If a home owner “won” in a foreclosure action it doesn’t mean that a new filing can’t be undertaken by the Mortgage Servicer. In fact if a foreclosure action was dismissed, servicers and borrowers will return to their pre-foreclosure complaint status. Good news if the mortgagee has been paying their mortgage. Not so good if they continued to be in default of the terms of the mortgage. So, will this ruling impact our inventory? It shouldn’t in the short term, but give it a year and we’ll begin to see more properties come onto the market. Especially in counties that accelerate foreclosure filings like in Manatee County. It’s called the Rocket Docket and it was meant to clean up the overwhelming plethora of past cases. And with this ruling and the Rocket Docket fairly clear you should see time frames from filings to sale tighten up. One official stated that it could impact thousands of property owners. But, in my opinion, if you’re waiting for the other shoe to drop to become a resident of Florida, purchase a second home here or sell yours and move on up – don’t. You could easily miss some great opportunities with new home builders and re-sale properties currently on the market right now. If you’re looking to expand your portfolio through purchases of distressed properties, we’re here to help and we’ll always keep you abreast of the situation in future blogs.
Kendall Baer of DS News wrote an article that makes the new ruling really easy to understand.
The Florida Supreme Court recently ruled that servicers may file new foreclosure actions against borrowers who won foreclosure cases more than five years ago if the borrowers defaulted again within five years of the first case’s dismissal. The case, Lewis Brooke Bartram v. U.S Bank National Association was decided in favor of the mortgage servicers as borrowers argued a five-year statute of limitations should apply.
The court’s ruling, authored by Justice Barbra Pariente, determined that when foreclosure actions are dismissed, servicers and borrowers return to their pre-foreclosure complaint status. This allows homeowners to continue to pay back their loans in installments, rather than all at once.
The ruling also gives back servicers’ right to seek acceleration and foreclosure based on the mortgagor’s subsequent defaults saying, “Accordingly, the statute of limitations does not continue to run on the amount due under the note and mortgage.”
The decision affirms a Fifth District Court of Appeal ruling in the case and is consistent with the Florida Supreme Court’s 2004 opinion in Singleton v. Greymar Associates.
In Singleton, the court ruled successive foreclosure actions based on separate periods of default were not barred by res judicata, the principle that a case that has already been adjudicated cannot be pursued again by the same parties. The court ruled that two separate defaults are considered two different breaches of the mortgage contract and can be brought as two different actions.
Chief Justices Jorge Labarga and Justice Peggy Quince, Justice Charles Canady, and Justice James Perry agreed with the decision and Justice Ricky Polston and Justice Fred Lewis concurred in result.
Despite agreeing with the decision, Lewis stated that he was not comfortable with the expansion of Singleton to “potentially any case involving successive foreclosure actions.”
“I fear [continued expansion] will come at the cost of established Florida law and Floridians who may struggle with both the costs of owning a home and uncertain behavior by lenders,” said Lewis.