled.  Florida has a double whammy for the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) and yes they award attorney fees.

The foreclosure mills of Florida.  Sometimes stopping that wheel is as simple as filing an answer – which is mysteriously followed by your accepted loan modification or short sale.  Go figure.

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Madison

———-

Hi Madison,

You couldn’t have refinanced in December 2009 (because it’s January ’09), so I don’t know when you refinanced although that is a non-issue.  You have an FHA loan and if you enter the FHA short sale program or more accurately stated the FHA pre-foreclosure sale program and follow through with what is required (i.e. signing and returning Form HUD-90045 ‘Approval To Participate’ back to the lender within 7 days of receipt and following the rules that are contained therein) then you won’t be “responsible for the difference of what the house eventually sells for and the balance on the mortgage” if the property does not sell as a short sale and ultimately becomes a foreclosure. Specifically, page five of Mortgagee Letter 2008-43 states:

“A PFS sale must be an outright sale of the property.  If a foreclosure occurs after the mortgagor unsuccessfully participated in the PFS process in good faith, neither the mortgagee nor HUD will pursue the mortgagor for a deficiency judgment.”

On a side note, another nice piece of information that I noticed in the December 24, 2008 FHA pre-foreclosure sale guidelines is the following:

“On the 32nd day but, no later than the 60th day of delinquency, the mortgagee shall send the delinquent borrower a pamphlet (HUD-PA-426, How To Avoid Foreclosure) about foreclosure avoidance.   This pamphlet provides mortgagors with important information about loss mitigation alternatives, which include the pre-foreclosure sale option.”

The above notice requirement is a new requirement and homeowners with FHA loans should be vigilant as to whether or not they received the HUD-PA-426 pamphlet postmarked prior by the 60th day of delinquency.  If the homeowner does not receive this timely pamphlet, then the foreclosing FHA lender may be guilty of failure of good faith and fair dealing, unclean hands, illegal charges added to the balance, and illegal consumer collection – and in addition to these defenses and counterclaims, in Florida at least, there is case law that establishes that failure to provide such timely notices precludes summary judgment (which means no quickie foreclosure for the big bad lender).

Madison, call your lender and ask about the FHA pre-foreclosure sale program or, if your sevicer is not cooperative, you can call HUD’s national oversight for loss mitigation at 888.297.8685.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

…she became an expert on lending law when her caseload of foreclosures increased and she began to notice a number of disturbing trends that have yielded her key defense strategies.

First, because of the way mortgages have been securitized, it’s often unclear who actually owns the debt, she said. “What we see is that systematically, the originating lenders only pledged these loans and didn’t actually transfer them” to the trusts that are supposed to hold them and issue the securities, she explained.

But only the true debt owner has the legal standing to be a plaintiff in a foreclosure, she continued. “That’s first-year law school stuff. If you’re Joe and the debt doesn’t belong to you, it belongs to Marjorie, then Marjorie better be in court, not Joe. Don’t come in as Joe and tell me you have the right to be there when you know full well you don’t.”

Yet, time and again, loan servicers and others have sought plaintiff status, often by using affidavits stating that the actual notes had been lost, she said. “I’ve seen paperwork filed by lawyers saying, ‘We anticipate assignment’” of the debt, she said with a scoff.

And the loan originators can’t appear in court and claim the right to foreclose because they would be in violation of securities laws for not transferring the loan to the trust when they were supposed to, she said.

Making an issue out of the actual ownership of the securitized title might strike some as a shameless stalling tactic aimed at abetting a debtor who, after all, owes the money. But Charney said that if such basic legalities aren’t adhered to, a homeowner could pay his or her way out of a foreclosure jam only to wind up in another when a new plaintiff emerges claiming to own the debt. She described cases in which homeowners have been sued for foreclosure by two different trusts, each claiming they owned their house, and cases where trusts have been sent documents on the same case by two different servicers.

Charney has a number of other defenses that focus on other sloppy and illegal practices by lenders and mortgage servicers. Some homeowners in foreclosure, such as those with FHA-insured loans like her client Vickie Lewis, were “entitled to very special default case management, and they didn’t get it,” she said. These people might not be in foreclosure if they had, she said.

Next, we’ll take a look at what the Broken Credit Blog uncovered.  Now, coincidentally, the article above came out yesterday and earlier in the week I was reviewing pleadings in one of April’s cases, so now for the benefit of the education of all and without further ado, here are pleadings and orders in one of her ongoing Florida foreclosure defense cases:

Florida Foreclosure Complaint

Florida Lis Pendens

Motion to Enlarge Time

Consent Order

Motion to Dismiss Complaint

Florida Foreclosure Amended Complaint

Defendant’s Motion to Enlarge Time to Respond to Amended Complaint

Defendant’s Answer to Amended Complaint; Motion to Dismiss; Affirmative Defenses; Counterclaims; and Demand for Jury Trial

Plaintiff’s Motion to Strike, Amended Affirmative Defenses, Dismiss Amended Counterclaim, and Strike Demand for Jury Trial

Defendant’s Memorandum in Opposition to Plaintiff’s Motion to Strike

Order Denying Plaintiff’s Motion to Strike Defendant’s Affirmative Defenses; Denying motion to Dismiss Counterclaims; and Denying Plaintiff’s Motion to Strike Demand for Jury Trial

Plaintiff’s Answer and Affirmative Defenses to Defendant’s Counterclaim

Plaintiff’s Request for Admissions

Defendant’s Answer for Request for Admissions

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

(souce=msnbc.msn.com/id/28277420/)

A couple of weeks ago I found this answer to this foreclosure complaint which pleading states: “Verified Answer, Affirmative Defenses, Motion to Dismiss Count I, Counterclaims, Third Party Complaint, And Demand For A Jury Trial”.

Now I don’t know how you feel about the subject and I don’t know this attorney, but I can already tell that I like his style – as a consumer advocate I’m a personal fan of anyone that requests a jury trial to defend a foreclosure.  The fact is that too many homeowners get served in a foreclosure action and don’t respond.  Then, the lender goes right to default judgment.  IMO that’s a real problem because fighting back – even by doing as little as answering the complaint – throws a wrench in the fast spinning foreclosure mill wheel and by so doing may either provide the homeowner the opportunity to rework the loan through a fair and equitable loan modification or permit them to sell the property as a short sale and avoid foreclosure (remember: a short sale permits the homeowner/seller to buy again in two years whereas a foreclosure knocks them out for five-years and in Florida can result in a deficiency judgment and continued collection).

Before I get sidetracked again (sorry I’m longwinded), I want to highlight a section of this answer and with the footnote that at present I do not have an opinion as to whether this highlighted portion of the defense has any merit.  Keep in mind, the general rule in defending a foreclosure is to challenge everything, so I’m still researching the following defense.  From page four through six of the Pinkston answer:   

27. Failure to state a claim for which relief may be granted.

i. Plaintiff filed a claim to re-establish a lost note.

ii. Plaintiff claims the right to re-establish such note under Fla. Stat. §673.3091

iii. Fla. Stat. §673.3091 provides only for re-establishment of negotiable instruments as defined under Fla. Stat. §673.1041

iv. The note at issue is not a negotiable instrument as defined under §673.1041 because it does not contain an unconditional promise to pay and/or other requirements to qualify as a negotiable instrument.

v. Therefore Fla. Stat. §673.3091 does not apply to transfer or enforce the promissory note at issue in this foreclosure action.

vi. Therefore, Plaintiff has failed to state a claim for which relief may be granted.

MOTION TO DISMISS COUNT I.

Defendant moves to dismiss count I of Plaintiff’s complaint to re-establish a lost promissory note for failure to state a cause of action.

29. Florida Statutes Chapter 673 “applies to negotiable instruments.”

30. F.S. 673.1041(1)(c) defines the term “negotiable instrument” as an unconditional promise or order to pay a fixed amount of money, if the instrument does 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. (emphasis added)

31. F.S. 673.1041(2) provides that “instrument” means a “negotiable instrument”.

32. The official comment to F.S. 673.1041 states that the definition of “negotiable instrument” delineates the scope of Article 3 of the Uniform Commercial Code.

33. The promissory note that the plaintiff seeks to foreclose is not a negotiable instrument under Florida law because the note is not just a promise to pay as it requires additional undertakings by the owner and holder of the note imposed pursuant to the special default loan servicing obligations that apply to this loan.  These special and highly detailed loan servicing requirements are incorporated into the subject note and serve to create uncertainty in the amount due.  As a result, the promissory note is not a negotiable instrument and not subject to reestablishment under the Uniform Commercial Code.

34. A promissory note to be negotiable, must contain an unconditional promise and there must be a specific ascertainable sum.  The uncertainty presented by the terms of the note at issue in this foreclosure defeat negotiability of the note and eliminates the possibility of the application of F.S. Chapter 673 in an action to enforce the note.  Nagel v. Cronebaugh, 782 So. 2d 436 (Fla. 5th DCA 2001), citing United Nat’l Bank of Miami v. Airport Plaza Ltd. P’ship, 537 So. 2d 608,609 (Fla. 3d DCA 1988); Thompson v. First Union, 643 So. 2d 1179 (Fla. 5th DCA 1994); See also, Bankers Trust v. 236 Beltway Investment, 865 F. Supp. 1186 (E.D. Va. 1994).

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

FORECLOSURE OF MORTGAGES, AGREEMENTS FOR DEEDS,
AND STATUTORY LIENS

702.01  Equity.

702.03  Certain foreclosures validated.

702.035  Legal notice concerning foreclosure proceedings.

702.04  Mortgaged lands in different counties.

702.05  Mortgaged lands sold for taxes.

702.06  Deficiency decree; common-law suit to recover deficiency.

702.065  Final judgment in uncontested proceedings where deficiency judgment waived; attorney’s fees when default judgment entered.

702.07  Power of courts and judges to set aside foreclosure decrees at any time before sale.

702.08  Effect of setting aside foreclosure decree.

702.09  Definitions.

702.10  Order to show cause; entry of final judgment of foreclosure; payment during foreclosure.

702.01  Equity.–All mortgages shall be foreclosed in equity. In a mortgage foreclosure action, the court shall sever for separate trial all counterclaims against the foreclosing mortgagee. The foreclosure claim shall, if tried, be tried to the court without a jury.

History.–RS 1987; GS 2501; RGS 3844; CGL 5747; s. 7, ch. 22858, 1945; s. 2, ch. 87-217.

702.03  Certain foreclosures validated.–All mortgage foreclosures heretofore made, or now pending, wherein there has been annexed to the bill of complaint in such cause, an uncertified copy of the mortgage, as provided by chapter 12095, Acts of 1927, entitled: “An act to amend section 3845 RGS relating to complaint in foreclosure of mortgages” are hereby validated and confirmed insofar as they relate to the copy of the mortgage attached to such complaint, to the same extent and effect as if section 3117, RGS, had been expressly repealed by chapter 12095, 1927, entitled: “An act to amend section 3845 RGS relating to complaint in foreclosure of mortgages.”

History.–s. 1, ch. 13642, 1929; CGL 1936 Supp. 5748(1).

702.035  Legal notice concerning foreclosure proceedings.–Whenever a legal advertisement, publication, or notice relating to a foreclosure proceeding is required to be placed in a newspaper, it is the responsibility of the petitioner or petitioner’s attorney to place such advertisement, publication, or notice. For counties with more than 1 million total population as reflected in the 2000 Official Decennial Census of the United States Census Bureau as shown on the official website of the United States Census Bureau, any notice of publication required by this section shall be deemed to have been published in accordance with the law if the notice is published in a newspaper that has been entered as a periodical matter at a post office in the county in which the newspaper is published, is published a minimum of 5 days a week, exclusive of legal holidays, and has been in existence and published a minimum of 5 days a week, exclusive of legal holidays, for 1 year or is a direct successor to a newspaper that has been in existence for 1 year that has been published a minimum of 5 days a week, exclusive of legal holidays. The advertisement, publication, or notice shall be placed directly by the attorney for the petitioner, by the petitioner if acting pro se, or by the clerk of the court. Only the actual costs charged by the newspaper for the advertisement, publication, or notice may be charged as costs in the action.

History.–s. 4, ch. 2001-215; s. 7, ch. 2006-175; s. 2, ch. 2007-185.

702.04  Mortgaged lands in different counties.–When a mortgage includes lands, railroad track, right-of-way, or terminal facilities and station grounds, lying in two or more counties, it may be foreclosed in any one of said counties, and all proceedings shall be had in that county as if all the mortgaged land, railroad track, right-of-way, or terminal facilities and station grounds lay therein, except that notice of the sale must be published in every county wherein any of the lands, railroad track, right-of-way, or terminal facilities and station grounds to be sold lie. After final disposition of the suit, the clerk of the circuit court shall prepare and forward a certified copy of the decree of foreclosure and sale and of the decree of confirmation of sale to the clerk of the circuit court of every county wherein any of the mortgaged lands, railroad tracks, right-of-way, or terminal facilities and station grounds lie, to be recorded in the foreign judgment book of each such county, and the costs of such copies and of the record thereof shall be taxed as costs in the cause.

History.–RS 1989; s. 1, ch. 4420, 1895; GS 2503; s. 1, ch. 7339, 1917; RGS 3846; CGL 5749.

702.05  Mortgaged lands sold for taxes.–Any person who has a lien by mortgage or otherwise upon lands sold for taxes may, within the time allowed by law for redemption, redeem such lands, and the receipt of the officer authorized to receive the amount paid for redemption money shall entitle the lienholder to collect the said amount, with interest at the rate of 10 percent per annum, as a part of and in the same manner as the amount secured by her or his original lien.

History.–s. 1, ch. 3903, 1889; RS 1990; GS 2504; RGS 3847; CGL 5750; s. 783, ch. 97-102.

702.06  Deficiency decree; common-law suit to recover deficiency.–In all suits for the foreclosure of mortgages heretofore or hereafter executed the entry of a deficiency decree for any portion of a deficiency, should one exist, shall be within the sound judicial discretion of the court, but the complainant shall also have the right to sue at common law to recover such deficiency, provided no suit at law to recover such deficiency shall be maintained against the original mortgagor in cases where the mortgage is for the purchase price of the property involved and where the original mortgagee becomes the purchaser thereof at foreclosure sale and also is granted a deficiency decree against the original mortgagor.

History.–s. 1, ch. 11993, 1927; CGL 5751; s. 1, ch. 13625, 1929.

702.065  Final judgment in uncontested proceedings where deficiency judgment waived; attorney’s fees when default judgment entered.–

(1)  In uncontested mortgage foreclosure proceedings in which the mortgagee waives the right to recoup any deficiency judgment, the court shall enter final judgment within 90 days from the date of the close of pleadings. For the purposes of this subsection, a mortgage foreclosure proceeding is uncontested if an answer not contesting the foreclosure has been filed or a default judgment has been entered by the court.

(2)  In a mortgage foreclosure proceeding, when a default judgment has been entered against the mortgagor and the note or mortgage provides for the award of reasonable attorney’s fees, it is not necessary for the court to hold a hearing or adjudge the requested attorney’s fees to be reasonable if the fees do not exceed 3 percent of the principal amount owed at the time of filing the complaint, even if the note or mortgage does not specify the percentage of the original amount that would be paid as liquidated damages. Such fees constitute liquidated damages in any proceeding to enforce the note or mortgage. This section does not preclude a challenge to the reasonableness of the attorney’s fees.

History.–s. 2, ch. 2001-215.

702.07  Power of courts and judges to set aside foreclosure decrees at any time before sale.–The circuit courts of this state, and the judges thereof at chambers, shall have jurisdiction, power, and authority to rescind, vacate, and set aside a decree of foreclosure of a mortgage of property at any time before the sale thereof has been actually made pursuant to the terms of such decree, and to dismiss the foreclosure proceeding upon the payment of all court costs.

History.–s. 1, ch. 11881, 1927; CGL 5752.

702.08  Effect of setting aside foreclosure decree.–Whenever a decree of foreclosure has been so rescinded, vacated, and set aside and the foreclosure proceedings dismissed as provided in s. 702.07, the mortgage, together with its lien and the debt thereby secured, shall be, both in law and equity, completely relieved of all effects of any kind whatsoever resulting from or on account of the foreclosure proceedings and the decree of foreclosure and fully restored in all respects to the original status of the same as it existed prior to the foreclosure proceedings and the decree of foreclosure, and thereafter the same shall be for all purposes whatsoever legally of force and effect just as if foreclosure proceeding had never been instituted and a decree of foreclosure had never been made.

History.–s. 2, ch. 11881, 1927; CGL 5753.

702.09  Definitions.–For the purposes of ss. 702.07 and 702.08 the words “decree of foreclosure” shall include a judgment or order rendered or passed in the foreclosure proceedings in which the decree of foreclosure shall be rescinded, vacated, and set aside; the word “mortgage” shall mean any written instrument securing the payment of money or advances and includes liens to secure payment of assessments arising under chapters 718 and 719 and liens created pursuant to the recorded covenants of a homeowners’ association as defined in s. 712.01; the word “debt” shall include promissory notes, bonds, and all other written obligations given for the payment of money; the words “foreclosure proceedings” shall embrace every action in the circuit or county courts of this state wherein it is sought to foreclose a mortgage and sell the property covered by the same; and the word “property” shall mean and include both real and personal property.

History.–s. 3, ch. 11881, 1927; CGL 5754; s. 4, ch. 2002-27; s. 13, ch. 2003-14.

702.10  Order to show cause; entry of final judgment of foreclosure; payment during foreclosure.–

(1)  After a complaint in a foreclosure proceeding has been filed, the mortgagee may request an order to show cause for the entry of final judgment and the court shall immediately review the complaint. If, upon examination of the complaint, the court finds that the complaint is verified and alleges a cause of action to foreclose on real property, the court shall promptly issue an order directed to the defendant to show cause why a final judgment of foreclosure should not be entered.

(a)  The order shall:

1.  Set the date and time for hearing on the order to show cause. However, the date for the hearing may not be set sooner than 20 days after the service of the order. When service is obtained by publication, the date for the hearing may not be set sooner than 30 days after the first publication. The hearing must be held within 60 days after the date of service. Failure to hold the hearing within such time does not affect the validity of the order to show cause or the jurisdiction of the court to issue subsequent orders.

2.  Direct the time within which service of the order to show cause and the complaint must be made upon the defendant.

3.  State that the filing of defenses by a motion or by a verified or sworn answer at or before the hearing to show cause constitutes cause for the court not to enter the attached final judgment.

4.  State that the defendant has the right to file affidavits or other papers at the time of the hearing and may appear personally or by way of an attorney at the hearing.

5.  State that, if the defendant files defenses by a motion, the hearing time may be used to hear the defendant’s motion.

6.  State that, if the defendant fails to appear at the hearing to show cause or fails to file defenses by a motion or by a verified or sworn answer or files an answer not contesting the foreclosure, the defendant may be considered to have waived the right to a hearing and in such case the court may enter a final judgment of foreclosure ordering the clerk of the court to conduct a foreclosure sale.

7.  State that if the mortgage provides for reasonable attorney’s fees and the requested attorney’s fees do not exceed 3 percent of the principal amount owed at the time of filing the complaint, it is unnecessary for the court to hold a hearing or adjudge the requested attorney’s fees to be reasonable.

8.  Attach the final judgment of foreclosure the court will enter, if the defendant waives the right to be heard at the hearing on the order to show cause.

9.  Require the mortgagee to serve a copy of the order to show cause on the mortgagor in the following manner:

a.  If the mortgagor has been served with the complaint and original process, service of the order may be made in the manner provided in the Florida Rules of Civil Procedure.

b.  If the mortgagor has not been served with the complaint and original process, the order to show cause, together with the summons and a copy of the complaint, shall be served on the mortgagor in the same manner as provided by law for original process.

Any final judgment of foreclosure entered under this subsection is for in rem relief only. Nothing in this subsection shall preclude the entry of a deficiency judgment where otherwise allowed by law.

(b)  The right to be heard at the hearing to show cause is waived if the defendant, after being served as provided by law with an order to show cause, engages in conduct that clearly shows that the defendant has relinquished the right to be heard on that order. The defendant’s failure to file defenses by a motion or by a sworn or verified answer or to appear at the hearing duly scheduled on the order to show cause presumptively constitutes conduct that clearly shows that the defendant has relinquished the right to be heard. If a defendant files defenses by a motion or by a verified or sworn answer at or before the hearing, such action constitutes cause and precludes the entry of a final judgment at the hearing to show cause.

(c)  In a mortgage foreclosure proceeding, when a default judgment has been entered against the mortgagor and the note or mortgage provides for the award of reasonable attorney’s fees, it is unnecessary for the court to hold a hearing or adjudge the requested attorney’s fees to be reasonable if the fees do not exceed 3 percent of the principal amount owed on the note or mortgage at the time of filing, even if the note or mortgage does not specify the percentage of the original amount that would be paid as liquidated damages.

(d)  If the court finds that the defendant has waived the right to be heard as provided in paragraph (b), the court shall promptly enter a final judgment of foreclosure. If the court finds that the defendant has not waived the right to be heard on the order to show cause, the court shall then determine whether there is cause not to enter a final judgment of foreclosure. If the court finds that the defendant has not shown cause, the court shall promptly enter a judgment of foreclosure.

(2)  In an action for foreclosure, other than residential real estate, the mortgagee may request that the court enter an order directing the mortgagor defendant to show cause why an order to make payments during the pendency of the foreclosure proceedings or an order to vacate the premises should not be entered.

(a)  The order shall:

1.  Set the date and time for hearing on the order to show cause. However, the date for the hearing shall not be set sooner than 20 days after the service of the order. Where service is obtained by publication, the date for the hearing shall not be set sooner than 30 days after the first publication.

2.  Direct the time within which service of the order to show cause and the complaint shall be made upon the defendant.

3.  State that the defendant has the right to file affidavits or other papers at the time of the hearing and may appear personally or by way of an attorney at the hearing.

4.  State that, if the defendant fails to appear at the hearing to show cause and fails to file defenses by a motion or by a verified or sworn answer, the defendant may be deemed to have waived the right to a hearing and in such case the court may enter an order to make payment or vacate the premises.

5.  Require the mortgagee to serve a copy of the order to show cause on the mortgagor in the following manner:

a.  If the mortgagor has been served with the complaint and original process, service of the order may be made in the manner provided in the Florida Rules of Civil Procedure.

b.  If the mortgagor has not been served with the complaint and original process, the order to show cause, together with the summons and a copy of the complaint, shall be served on the mortgagor in the same manner as provided by law for original process.

(b)  The right to be heard at the hearing to show cause is waived if the defendant, after being served as provided by law with an order to show cause, engages in conduct that clearly shows that the defendant has relinquished the right to be heard on that order. The defendant’s failure to file defenses by a motion or by a sworn or verified answer or to appear at the hearing duly scheduled on the order to show cause presumptively constitutes conduct that clearly shows that the defendant has relinquished the right to be heard.

(c)  If the court finds that the defendant has waived the right to be heard as provided in paragraph (b), the court may promptly enter an order requiring payment in the amount provided in paragraph (f) or an order to vacate.

(d)  If the court finds that the mortgagor has not waived the right to be heard on the order to show cause, the court shall, at the hearing on the order to show cause, consider the affidavits and other showings made by the parties appearing and make a determination of the probable validity of the underlying claim alleged against the mortgagor and the mortgagor’s defenses. If the court determines that the mortgagee is likely to prevail in the foreclosure action, the court shall enter an order requiring the mortgagor to make the payment described in paragraph (e) to the mortgagee and provide for a remedy as described in paragraph (f). However, the order shall be stayed pending final adjudication of the claims of the parties if the mortgagor files with the court a written undertaking executed by a surety approved by the court in an amount equal to the unpaid balance of the mortgage on the property, including all principal, interest, unpaid taxes, and insurance premiums paid by the mortgagee.

(e)  In the event the court enters an order requiring the mortgagor to make payments to the mortgagee, payments shall be payable at such intervals and in such amounts provided for in the mortgage instrument before acceleration or maturity. The obligation to make payments pursuant to any order entered under this subsection shall commence from the date of the motion filed hereunder. The order shall be served upon the mortgagor no later than 20 days before the date specified for the first payment. The order may permit, but shall not require the mortgagee to take all appropriate steps to secure the premises during the pendency of the foreclosure action.

(f)  In the event the court enters an order requiring payments the order shall also provide that the mortgagee shall be entitled to possession of the premises upon the failure of the mortgagor to make the payment required in the order unless at the hearing on the order to show cause the court finds good cause to order some other method of enforcement of its order.

(g)  All amounts paid pursuant to this section shall be credited against the mortgage obligation in accordance with the terms of the loan documents, provided, however, that any payments made under this section shall not constitute a cure of any default or a waiver or any other defense to the mortgage foreclosure action.

(h)  Upon the filing of an affidavit with the clerk that the premises have not been vacated pursuant to the court order, the clerk shall issue to the sheriff a writ for possession which shall be governed by the provisions of s. 83.62.

History.–s. 14, ch. 93-250; s. 3, ch. 2001-215.

(source=flsenate.gov/Statutes)