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How Lawyers Defend Mortgage Foreclosure Lawsuits

Florida homeowners, clients, and prospective clients often ask me how Stopa Law Firm (or any lawyer, for that matter) can defend a mortgage foreclosure lawsuit when the homeowner is behind on monthly mortgage payments. Sometimes, when I try to explain, I feel like I’m a surgeon giving a play-by-play of open-heart surgery or a mechanic giving a lecture on how-to rebuild a car engine. In other words, yes, it’s possible to explain, but if you’re not used to the terminology of surgeons or mechanics, it can be difficult to understand. This dynamic sometimes frustrates homeowners, who want to understand how the process works in layman’s terms. In other words, what do foreclosure defense lawyers do?

I’ve said many times – foreclosure defense lawyers such as Stopa Law Firm force banks to prove their case … to prove their entitlement to foreclosure, every step of the way. If that sounds vague, it is. I don’t intend it that way, it’s just hard to explain – like the car engine. That’s why I’m pleased to have encountered a recent appellate decision that helps remove the cloak of ambiguity, providing two simple examples of the types of things foreclosure defense attorneys do to defend mortgage foreclosure lawsuits.

By way of background, remember – no matter how delinquent a homeowner is on monthly mortgage payments, there are basically only two ways a bank can prevail in a foreclosure lawsuit – via entry of summary judgment or trial. As I’ve repeatedly explained, banks don’t want to have to go to trial. In fact, as I showed, here, there were fewer than 200 trials in foreclosure cases in the entire state of Florida in a recent, one-year period. As a result, banks rely almost exclusively on a procedure called “summary judgment” to win a foreclosure case. This is why it’s so critical for defense attorneys to defeat summary judgment, as it is the mechanism by which most foreclosrue lawsuits are adjudicated.

The good news for homeowners, and the problem for banks, is that prevailing at summary judgment is typically not easy if a lawsuit is properly defended. Banks have a high burden of proof at the summary judgment stage, and, as Florida’s Fifth District recently explained in Gee v. U.S. Bank Nat’l Ass’n, there are many procedural requirements with which the banks must comply, failing which summary judgment must be denied. (Remember, the denial of a summary judgment motion forces the bank to go to trial, and that’s a great dynamic for homeowners, as we’ve already established they don’t want to have to go to trial. In other words, if you want a settlement, perhaps the best way to get one is to defeat the bank’s summary judgment motion and force it to go to trial.)

One procedural requirement of summary judgment which I absolutely love, and assert every chance I can, is the banks’ obligation to specify all of the grounds for summary judgment in the written motion itself. As the Fifth District explained in Gee, it’s not enough for a bank to show up at the hearing and argue the reasons it is entitled to summary judgment – those grounds must be set forth in the written motion. In the Court’s words:

The purpose of the rule is to prevent ambush by allowing the non-moving party to be prepared for the issues that will be argued at the summary judgment hearing.

In Gee, for example, the bank asked the judge, at the summary judgment hearing, to grant its request to re-establish a lost note and to reform the mortgage (a common request in foreclosure cases). The judge agreed, but the appellate court reversed that ruling because that request was not set forth in the written motion.

Requests to reinstate a lost note are somewhat common, but they don’t happen in every case. What is more common, though, is when a bank tries to disprove a homeowner’s affirmative defenses at the summary judgment hearing (as it must to obtain summary judgment), yet the bank failed to articulate those arguments in the written motion itself.

Think about this for a moment – how often do you think banks take the time to disprove affirmative defenses in their written motion for summary judgment? I’ve seen a lot of summary judgment motions, and I assure you – it almost never happens. Yet under Gee, the banks are required to do just that, failing which summary judgment must be denied.

That may sound technical, but as the Fifth District explained, if banks are going to ask for summary judgment, they shouldn’t be able to “ambush” homeowners with arguments not set forth in their written motions. In other words, banks must explain, in their written motions, why the homeowners’ affirmative defenses are insufficient to preclude summary judgment, failing which their request for summary judgment must be denied.

If that sounds complicated, it’s not. All I’m saying is this - one thing foreclosure defense attorneys do is ensure all of the banks’ arguments in support of summary judgment are properly set forth the bank’s written motion, and if/when the bank fails to do so, show the judge cases like Gee which require the judge to deny summary judgment.

A second example from Gee is seen in the Court’s explanation regarding standing. In Gee, the plaintiff was not the original mortgage holder (which is very common – the plaintiff that is suing is usually not the company that originally received the mortgage). To prove standing, the plaintiff relied on an assignment from the original mortgage holder (who I’ll call “A”), to a second bank (which I’ll call “B”), and a second assignment from the successor-by-merger to “B”, which I’ll call “B- Succ.” to a third bank, which I’ll call “C.”

It sounds complicated, but it’s not - A assigned to B, and B’s successor assigned to C, and C is the plaintiff.

Anyway, the Fifth District ruled, in Gee, that the plaintiff could not obtain summary judgment because it failed to provide evidence that B’s successor was actually B’s successor. Frankly, this isn’t terribly difficult to do – usually, in my experience, banks file something called “Articles of Merger,” or something of that ilk. The point, though, is that the bank had to put on evidence in this regard, and its failure to do so precluded summary judgment. To illustrate, I particularly liked this quote from Gee:

Incredibly, [plaintiff] argues “it would be inequitable for [the homeowner] to avoid foreclosure based on the absence of an indorsement.” But that argument flies in the face of well-established precedent requiring the party seeking foreclosure to present evidence that it owns and holds the note and mortgage in question in order to proceed with a foreclosure action.

In layman’s terms, even though the homeowner was behind on mortgage payments, the plaintiff/bank did not get to foreclose without proving its right to do so via evidence.

Ensuring the banks prove their right to foreclose, with evidence, is another example of what foreclosure defense attorneys do. Again, that may sound simple, but as the Gee case shows, this issue arises with incredible frequency.

So what’s the moral of the story? Defend your foreclosure case with competent counsel. And remember – defending a foreclosure case is like rebuilding a car engine or performing open-heart surgery. I can explain, in layman’s terms, what we do, but these are just two examples. There are legions of technical requirements like this which, if utilized correctly, can make it really difficult for banks to prevail in their attempts to foreclose on Florida homeowners.

Mark Stopa

http://www.stayinmyhome.com

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