FYI: CFPB Updates Its Supervision and Examination Manual as to TILA and RESPA, Issues "'Know Before You Owe' Mortgage Shopping Toolkit"

The Consumer Financial Protection Bureau (“CFPB”) recently released two updates to its Supervision and Examination Manual:

 

(1.)  “TILA Procedures – TILA RESPA Integrated Disclosures (applicable for examinations after the August 2015 effective date), and Higher-Priced Mortgage Loan Appraisals (January 2014), Escrow Accounts (January 2014), and Mortgage Servicing Requirements (January 2014)”

 

A copy is available at:   http://files.consumerfinance.gov/f/201503_cfpb_truth-in-lending-act.pdf

 

(2.)  “RESPA Procedures – TILA RESPA Integrated Disclosures (applicable for examinations after the August 2015 effective date), and Mortgage Servicing Requirements (January 2014)”

 

A copy is available at:  http://files.consumerfinance.gov/f/201503_cfpb_regulation-x-real-estate-settlement-procedures-act.pdf

 

 

The CFPB also recently released its new “’Know Before You Owe’ Mortgage Shopping Toolkit.”  The toolkit will replace the current Settlement Costs Booklet. 

 

A copy of the toolkit is available at:  http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf

 

According to the CFPB, “[t]he updated toolkit is designed to be used in connection with the new Loan Estimate and Closing Disclosure forms that will be effective on August 1, 2015. Creditors must provide the toolkit to mortgage applicants as a part of the application process, and other industry participants, including real estate professionals, are encouraged to provide it to potential homebuyers.”

 

The CFPB also noted that the electronic version of the toolkit contains “fillable text fields and interactive check boxes so the consumer can save and print their progress as they work through the toolkit. The electronic version meets federal accessibility standards to ensure that all consumers, including those with disabilities, can use the resource. The CFPB encourages lenders to keep this level of accessibility when delivering the PDF to consumers.”

 

The CFPB also noted that a Spanish language version will also be made available later in 2015.

 

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@mwbllp.com

 

Admitted to practice law in Illinois

 

 

 

 

 

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FYI: Fla App Ct (4th DCA) Issues Four Rulings Against Various Plaintiff Mortgagees, All on Issues of Standing to Foreclose

The District Court of Appeal of the State of Florida, Fourth District, recently issued four opinions on the same day addressing the issue of standing to sue in mortgage foreclosure actions.  In every case, the Court held that the plaintiff mortgagee failed to present sufficient evidence of standing.

 

In the first case, the assignment of mortgage was executed after the foreclosure was filed, and the plaintiff mortgagee did not present evidence that it became the holder of the note prior to the filing of the complaint.  Accordingly, the Fourth District reversed the judgment of foreclosure entered in favor of the plaintiff mortgagee, holding that the plaintiff mortgagee did not provide it had standing when the complaint was filed.

 

A copy of the opinion is available at:  http://www.4dca.org/opinions/March%202015/03-25-15/4D13-4645.op.pdf

 

The plaintiff filed its foreclosure action in February of 2010, alleging that it was the present holder of the note and mortgage.  At trial, plaintiff introduced the original note into evidence. The note was endorsed in blank by the bank that was the original lender. The plaintiff also introduced in evidence the assignment of the mortgage to the plaintiff. Unfortunately, however, the assignment of mortgage was signed in March of 2010, after the foreclosure action was filed, but provided for an effective back-date of January of 2010.

 

The trial court ruled in favor of the plaintiff and entered a final judgment of foreclosure, from which the borrowers appealed.

 

On appeal, the Fourth District reiterated that its prior standing jurisprudence provides that standing to foreclose may be established by either an assignment or an equitable transfer of the mortgage prior to the filing of the complaint. However, the Court reiterated, the assignment or equitable transfer must pre-date the filing of the foreclosure action, and a party that does not have standing when the complaint is filed cannot retroactively remedy this defect.

 

Even though the note introduced at trial showed the plaintiff had standing at that point in time because plaintiff was the bearer under a “blank endorsement” under section 673.2051 of Florida’s version of the Uniform Commercial Code, because the blank endorsement was undated, the Appellate Court held that the plaintiff mortgagee did not prove it was the holder when the complaint was filed.

 

Before reversing the final judgment for failure to establish standing, the Appellate Court took pains to point out that it recognized that even if an assignment is executed after the complaint is filed, standing can be proven by evidence that equitable title was transferred prior to the filing date, but that no such evidence was presented at trial.

 

In the second case, the Court rejected another attempt to remedy retroactively a standing problem caused by a blank and undated indorsement on the promissory note.

 

A copy of the opinion is available at:  http://www.4dca.org/opinions/March%202015/03-25-15/4D13-3799.op.pdf

 

The plaintiff mortgagee attached copies of the mortgage and promissory note bearing an undated, blank endorsement from the original lender.

 

Prior to trial, the plaintiff filed the original note with the court, but the note differed from the copy attached to the complaint in that it showed another undated endorsement -- from the original lender to another bank, not the plaintiff. The plaintiff also filed an assignment of mortgage from the original lender, dated one month after the lawsuit was filed.

 

At trial, the lower court found that the plaintiff had standing to sue and entered judgment in the plaintiff’s favor.

 

On appeal, the Fourth District first reiterated that standing must exist at the time the foreclosure suit is filed. This burden, the Court held, may be satisfied by submitting “the note bearing a special indorsement in favor of the plaintiff, an assignment from payee to the plaintiff or an affidavit of ownership proving its status as holder of the note.”

 

The Court further held that, when standing is based on an undated indorsement on the note, the plaintiff mortgagee must show that the indorsement occurred before the complaint was filed through record evidence such as testimony of a person with knowledge, proving that it had the right to enforce the note on the date the complaint was filed.

 

The plaintiff’s trial witness was unable to say with certainty whether the copy of the note attached to the complaint was the most recent version, nor could he definitely show that the plaintiff had possession of the note prior to the filing of the complaint. For these reasons, the Appellate Court held that the plaintiff could not prove that it had standing to foreclose the mortgage “by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint.”

 

The Court also held that the plaintiff mortgagee failed to present evidence proving that it actually had equitable title to the note and mortgage before the complaint was filed.

 

Because neither the record evidence nor testimony at trial clarified when the plaintiff came into title, the Court held there was no evidence proving the assignment took place before the filing of the complaint, and, therefore, the trial court’s finding of standing was not supported by competent substantial evidence. Accordingly, the Fourth District reversed the final judgment of foreclosure and remanded for entry of judgment in the borrowers’ favor.

 

The third case resulted in another victory for borrowers due to the plaintiff mortgagee’s failure to prove standing when the complaint was filed, with the Court reversing the final judgment of foreclosure and remanding for entry an order involuntarily dismissing the case.

 

A copy of the opinion is available at:  http://www.4dca.org/opinions/March%202015/03-25-15/4D13-4040.op.pdf

 

The plaintiff mortgagee sued to foreclose in February of 2009, attaching a copy of the mortgage to the complaint. Shortly thereafter, it filed a copy of the note, which was devoid of either blank or special endorsements.

 

At trial, the plaintiff mortgagee introduced into evidence the original note, two assignments, and part of a pooling and servicing agreement (“PSA”). However, the second assignment, to the plaintiff mortgagee, was signed more than six months after the foreclosure was filed. The plaintiff mortgagee’s witness also testified that, based on a “cut-off date” for the trust of April 1, 2006 reflected in the excerpt from the pooling and servicing agreement, the borrower’s loan was transferred into the trust prior to that date.

 

The trial found the plaintiff mortgagee had standing and entered final judgment in the bank’s favor.

 

On appeal, the Fourth District reversed and remanded for entry of an order involuntarily dismissing the action, holding that the plaintiff mortgagee failed to provide sufficient evidence that it had standing on the date it filed its foreclosure action.

 

The Court first held that the plaintiff mortgagee did not prove standing through the second assignment because it was executed after the foreclosure complaint was filed.

 

In addition, the Court held that the original note introduced at trial did not prove that the plaintiff mortgagee had standing to foreclose because the special indorsements on the note were undated and there was no testimony that these indorsements were made part of the note before the foreclosure action was filed.

 

Even more problematic was the fact that the special indorsement was in favor of a non-party bank, not the plaintiff mortgagee, because under section 673.2051(1) of Florida’s version of the Uniform Commercial Code, when a note contains a special indorsement, “the instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.”

 

According to the Appellate Court, the Pooling and Servicing Agreement (PSA) introduced into evidence at trial also failed to prove standing to foreclose because it did not shed any light on what role the assignee non-party bank under the second undated special endorsement played, whether as servicer of otherwise. Thus, leaving aside the fact that it was undated, the Court held that the second special indorsement implied that the assignee non-party bank was the proper party to bring the foreclosure action, not the plaintiff mortgagee.

 

Finally, the Court found that there was no competent evidence that the note and mortgage had been equitably transferred to the plaintiff mortgagee. According to the Appellate Court, it was unclear both who transferred the note and mortgage into the trust under the PSA before the complaint was filed and that that party intended to transfer its interest to the plaintiff bank. The Court noted that the only evidence of intent to transfer an interest to the plaintiff was the second assignment, which, as previously noted, was signed after the complaint was filed.

 

Because the plaintiff failed to provide sufficient evidence that it had standing to sue when it filed its foreclosure complaint, the Fourth District reversed and remanded. However, instead of remanding for further proceedings, it did so with instructions to enter an order involuntarily dismissing the case based on the common law rule that “appellate courts do not generally provide parties with an opportunity to retry their case upon a failure of proof.”

 

In the fourth case, the Fourth District once again held that the evidence presented was insufficient to prove the plaintiff mortgagee had standing for foreclose, again reversing the foreclosure judgment and directing the trial court to enter judgment in the borrower’s favor. 

 

A copy of the opinion is available at:  http://www.4dca.org/opinions/March%202015/03-25-15/4D13-3514.op.pdf

 

The borrower signed a note and mortgage in 2006. The servicing rights to the loan were transferred in 2009 to the plaintiff servicer, which filed suit after the borrower defaulted, alleging that it had the right to enforce the note and mortgage.

 

The note attached to the complaint was stamped “original” and did not contain any endorsements or allonges. Also attached was an assignment of mortgage from the Federal Deposit Insurance Corporation (“FDIC”) as receiver for a defunct bank, to MERS, as nominee for the plaintiff servicer.

 

Months after the complaint was filed, the servicer filed what it claims was the “original” note, along with an undated, blank allonge payable to the bearer. There was no indication however that the allonge had been affixed to the note.

 

Shortly before trial, the plaintiff servicer moved to substitute a new servicer as the plaintiff, which the trial court granted.

 

At trial, a litigation manager for the new servicer testified, but he was not familiar with the computer systems that the prior servicers used for the loan, how information was input into those systems or whether it was done correctly, or whether the prior servicers’ records were accurate, only that they were provided to the current servicer.

 

The litigation manager also testified that the plaintiff was both the servicer and holder of the note, but he had not seen the purchase agreement and did not have a copy. His belief that plaintiff held the note was based on a “screen shot” of the plaintiff’s computer system with loan information, which was not produced at trial.

 

Finally, the plaintiff’s trial witness did not know when the allonge with the blank endorsement was signed, whether the signature was a “wet ink” signature or a stamp, or whether the allonge was affixed to the note before filing with the court.

 

The borrower moved for involuntary dismissal, arguing that the plaintiff servicer failed to prove standing because it had now shown that it had the right to enforce the note and mortgage when the complaint was filed, but the trial court denied the motion and entered final judgment of foreclosure in favor of the plaintiff servicer.

On appeal, the Fourth District found that because the plaintiff servicer had presented no competent evidence that the prior servicer held the note when suit was filed or that it was entitled to enforce the note as servicer, it failed to prove standing to foreclose.

 

The Court held there was no proof of transfer of the note and mortgage from the original lender to the FDIC as receiver. Next, the Court held there was no proof that the undated allonge, which supposedly supplied the connection, was actually attached to the note and the last servicer offered no proof of when the allonge was signed. Finally, the Court held there was no proof of what rights the last servicer acquired from its predecessor that filed the complaint.

 

The Court also rejected the plaintiff servicer’s argument that its predecessor was a “nonholder in possession” because that party, as opposed to a holder in due course, cannot rely on possession alone, but “must account for possession of the unendorsed instrument by proving the transaction though which the transferee acquired it. If there are multiple transfers, the transferee must prove each prior transfer. Once the transferee establishes a successful transfer from a holder, he or she acquires the enforcement rights of that holder.”

 

Because the plaintiff did not offer any evidence of the prior transfers of the note, the Court held this gap made it impossible to prove that the plaintiff servicer was a nonholder in possession and the evidence presented according to the Court was “woefully inadequate to prove standing to foreclose.”    

 

 

 

 

 

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@mwbllp.com

 

Admitted to practice law in Illinois

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

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FYI: 6th Cir Holds Mortgagee Did Not Breach Settlement w/ Borrower By Disclosing Cancelled Indebtedness to IRS

The U.S. Court of Appeals for the Sixth Circuit recently reversed the entry of summary judgment in favor of a mortgagor in a breach of contract claim where the plain language of a settlement agreement did not prohibit a lender from reporting its transaction with the Internal Revenue Service (IRS).

 

Here, the mortgagor paid the taxes relating to the cancelled indebtedness, and the Court did not address the propriety of a hypothetical borrower’s attempt to prevent reporting to the IRS altogether. 

 

A copy of the opinion is available at:  Link to Opinion

 

On November 14, 2015, the mortgagor (“Mortgagor”) obtained a loan from the mortgagee’s (“Lender”) predecessor in interest.  Mortgagor eventually defaulted on the loan, and Lender initiated foreclosure proceedings in the state court.

 

On June 1, 2010, the state court entered judgment in the amount of $524,478.87 (the “Judgment”), and ordered the sheriff to sell the property.  Lender assigned its right to bid at the sheriff’s sale to a bidder (“Bidder”).  Bidder purchased the property at the sheriff’s sale for $280,000.  After accounting for fees and costs, the state court credited Mortgagor $269,557.90 toward the balance that he owed to Lender on the judgment.

 

On June 1, 2011, Mortgagor filed a motion in the state court to set aside the Judgment on the ground that Lender had failed to mitigate its damages.  Mortgagor asserted that, prior to the sheriff’s sale, Lender had received two offers to purchase the property for $435,000 and $372,000, respectively.  Mortgagor argued that: (1) Lender had unreasonably failed to pursue those offers; and (2) because the winning bid at the sheriff’s sale was substantially less than the other offers Lender had received, the credit that the state court applied toward the balance Mortgagor owed on the Judgment was too low.

 

Mortgagor and Lender ultimately agreed to resolve Mortgagor’s motion to set aside the Judgment.  As part of the resolution, Mortgagor agreed to pay Lender $5,000 and Lender agreed to negate the portion of the Judgment reflecting amounts owed by Mortgagor (the “Settlement Order”).

 

The parties memorialized their agreement by stipulating to the entry of the Settlement Order, which contained the following terms:

 

1) For good and valuable consideration, the receipt of which Lender acknowledges, the deficiency judgment as to Mortgagor has been resolved and settled among the parties in total; and

2) Any such deficiency judgment as to Mortgagor is hereby released and/or vacated.

 

Following the entry of the Settlement Order, Lender issued a 1099 (likely a 1099-C) to both Mortgagor and the IRS.  On that form, Lender indicated that it had cancelled $159,478.87 in debt owed by Mortgagor.  Mortgagor included that amount in the gross income he reported in his 2011 federal tax return.  Mortgagor claimed that the additional $159.478.87 reported income increased his 2011 tax liability by $68,660.

 

After paying his 2011 federal taxes, Mortgagor filed a breach of contract action against Lender in the state court.  Lender removed the action to federal court.  Both parties moved for summary judgment.

 

The district court granted summary judgment in favor of Mortgagor.  The district court reasoned that resolution of the claim necessitated evaluation of income tax law and terms of art utilized in that area of law, particularly the contested liability doctrine.  See, e.g., Zarin v. Comm’r of Internal Revenue, 916 F.2d 110, 115 (3d Cir. 1990) (“Under the contested liability doctrine, if a tax payer, in good faith, disputed the amount of a debt, a subsequent settlement of the dispute would be treated as the amount of debt cognizable for tax purposes.  The excess of the original debt over the amount determine to have been due is disregarded [in calculating gross income].”). 

 

The district court reasoned that because Mortgagor contested the amount of the debt that was negated by the Settlement Order, the order did not result in “income” to Mortgagor.  Accordingly, the district court held that Lender breached the Settlement Order by issuing the 1099.

 

On appeal, the Sixth Circuit looked to Ohio contract law to determine the parties’ obligations under the Settlement Order.  The Sixth Circuit noted that where “the parties following negotiations make mutual promises which thereafter integrated into an unambiguous contract duly executed by them, courts will not give the contract a construction other than which the plain language of the contract provides.” See Aultman Hosp. Ass’n v. Cmty. Mut. Ins. Co., f/k/a Hosp. Care Corp., 544 N.E.2d 920, 924 (Ohio 1989).  A court may not “rewrite the parties’ contract” to give it a meaning other than and/or beyond that expressed in its unambiguous language.” Id.

 

The Sixth Circuit noted that the Settlement Order consisted in relevant part of two short, clear sentences.  According to the Court, Lender only: (1) acknowledged that the deficiency judgment had been settled; and (2) it agreed that the deficiency judgment was “resolved and/or vacated”  -- Lender had not made any effort to resuscitate Mortgagor’s debt, it had not taken any action that indicated to anyone or any entity that Mortgagor remained indebted to Lender, and Lender had not made any effort to collect any debt from Mortgagor.  Thus, the Court held, the Lender had not breached the Settlement Order.

 

The Sixth Circuit concluded that the Settlement Order said nothing about how each party would treat the transaction memorialized in the Settlement Order for tax purposes nor about how each party would report the transaction the IRS.  Given the complete absence of any reference to tax reporting issues, the Court held, the Settlement Order could not be read as precluding Lender from issuing the 1099.  Indeed, the Sixth Circuit noted, a contrary ruling would violate Ohio’s fundamental rules of contract interpretation. 

 

The Sixth Circuit likened the case to a South Carolina case in which the District of South Carolina granted summary judgment in favor of an insurance company because a similar agreement did not prohibit the insurance company from filing a Form 1099-MISC.  See Ward v. Am Family Life Ins. Co. of Columbus, 444. F. Supp.2d 540 (D. S.C. 2006).

 

Next, the Court noted that the absence of any reference to tax treatment/reporting in the Settlement Order was significant because it is common practice for parties to address tax matters in settlement agreements when the parties have, in fact, agreed upon them.  Consideration of tax law, however, would be appropriate where the language of the parties’ settlement agreement makes those laws relevant.  See Duse v. Int’l Bus. Mach. Corp. 252, F.3d 151 (2d Cir. 2001) (consideration of tax law appropriate where settlement agreement provided that the settlement payment was “not subject to withholding taxes” and where defendant agreed not to disclose the amount of the settlement “except as may be required by law or business necessity”).  As the Settlement Order contained no language tying Lender’s authority to report the settlement payment to federal tax law, the Court held there was no basis to resolve the contract claim by reference to federal tax law.

 

Accordingly, the Sixth Circuit reversed the entry of summary judgment in favor of Mortgagor and remanded for entry of judgment in favor of Lender.

 

 

 

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@mwbllp.com

 

Admitted to practice law in Illinois

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

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FYI: Fla App Ct (4th DCA) Holds Subordinate Lienholder's Claim to Foreclosure Sale Surplus Time-Barred, Despite Lack of Actual Notice

The District Court of Appeals of the State of Florida, Fourth District, held that a subordinate lienholder failed to show good cause for entitlement to the surplus from a foreclosure sale, even though the subordinate lienholder asserted it was never provided the final judgment or certificate of disbursements, and therefore did not have actual notice of the surplus until it was too late.

 

The Appellate Court rejected the subordinate lienholder’s arguments that Florida Statutes § 45.031 and § 45.032 cannot be interpreted as imposing a sixty-day bar for subordinate lienholders’ claims to the surplus, and held that plain language of the statutes: (i) clearly warn that a subordinate lienholder will not be entitled to any surplus if it fails to file a timely claim, and; (ii) establishes a rebuttable legal presumption that the owner is entitled to any surplus after payment of subordinate lienholders who have timely filed a claim.  Fla. Stat. § 45.031(1)(a); § 45.032(2).

 

A copy of the opinion is available at: http://www.4dca.org/opinions/March%202015/03-25-15/4D13-4815.op.pdf

 

The primary lienholder filed suit to foreclose its mortgage on the subject property.  After default was entered against the borrowers and subordinate lienholder, the trial court entered a final judgment of foreclosure in favor of the primary lienholder.  The judgment set a date for the foreclosure sale, and provided the requisite language notifying subordinate lienholders that any claim to surplus must be made within 60 days after the sale pursuant to Fla. Stat. § 45.031(1)(a). 

 

After the sale was rescheduled, the clerk subsequently published a re-notice of sale, which notified any persons claiming interests to file a claim within sixty days after the sale pursuant to Fla. Stat. § 45.031(2)(f). 

 

A third party purchased the property at the foreclosure sale in an amount which exceeded the final judgment.  The certificate of disbursements provided that any person claiming right to funds remaining after the sale must file a claim no later than 60 days after the sale, and that after 60 days, only the owner of record as of the date of the recording of the is pendens may claim the surplus.  See Fla. Stat. § 45.031(7)(b).

 

After more than sixty days passed after the sale, the borrowers filed a claim to the surplus.  The subordinate lienholder subsequently filed its claim to surplus, acknowledging that it was untimely, but claiming that it was never provided the final judgment or certificate of disbursements, and thus, never had proper notice or opportunity to timely file a claim.  The subordinate lienholder argued that the borrowers “should not be permitted an inequitable windfall simply because [it] missed the 60-day deadline by a few weeks.”

 

The trial court entered a written order directing the clerk to disburse the remaining surplus in favor of the subordinate lienholder, finding “good cause for [its] claim filed after the sixty (60) day period.”  This appeal followed.

 

The borrowers argued that the subordinate lienholder’s should not be entitled to surplus because: (i) its claim was untimely under the applicable Florida Statutes and that no extension of time is permitted; (ii) its lack of notice was irrelevant because the recorded final judgment and re-notice of sale provided constructive notice of its rights and obligation to file a timely claim, and; (iii) the subordinate lienholder’s appeal to equity lacked merit because “equity follows the law and cannot be used to eliminate its established rules.” Davis v. Starling, 799 So. 2d 373, 378 (Fla. 4th DCA 2001).

 

The subordinate lienholder countered the borrowers’ arguments by asserting that: (i) sections 45.031 and 45.032 cannot be interpreted as imposing a sixty-day bar for subordinate lienholders’ claims to the surplus, pursuant to DeMario v. Franklin Mortgage & Investment Co., 648 So. 2d 210 (Fla. 4th DCA 1994); (2) the subordinate lienholder’s untimely claim should be excused because it did not receive a copy of the final judgment or certificate of disbursements; and (3) the homeowners’ claim did not acknowledge that the subordinate lienholder may have a claim to the surplus, and if the homeowners’ claim had acknowledged such a claim, then the court would have held an evidentiary hearing on the entitlement to the surplus. See § 45.032(3)(b), Fla. Stat. (2012).

 

The Appellate Court rejected the subordinate lienholder’s argument under DeMario, because unlike the rule at issue in DeMario (Fla. Admin. Code Rule 12D-13.065 governing surplus funds from a tax deed sale) conflicted with sections 45.031 and 45.032.  The Appellate Court instead held that the plain language of statutory sections 45.031(1)(a) and 45.031(7)(b) require the clerk to pay the surplus to only those claims filed within sixty days of the sale, and are not in conflict with any other rule. 

 

The subordinate lienholder’s arguments that it did not receive copies of the final judgment or certificate of disbursements, and that the borrower’s claim did not acknowledge its right to surplus, were also rejected for lacking merit.

 

As it was undisputed that the subordinate lienholder did not timely file its claim, the Appellate Court instead looked to the plain language of statutory sections 45.031(1)(a) and section 45.032(2) to determine that the homeowners, and not the subordinate lienholder, were entitled to the surplus. See Dever v. Wells Fargo Bank Nat’l Ass’n, 147 So. 3d 1045, 1047-48 (Fla. 2d DCA 2014) (trial court erred in disbursing surplus to subordinate lienholder which failed to file a claim for the surplus within sixty days after the sale); Mathews, 139 So. 3d at 500-01 (same).

 

Accordingly, the Appellate Court reversed the trial court’s order directing the clerk to disburse the remaining surplus from the foreclosure sale to the subordinate lienholder, and remanded for the trial court to enter an order directing the clerk to disburse the remaining surplus to the homeowners.

 

 

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: rwutscher@mwbllp.com

 

Admitted to practice law in Illinois

 

 

 

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

Our updates are available on the internet, in searchable format, at:

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and

 

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and

 

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