Florida is a judicial foreclosure state. Therefore, a bank or HOA seeking to foreclose a home must receive approval from a judge. The case must be filed in the circuit court where the property is located. Under Florida foreclosure law, all mortgage foreclosure cases are to be conducted in a court of equity. Courts of equity are authorized to apply principles of equity (fairness), as opposed to only legal defenses. Therefore, the judge can consider acts by the bank that would render the foreclosure unfair.
During the court process, the homeowner will have an opportunity to raise defenses and challenge the foreclosure. If the foreclosure sale of your home has already been scheduled, you should contact a foreclosure defense attorney in Tampa. There may still be options to stop the foreclosure sale, but time is running out.
Florida Foreclosure Trial
Foreclosure cases in Florida are conducted without a jury. Instead of a jury, the judge will decide the fate of the case. Homeowners will have to persuade the judge to rule in their favor. Judges are typically a lot less likely to be persuaded by principles of fairness than a jury would be. Therefore, you should consult with a foreclosure defense attorney to learn more about potential legal defenses. There may be a legal defense that would require the judge to deny the foreclosure.
Unclean Hands as a Florida Foreclosure Defense
One of the many potential ways to stop a foreclosure is the defense of unclean hands. Florida case law stands for the proposition that a foreclosure action must be denied if the bank has unclean hands. See Federal Savings and Loan v. Robert Smith. An example of unclean hands is tortuously interference by the bank. If there is evidence that establishes the bank tortuous interfered with enforcing the loan, the foreclosure should be denied.
Homeowners should be cautious when trying to prevent a foreclosure based on an unclean hands defense. Proving unclean hands can be difficult without the requisite legal training and experience. If you think your lender has unclean hands, you should contact a foreclosure defense law firm in Tampa.
Proving Unclean Hands
To establish unclean hands, the homeowner must prove a fraudulent or illegal transaction. Alternatively, prove unrighteous, unconscious, or oppressive conduct by the mortgage company regarding the loan. See Epstein v. Epstein. Moreover, for a defense of unclean hands, the homeowner must show a detriment to them by way of the lender. The improper conduct along is not enough, there must be evidence of harm. Additionally, the conduct in question must be connected with the failure to make mortgage payments. See Marin v. Seven of Five Ltd
Foreclosure Defense of Conditions Precedent
Another foreclosure defense is that the bank failed to fulfill all the conditions precedents to foreclosure. A condition precedent is an event that must occur before performance under a contract becomes due. A common condition precedent in foreclosure cases is the bank’s requirement to send the homeowner notice of the default. Notice of default is just one example, there may be many other conditions precedent for the bank as well. For more information on the possible conditions precedent, your lender may be required to fulfill, contact a foreclosure defense law firm in Tampa.
Lack of Notice of Default
Many mortgages include a requirement the bank notify homeowners the loan is in default before filing foreclosure. This condition is commonly found in the 22nd paragraph of the mortgage. The notice to the homeowner must indicate the action required to cure the default. Additionally, the notice must provide at least 30 days to cure the default before the bank can initiate foreclosure. Once the borrower raises this issue as an affirmative defense, the bank will have the burden of proving the notice was sent to the homeowner. The bank will have to prove they sent a notice that complied with all the conditions outlined in the mortgage. See Wells Fargo v. Samaroo.
Common Notice of Default Clause in a Mortgage
Lender shall give notice to Borrower before acceleration following Borrower’s breach of any covenant or agreement in Security Instrument. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration. As well as the right to assert the non-existence of a default or any other defense of foreclosure.
As like most mortgages, the sample notice of default clause above is from a mortgage that contains an acceleration clause. Acceleration refers to the bank demanding the full amount of the mortgage, not just the missed monthly payments. If the loan does not have an acceleration clause, the lender can only demand payment of the amounts past due. If there is no acceleration clause, the bank will be unable to demand the full loan amount.
Loan Modification with Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows homeowners to force the bank to accept a 5-year payment plan for the past due amount. The homeowner won’t have to pay the full mortgage in 5 years, only the amount that is past due. You don’t need to apply for a loan modification, you can force the bank into the 5-year payment plan.
Additionally, you can apply for a traditional loan modification as part of the Chapter 13 case. These modification applications are usually much different than when a homeowner applies. In Chapter 13 mortgage modifications, the U.S. Trustee is there to oversee the bank. Additionally, there can be a mediator appointed as well to help streamline the process. With much more oversight the bank is less likely to cause unnecessary delays and wrongfully deny modification requests.
How to Cancel a Foreclosure Sale in Florida
Immediately after a homeowner files bankruptcy, an automatic stay will go into effect. The stay requires all collection activity to stop immediately, including a scheduled foreclosure sale. Even if a bankruptcy is filed just one minute before the auction, the foreclosure will be stopped. The bank will not be able to resume a foreclosure until the stay has been lifted by the court.
How to Void a Foreclosure Sale in Florida
If the sale already occurred, you will need to void the foreclosure. When foreclosing on a home, the bank must follow the strict procedures under Florida foreclosure law. See FL Statute 45.031. If the lender did not follow proper procedures in noticing the sale, there may be grounds to cancel the sale. Additionally, even if the bank fully complied with all procedures, the sale may be overturned if there was a material irregularity in the sale process. See UM Publishing v. Home News Publishing. Regardless, it is still recommended to try and cancel the sale before it occurs. If you wait until after the sale, you may lose options you would have otherwise had to keep the home.
Consult a Foreclosure Defense Law Firm in Tampa, FL
If your mortgage company is threatening you with foreclosure, call us to speak with a Tampa foreclosure defense lawyer. Homeowners have rights, and we want to make sure our clients choose the best strategic plan for their family. Regardless, if you want to prevent foreclosure or walk away without being responsible for the debt, we can help. Our initial consultation is free and we offer flexible payment options to all of our clients. To speak with a foreclosure defense lawyer in Tampa call us today at (800) 990-7763.
Frequently Asked Questions
Often, after a foreclosure auction, there will not be enough funds from the sale to pay the loan in full. In cases such as these, the bank may sue the borrower for the remaining balance (deficiency). Additionally, the bank will usually add interest, late penalties, and legal fees onto the balance. However, a Chapter 7 or Chapter 13 may be able to stop the bank from suing you and discharge the debt in full.
A borrower can become eligible for a mortgage with Fannie Mae after only two years have passed since a bankruptcy discharge. Moreover, if a debtor makes 12 consecutive Chapter 13 payments they may be given permission to increase their debt. The increase in debt may even include obtaining a new mortgage.
In a Chapter 13 case, you can apply for a loan modification. You can also contact the bank directly to apply for a loan modification. It is not required to hire an attorney to modify your mortgage, but it may help to make the process easier and increase your chances of approval.
When a Chapter 7 or Chapter 13 case is filed, an automatic stay is instantly put into effect. The automatic stay is a federal law that stops all forms of collection activity, including foreclosure auctions already scheduled to occur.
Foreclosure cases in Florida are conducted without a jury. Instead of a jury, the judge will decide the fate of the case. Homeowners will have to persuade the judge to rule in their favor.
An example of unclean hands is tortuous interference by the bank. If there is evidence that establishes the bank tortuously interfered with enforcing the loan, the foreclosure should be denied.
Chapter 13 is a reorganization bankruptcy; it gives homeowners the opportunity to reorganize debt into a more manageable payment. In addition, it may provide up to five years to catch up on missed mortgage payments without being charged any additional interest.
Yes, homestead (primary residence) is a protected asset in both Chapter 13 and Chapter 7 bankruptcy. Therefore, you may not have to forfeit your home as a condition of the bankruptcy.