Court tosses 5-year foreclosure limit

Court tosses 5-year foreclosure limit – posted by Roy Oppenheim Sunday, April 28th, 2014

The following article was written  in the Palm Beach Post by Kimberly Miller  and republished with excerpts from Roy Oppenheim in The South Florida Law Blog. 

A Florida appeals court crushed the hopes of hundreds, if not thousands, of defaulted homeowners Friday in a benchmark decision on how the state’s five-year foreclosure deadline is interpreted.

With the first serious wave of foreclosures now six years past, some borrowers with aging or abandoned cases were counting on a common contract law that says a person has five years to sue on a debt or give up the right to collect.

While it only pertains to foreclosures in a very specific set of circumstances, the collapse of the state’s largest so-called “foreclosure mill” in 2011 left an estimated 100,000 cases in disarray and an unknown number fitting the right profile.

The idea was if the case gets dismissed — something common if the paperwork was faulty or missing — the lender only had five years to refile or the home could go to the borrower free and clear.

But the 5th District Court of Appeal in Daytona Beach said Friday that the statute doesn’t work like that, and it has asked the Florida Supreme Court to weigh in on the matter, saying it is of “great public importance.”

“I understand they don’t like the idea that people can end up with free houses but this undermines and defies the purpose of a statute of limitations,” said foreclosure defense attorney Roy Oppenheim, who is fighting a high-profile foreclosure deadline case in Boca Raton in which homeowners stand to win a multimillion-dollar waterfront mansion. “This is going to create a bizarre and unintended set of circumstances.”

New Ruling:

In Friday’s ruling in U.S. Bank National Association v. Patricia J. Bartram, et al., the key issue was when the clock started ticking on the five-year deadline. Many foreclosure defense attorneys agree that happens at the time of “acceleration” — when the bank decides after a series of missed payments that the entire loan amount is due.

That typically occurs when the foreclosure is filed with the court. Bartram’s foreclosure was filed in May 2006 by the Law Offices of David J. Stern, which closed in March 2011 after allegations of wrongdoing.

In May 2011, the court dismissed the foreclosure after the bank missed a conference. “The record does not reflect what was occurring in the bank’s foreclosure case for the intervening almost five years,” Friday’s decision says.

Starts Anew when each mortgage payment is missed:

Eventually, the court canceled the note and mortgage and said the bank no longer could enforce its right to collect the debt. But on appeal, it was decided the five-year deadline to collect started anew when each mortgage payment was missed. That essentially means the bank is under no deadline to refile for the life of the mortgage, plus five years, said attorney Mike Wasylik, who represents Lewis Bartram. Lewis and Patricia Bartram are divorced. ”

This case is really important and has a massive footprint across ­the state,” Wasylik said. “There are easily thousands of cases this could affect.”