The Florida Supreme Court recently ruled in Bartram v. U.S. Bank, that when a foreclosure action is dismissed, the state’s five-year statute of limitations is reset. Now, mortgage lenders may bring subsequent foreclosure actions against borrowers for an additional five years after the suit has been dismissed if the borrower ceases payments. This decision will likely increase the number of foreclosures in Florida.
Foreclosures in Florida
Currently, Florida has the highest rate of complete foreclosures in the country. From 2015 to 2016, approximately 55,000 foreclosure actions were initiated in the state. A likely cause of Florida’s high rate of foreclosures is a law enacted by Florida’s Governor Rick Scott in 2013. The law sped up the foreclosure process in the hopes to put more homes back into the real estate market.
Bartram v. U.S. Bank
In Bartram v. U.S. Bank, the Florida Supreme Court ruled that an involuntary dismissal or judgment against a lender does not bar subsequent actions against the borrower if the borrower continues to be delinquent on payments. A mortgage lender must still bring the subsequent foreclosure suit within the five-year statute of limitations, but a court judgment against the lender does not affect the statute of limitations. In other words, if the borrower fails to make payments again, the lender can still bring another foreclosure action if they bring it within five years of the failed payment. Thus, homeowners must still pay their mortgages, even if they have won the suit or the court has dismissed the suit brought by the mortgage lender.
The court’s decision applies to residential mortgages only, as opposed to all mortgages, such as mortgages for business properties.
What Does the Decision Mean for Mortgage Lenders?
Mortgage lenders will now have a second chance to bring a foreclosure suit against a borrower, even if a court dismissed their original suit. The mortgage company is not barred by the statute of limitations to bring a subsequent suit if the lender brings the suit within five years. Since multiple successive actions are now allowed against a borrower, it is likely that there will a foreclosure increase in Florida.
What Does the Decision Mean for Borrowers?
After this decision, borrowers with residential mortgages have one less protection against mortgage companies. Now, even if a borrower has won a suit against a mortgage lender or the court has dismissed the lenders case, borrowers must continue to make timely payments, or else risk a subsequent foreclosure action.
There is still good news for borrowers. Since the Court did not get rid of acceleration revocations. In Florida, when a court dismisses a foreclosure action, the acceleration of the foreclosure is revoked. An ‘acceleration” is a term in the initial mortgage agreement requiring a borrower to make a full immediate payment or else the lender will foreclosure on the property. Revoking the acceleration allows the borrower to continue to make payments but the borrower does not need to make a full payment on the mortgage to stop foreclosure proceedings.
Also, borrowers still have many other protections against mortgage lenders. New federal laws have given borrowers more rights during the foreclosure process. The Consumer Financial Protection Bureau has enacted laws that prohibit dual tracking halting the foreclosure action while the borrower is in the process of loan modification. Borrowers facing foreclosure should consult with an attorney to ensure that their rights are protected during foreclosure proceedings.
Authored by Robin Sheehan, LegalMatch Legal Writer