The Neil Garfield Radio Show LIVE at 6 pm Eastern: The Statute of Limitation

Thursdays LIVE! Click in to the The Neil Garfield Show

Or call in at (347) 850-1260, 6pm Eastern Thursdays

Q and A: Statute of Limitations

In this episode I will be discuss two states with drastically different interpretations of Statute of Limitations.  In Florida the Bartram decision ruled that every time a homeowner misses a payment, the statute resets.  In stark contrast is a New York case called Costa v. Deutsche Bank that clarified that statute of limitations will be enforced.

The Bartram decision created a bad precedent where Pretender lenders (or any other Plaintiff) can look to Bartram as support for taking a pot luck shot at getting a foreclosure judgment and sale, followed by eviction. If they fail they can try again.

The application of res judicata, statute of limitations and Rooker Feldman don’t apply to the banks.

This creates a double standard.  The ambidextrous treatment of homeowners versus the financial sector is exactly what the equal protection clause of the U.S. Constitution (and, the Florida Constitution) says cannot occur under guarantees of equal protection under the law.

In stark contrast to Bartram was a New York decision last week called Costa v. Deutsche Bank.

The court was asked whether the statute of limitations applies. It did and according to NY Law it was too late for the pretend lender to take action.

Get a consult! 202-838-6345 or https://www.vcita.com/v/lendinglies

THIS DISCUSSION IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE.

Contact Attorney Charles Marshall at:

Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101

Florida Supreme Court dismisses motion for rehearing in case concerning Florida Statute of Limitations

by K.K. MacKinstry

Last week a Manhattan court ruled in Costa v. Deutsche Bank that Deutsche Bank had failed to foreclose within the six year window and was therefore barred from collecting the debt.  In the same week, the Florida Supreme Court denied a motion for rehearing in Bartram v. U.S. Bank regarding the statute of limitations in foreclosure cases, therefore ruling that there is no statute of limitation on mortgage debt in Florida.

In the 2016 Bartram opinion the court ruled that if there is an involuntary dismissal of a foreclosure in a foreclosure case, a follow-up foreclosure action can be filed. This decision allows a lender to “correct” issues in litigation and refile until they can successfully foreclose on a homeowner and is likely unconstitutional.  Bartram ruled that a follow-up filing could be done to accelerate the debt involved in a mortgage foreclosure again and again.

The decision is an especially important one for lending institutions in Florida who fought tooth and nail for the decision.   Banks are allowed to file foreclosure even in circumstances when previous foreclosure actions have been attempted.  For exampl,e if a bank loses because they came to court with an unendorsed note, this decision tells the bank exactly what issue to cure before they file to foreclose again.  The banks have deep pockets and can file an unlimited number of lawsuits, while the homeowner will be forced to defend against foreclosure again and again until the bank can successfully foreclose.

This ruling affects all Floridians.  There is no other state in America where a bank receives a second, third, fourth, fifth or sixth time (or more) to successfully foreclose.  In theory, a homeowner could spend decades in litigation before the bank finally wears them down or bankrupts them while defending their home.

Statute of limitations are important in debt collection because people should not be pursued for decades of their lives- especially by a bank that can’t prove standing without forging and fabricating documents to “perfect” its illusion of being a holder.

This is likely a final decision and a terrible decision at that.  The Florida Supreme Court is no longer bothering to hide its bias for the banks.

A statute of limitations sets a time limit for initiating a legal claim. In the context of home foreclosure, the statute of limitations for written contracts (that is, mortgages) is usually the applicable statute or there may be a specific statute that addresses foreclosures, as is the case in New Jersey. If the foreclosure is initiated after the statute of limitations has expired, the lender’s claim is invalid and the lender is not entitled to foreclose.

Raising the Statute of Limitations as a Defense to Foreclosure

If the relevant time period for a foreclosure statute of limitations has run out, then this is an affirmative defense to foreclosure. The statute of limitations defense must be asserted by the homeowners to defeat the lender’s claim. If the homeowners do not assert the statute of limitations defense, then this defense is deemed waived. Therefore, it is extremely important for borrowers to be aware of the statute of limitations for foreclosures in their state because it could mean a quick end to a foreclosure if the time limit has expired.

On the other hand, if the statute of limitations runs out after the foreclosure process has already started, then the statute of limitations will not be a defense to the foreclosure. This means that even if a foreclosure takes years to complete and the time period under the statute of limitations covering foreclosures runs out while the foreclosure is in process, this will not prevent the foreclosure from going through. For instance, if the lender files a foreclosure lawsuit in January, 2017, but the statute of limitations runs out in June, 2017 while the foreclosure is pending, a statute of limitations defense is not available. In order to comply with a statute of limitations, the lender must simply begin the foreclosure before the time period expires.

However, in most states,  if the foreclosure is cancelled or dismissed (perhaps due to a procedural error by the lender), then the statute of limitations will still apply to any subsequent foreclosure. The lender could restart the foreclosure, but the restart would have to occur within the time period provided for in the statute of limitations. In the example above, if the foreclosure was dismissed in April, 2017, the lender would need to restart the action prior to June, 2017 to fall within the statute of limitations. It is important to note that if the borrower makes a payment in the interim, this will reset a statute of limitations in most cases.

How to Determine the Statute of Limitations in Your State

Each state has its own set of statutes of limitations. Generally, for a written contract, including mortgages, the statute of limitations will vary from three years to 15 years, though this differs from state to state with most falling within the three-to-six-year range. Most states have a statute of limitations of six years covering foreclosures.

The statute of limitations clock for a mortgage foreclosure usually starts when the default occurs–that is, when the borrowers stop making mortgage payments. It is usually calculated from the date of the last payment or from the due date of the first missed mortgage payment. Again, this depends on your state’s particular statute.  If you have the misfortune of living in Florida, every time you miss a payment, the statute of limitations begins all over again.

New York Judge finds foreclosure time-barred and cancels Mortgage: Costa v. Deutsche Bank

Read Costa v. Deutsche Bank here: Costa v. Deutsche Bank 2017 03 29

Unlike Florida where there is no statute of limitations and every missed mortgage payment resets the clock, New York enforces the statute of limitations for debt collection including mortgages.

A federal judge has granted two New Rochelle, New York homeowners’ request to have their mortgage canceled, ending their nearly 10-year battle to keep their house after defaulting on a $544,000 mortgage loan they took out in 2006.

The decision on Thursday by U.S. District Judge Katherine Polk Failla in Manhattan was a defeat for Deutsche Bank National Trust Co, trustee for a trust that owned the mortgage loan, which had argued that the couple was getting a free house on a technicality. Under New York state law, Vito and Marion Costa have a right to the property mortgage-free because a six-year statute of limitations on foreclosing on it had passed, Failla said.

More information to follow in the next week when we obtain the case specifics.

This is excellent news for New York homeowners and will hopefully be applied in other states.

 

 

Lawsuit Seeking Disgorgement Might Not Be Barred by Statute of limitations

What is apparent here is that the Courts are coming to terms with the possibility that those relying upon a statute of limitation as a defense to various claims might NOT be protected by an otherwise applicable statute of limitations.

The premise enunciated in a decision that seeks affirmation from the U.S. Supreme Court, is that disgorgement is not monetary damages or a penalty. It is an equitable finding that a party has been unjustly enriched and therefore has no present right to hold onto ill-gotten gains. The decision could result in elimination of the statute of limitations as a defense for the banks.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-
This is a potential thrust to the heart of the bank strategy to create a vacuum, fill it with illusory claims on behalf of complete strangers to the transactions, and walk away with a free house after submitting an utterly fraudulent “credit bid.”.
The SEC is asking the Supreme Court to affirm the Tenth Circuit’s decision in SEC v. Kokesh, which held that “disgorgement is not a penalty under [28 U.S.C.] § 2462 because it is remedial” and, therefore, is not subject to the five-year federal statute of limitations in § 2462. see https://www.findknowdo.com/news/01/04/2017/sec-urges-supreme-court-affirm-disgorgement-not-subject-statute-limitations?utm_source=Mondaq&utm_medium=syndication&utm_campaign=View-Original
A favorable SCOTUS decision would have the effect of recasting the suits for damages as instead suits for disgorgement because neither the servicers nor anyone they represent had any right to collect or enforce the putative loan by an undisclosed and probably unknown creditor. This would have the same ultimate effect as TILA rescission which the courts have steadfastly resisted despite the clear language of 15 USC §1635 and SCOTUS in Jesinoski v Countrywide.

Bartram: The Missing Links

Why did the Plaintiff lose in its “standard foreclosure”?

The decision on acceleration is essentially this: If the banks do it, it doesn’t count.

While Bartram didn’t turn out the way we want, there are two paths that nobody is talking about — logistics and res judicata.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-
The Florida Supreme Court decision in Bartram reinforces the absurd — that after losing in trial court, the pretender lender can sue over and over again for “new defaults.” The court has re-written the alleged “loan contract” to mean that a loss in court means that their acceleration of the entire loan becomes de-accelerated, meaning that acceleration is merely an option hanging in the wind that doesn’t really mean anything. The decision might have consequences when the same logic is applied to other actions taken pursuant to contract. The decision on acceleration is essentially this: If the banks do it, it doesn’t count.
 *
But two things remain outstanding, one of which the court mentioned in its opinion. Why did the Plaintiff lose in its “standard foreclosure”? The issues that were litigated as to the money and/or documentary trail have been litigated and are subject to res judicata. The Plaintiff, if it is the same Plaintiff, is barred from relitigating them.
 *
If Plaintiff failed to prove ownership of the loan and was using fabricated void assignments and endorsements, the lifting of the statute of limitations should not help them in attempting to bring future litigation. Many other such issues were undoubtedly raised in the original case. The Plaintiff would be forced to argue that while the issues were raised, they were not actually litigated and a judgment was not entered based upon those issues.
 *
The Florida Supremes took away the Statute of Limitations, up to a point (see below) but gave us the right remedy — res judicata. Even if a new Plaintiff appears, the questions remain as to how the alleged loan papers got to them remain open, as well as whether the paper represented any actual loan contract absent an actual lender.
 *
And then there are the logistics that I don’t think were considered in its decision. According to the Bartram decision the act of acceleration vanishes if the Plaintiff loses. The statute of limitations does apply for past due payments that are more than 5 years old. That means, starting with the date of the lawsuit (not the demand), you count back 5 years and all payments due before that are barred by the SOL.
 *
So if a Plaintiff loses the foreclosure, it can bring the action again based upon missed payments that were due within the SOL period. Of course if the Defendant won because the Plaintiff had no right or authority to collect on the DEBT, the action should be barred by res judicata. But putting that issue aside, there are other problems.
 *
“Servicing” of a designated “loan account” is actually done by multiple IT platforms. The one used for foreclosure comes out of LPS/Black Knight in Jacksonville, Florida. This is the entity that  fabricates documents and business records for foreclosure. It is not the the actual system used for servicing that deals in reality with the alleged borrower and accepts payments and posts them. It is incomplete. This system intentionally does not have all the documents and all the “business records” relating to the loan. For example there is no document or report that shows who was and probably still is receiving payments as though the loan were performing perfectly.
 *
The decision on when and if to foreclose is always performed by LPS/Black Knight in order to prevent multiple servicers, trustees, banks and “lenders” from suing on the same loan, which has happened in the past. LPS assigns the loan to a specific party who is then named by Plaintiff. And LPS creates all the fabricated paperwork to make it look like that party is the right Plaintiff and that the business records produced by LPS can be presented as the business records of the party whose name was rented for the purpose of foreclosure. It is LPS documents that are produced in court, not the records of the named Plaintiff.
 *
So here is a sample simple scenario that will illustrate the logistical problem created by the Florida Supremes: LPS issues a notice of default letter naming the claimant as XYZ, as trustee for XYZ series 2006-19B Pass Through Trust Certificates. Previously XYZ lost the foreclosure action by failing to prove that it had any relationship with the loan. The Notice of Default and right to reinstate issued by LPS on behalf of XYZ must be for payment that was within the SOL. This action of course waives the payments, fees etc that are barred by the SOL. It also assumes that the date of the letter AND THE LAWSUIT will be within the SOL period. So for example, if the last payment was on December 1, 2006 and the letter refers to a missed payment starting with January 1, 2012, the letter is proper. But if suit is not commenced until January 2, 2017, the letter is defective and the lawsuit is barred by the SOL. Further the doctrine of res judicata bars any cause of action that was litigated previously.
 *
All of this leads to a court determination of what issues were previously raised, when they were raised and whether the Final Judgment in favor of the homeowner means anything.

Renewing the Statute of Limitations Accidentally: Modifications and Payments

It seems apparent to me that the banks are sidestepping the statute of limitations issue by getting homeowners to renew payments after the statute has run. Given the confusion in Florida courts it is difficult to determine with certainty how the statute will be applied. But the execution of a modification agreement would, in my opinion, almost certainly waive the statute of limitations, particularly since it refers to the part of the alleged debt that was previously barred by the statute. It would also, in my opinion, reaffirm a discharged debt in bankruptcy.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-

There are several reasons why servicers are offering modifications and several other reasons why they don’t.

My perception is that the main reason for offering the modification is that the servicer is converting the ownership of the debt from the investors to the servicer and by reference to an empty trust with no assets. HAMP modifications are virtually nonexistent statistically. “In house” modifications are what they are offering; that is code for “it’s our loan now.” That scenario leaves the servicer with rights to the debt that didn’t legally exist before — but subject to separate, private agreements with the Master Servicer who is willing to pay the servicer for their apparent “services” but not willing to share in the windfall profits made by a party who now owns a loan in which they had no financial interest before the execution of the modification.

This is a good alternative to stealing from the investors by way of false claims for “Servicer advances” where the money, like all other deals in the false securitization chain, comes from “investments” that the investors thought they were making into individual trusts. And by the way this part explains why they don’t offer modifications — the Master Servicer can only apply is false claim for “recovery” of servicer advances when the property is liquidated.

A second reason for applying pressure to a homeowner to sign more papers they don’t understand is to get the homeowner to (1) agree or reaffirm the debt, thus restarting the statute of limitations from where it had originally left off and (2) to get the homeowner to make at least some payments, thus reaffirming the debt for purposes of both bankruptcy and the statute of limitations. This explains why they take three “trial” payments and then deny the “permanent” modification after they already announced the homeowner was “approved.”

In this sense there is no underwriting done. There is only an evaluation of how the Master Servicer can make the most money. This also is an example of why I say that the interests of servicers are adverse to the investors who have already been screwed. Forced sale doesn’t just artificially limit the recovery, it virtually eliminates recovery for the investor while the servicers take the money and run.

And a third reason for coercing the homeowner into a modification agreement that is guaranteed to fail is that the homeowner has either waived defenses and claims or has created the conditions where waiver could be asserted.

Schedule A Consult Now!

Will Florida’s Supreme Court protect the Homeowner or Bank?

Florida Supreme Court to rule on the Five Year Statute of Limitations

by William Hudson

In Florida, a five-year statute of limitations rule may prevent banks from being able to foreclose despite ongoing litigation.  As a result of this rule, mortgage servicers are actively attempting to preserve their right to foreclose pending the Florida Supreme Court Decision.  The Florida Supreme Court is reviewing the case, U.S. Bank v. Bartram, and will decide if servicers can restart foreclosures after five years, or if they will be barred by the Florida statute of limitations. The key question in Bartram is: When does the clock start ticking to sue to foreclose on a mortgage?  Mortgage servicers are prepared that they may not be able to collect on accounts where the homeowner has not made a payment for over five years and will be barred from pursuing foreclosure or other debt collection activity.

The Supreme Court will also determine if servicers can restart the clock.  If they are prevented from pursuing the outstanding debt, it is possible that banks will start making earnest attempts to modify loans by lowering the monthly payment or attempt to get the borrower to short-sale the property.  However, the real issue is that these homeowners will be able to live mortgage free in their homes indefinitely.  The banks had an opportunity to modify mortgages in good faith and failed to do so.  If the Florida Supreme Court upholds the five-year statute of limitations on debt collection it is probable that other states will institute the same consumer protection.

Moody’s Investor Service stated that, “The court ruling will have only a minor impact on overall RMBS performance because the number of previously dismissed foreclosure actions that are seriously delinquent or in foreclosure is minimal,” the report said. “Only approximately 3% of private label loans backed by properties in Florida had a prior foreclosure dismissed and are greater than 60 days delinquent or in foreclosure.”  Moody’s brought up the fact that only 3% of private label loans had a prior foreclosure dismissed, when the real question should be how many GSE (Government Sponsored Enterprise) loans guaranteed by Fannie Mae or Freddie Mac are near or beyond the five year statute of limitations?  The GSE loans have a higher portion of subprime loans on their books.  As usual, we hear only part of the true story.

Does the clock start ticking with the bank’s acceleration and pursuit of foreclosure, and end after five years, as the law had been in Florida prior to the Fifth DCA’s Bartram decision? In almost every other state in the country that has a mortgage foreclosure statute of limitations the clock starts ticking when the loan is accelerated leaving the bank only five years to take action.  The Bantram case will clarify if a lender can restart the clock by simply declaring a new default date- even if the statute of limitations is past the lenders original acceleration date of the loan.

Statute of limitation timelines are generally straightforward. In personal injury or fraud the right to sue expires after four years in Florida (check your state’s statutes). In written contracts, the law in Florida states the statute of limitations is five years and this includes the collection of rental payments and mortgages.  Every plaintiff knows if you fail to take action, you are out of luck if you fail to file a claim prior to the statute of limitations running out.  However, in the eyes of the Florida judiciary,  the law is not the law when it comes to mortgage claims.  As we have seen in foreclosure litigation, mortgage forgery is labeled “robosigning”, while a bank’s criminal trespass into an occupied home is called a “civil” matter.  When it comes to matters of foreclosure there is a tendency to make presumptions in favor of the bank- let’s hope the Supreme Court rules according to law.

According to Florida law, when the borrower defaults, the lender accelerates the debt and then files to foreclose.  If the Supreme Court rules for the lenders, Florida would be the only state permitting a judicial exception to the statute of limitations for mortgages. It is inevitable that this decision would unleash an explosion of litigation against homeowners in default while also inspiring banks to abandon their offers to modify mortgage loans.  The end result would be chaos for the Florida housing market.

The Bartram case is from the resulting fallout from the fraudulent robosigning (forgery) practices of the Law Offices of David J. Stern that began May 16, 2006, when U.S. Bank filed a mortgage foreclosure action against Lewis Bartram of Ponte Vedra Beach through their counsel David J. Stern. On May 4, 2011, nearly five years after the original suit, U.S. Bank missed a conference and the court dismissed the foreclosure.

In March 2011 Bartram’s ex-wife instituted a series of cross-claims against U.S. Bank and Bartram.  Eventually in July 2012, the trial court entered summary judgment in Bartram’s favor because the five-year statute of limitations had expired. The bank appealed and in 2014 the Fifth District ruled in favor of the bank concluding that a new five-year clock starts to tick with each mortgage payment that is missed. However, the Fifth District ignored the fact that there are no more mortgage payments due once a lender elects to accelerate the mortgage, as was the case in Bartram.

Acceleration is the key to understanding how a mortgage foreclosure action is supposed to work.  The Fifth District showed their bias in favor of the banks and should have ruled in favor of Bartram.  Standard mortgage contracts typically carry an acceleration clause that gives the lender two options in the event that a borrower defaults: 1) sue for missed payments or 2) call the entire loan due immediately.  As we know, the banks prefer to accelerate the debt so that they can auction the property. However, acceleration requires that the lender has five years from the debt acceleration to take legal action.

The Florida Fifth District effectively ruled in Bartram that a lender could restart the clock any time they wanted.  Interestingly, the mortgage contract doesn’t permit such an action by a lender.  It is noteworthy that apparently res judicata does not apply and that the Fifth District found that each missed payment creates a new cause of action, thereby permitting a lender to sue again and again and literally make a homeowner’s life a living hell- indefinitely if desired.

The Fifth District’s erroneous interpretation of the mortgage foreclosure statute of limitations is yet another attempt to legislate from the bench. It is the judge’s job to enforce the rules of the legislature.  If the Supreme Court upholds the Fifth District’s ruling, the Florida legislature will need to remove the mortgage foreclosure statute of limitation from the Florida Statutes because it will no longer be relevant.  Maybe they could do away with all statutes that protect homeowners while they are at it- because apparently that is what the judges’ would do if they weren’t constrained by an annoying legislative branch.

 

%d bloggers like this: