October 13, 2014
by Robert Schneider
Ronald R. Wolfe & Associates, P.L. – USFN Member (Florida)
As has been detailed recently, Florida courts have made clear that when a bank dismisses its first foreclosure case, a subsequent foreclosure case filed more than five years after the initial acceleration of the loan is not necessarily time-barred (See, e.g., Florida: Appellate Court Clarifies Statute of Limitations for Mortgage Foreclosures, by Roger Bear in the June 2014 USFN e-Update, highlighting U.S. Bank Nat. Ass’n v. Bartram, 2014 WL 1632138 (Apr. 25, 2014)). A recent decision out of the Middle District of Florida (Matos v. Bank of New York, 2014 WL 3734578 July 25, 2014) goes one step further in explaining what is considered a new, actionable default, and in clarifying when a mortgage foreclosure will be forever time-barred.
Matos involved a quiet title claim brought by the borrower against Bank of New York. In Matos, the subject mortgage lien was first accelerated for failure to make an October 1, 2007 payment, resulting in a foreclosure action being filed. The foreclosure case concerning the October 1, 2007 default was ultimately dismissed in 2010. By January 2014, the borrower claimed that the plaintiff no longer had an existing mortgage lien, asserting that the five-year statute of limitations effectively eliminated the lien.
As the court in Matos explained, however, the five-year statute of limitations in Florida Statutes § 95.11(2)(c) is no more than a “shield” to be used as an affirmative defense, should a lender try to collect on a debt greater than five years old (e.g., trying to collect past-due payments for the years 2007 and 2008 when filing an action for foreclosure in 2014, more than five years after those payments were due). The court emphasized that the statute of repose, as set forth in Florida Statute § 95.281(1)(b), is the “sword” and the applicable reference for determining the extinguishment of a mortgage lien altogether, such that no foreclosure action could be brought again against the borrower (e.g., in Matos, the 30-year mortgage that originated in 2006 would be a valid lien until 2041 — five years from the maturity date).
While Matos does not create new law, it does provide further guidance, along the lines of that contained in Bartram, to banks in accelerating loans where the initial default date is older than five years. The Matos court held that where “it is undisputed that a borrower has failed to make any payments in the last five years,” a bank can “sue for those defaults and accelerate the note and mortgage again.” From a practical perspective, though, lenders should consider sending notices of intent to accelerate for default dates that are not already five years old (perhaps four and one-half years old), allowing for the thirty-day cure period to expire and, ultimately, for the foreclosure action on the new default to be filed by a date that is less than five years from the date of default. Otherwise, defenses will undoubtedly be raised that by the time the second foreclosure action is filed, the default date is more than five years old and, thus, time-barred.
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