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The typical home mortgage comprises two closely related transactions. The first is a contract between the borrower and the lender under which the lender agrees to pay the borrower money in exchange for a promise to repay that money with interest. This is the note. As a condition for entering into that contract, the lender requires the borrower to give the lender a security interest in their property. This is the mortgage. The borrower is the mortgagor and the lender is the mortgagee.
The lenders’ right under the mortgage is like a non-possessory property interest that the borrower effectively repurchases with each payment on the principal of the loan. While the note gives the lender an “in personam” right against the borrower, the security interest gives the lender an “in rem” right against the property. Hence, destruction of the property — say by a hurricane or fire — might destroy the value of the lender’s in rem right, but will not destroy its in personam right to collect the full value of the loan from the borrower even though the property no longer exists.
Now, if the homeowners want a chance to save their homes, it’s necessary and imperative to have the mortgage transaction analyzed. Because the FDIC found that 83% of the mortgage transactions have problems, and 76% of the appraisals as well.
There’s only one firm in the country that provides that mortgage transaction analysis service–Mortgage Fraud Examiners www.mortgagefraudexaminers.com
In an opinion issued today, Florida’s Fifth District Court of Appeal joined other Florida appellate courts in holding that the five-year statute of limitations to bring an action to enforce a promissory note and/or mortgage does not prohibit a lender from collecting amounts more than five years past due.
In Grant v. Citizens Bank, N.A., slip op., Case No. 5D17-726 (Fla. 5th DCA Dec. 26, 2018), the Fifth District, sitting en banc, examined whether the trial judge erred in awarding to a foreclosing lender interest that had accrued more than five years prior to acceleration and the filing of the foreclosure complaint. The court noted that while Florida has a five-year statute of limitations to foreclose, the impact of the statute of limitations is simply that acceleration and foreclosure must be based on a default that occurred within the five year period prior to filing the foreclosure action. Each missed monthly installment payment constitutes a new default on which foreclosure may be based. Furthermore, forbearance from accelerating the note upon a borrower’s default does not constitute waiver of the lender’s right to subsequently seek all sums due and owing. Therefore, even if the lender does not file an action on a note or mortgage until more than five years after the borrower’s initial default, the lender may still recover amounts more than five years past due so long as the action commences within five years of maturity or a subsequent missed installment payment.
In reaching this conclusion, the Fifth District receded from its previous opinions in Velden v. Nationstar Mortgage, LLC, 234 So. 3d 850 (Fla. 5th DCA 2018) and U.S. Bank, N.A. v. Diamond, 228 So. 3d 177 (Fla. 5th DCA 2017), cases in which the court concluded that the statute of limitations prohibited the collection of amounts more than five years past due. With Grant, the Fifth District now joins the Third and Fourth District Courts of Appeal in holding that a lender is entitled to recover all outstanding payments upon maturity or acceleration, even those that came due more than five years earlier. See Bank of Am., N.A. v. Graybush, 253 So. 3d 1188 (Fla. 4th DCA 2018); Gonzalez v. Fed. Nat’l Mortg. Ass’n, — So. 3d —, 2018 WL 3636467 (Fla. 3d DCA Oct. 1, 2018).
The First and Second Districts have not directly addressed the interaction between the statute of limitations and the amounts a lender may collect. Given that neither those appellate courts nor the Florida Supreme Court has spoken on the topic, and now that there is no longer interdistrict conflict between the Third, Fourth, and Fifth Districts on the issue, trial courts in all districts of Florida are bound by the Grant, Graybush, and Gonzalez opinions. Thus, lenders throughout the state of Florida are able to recover all amounts owed to them—not just those that accrued within the previous five years.