Consumer Finance Litigation

As the foreclosure crisis dies down, lenders are seeing more creative tactics employed to stall foreclosures. One tactic is that during the pendency of the first lien holder's foreclosure, the borrower will convey title, or title will pass through a junior lien holder's foreclosure action, to an outfit that rents the property out for a profit. The longer the first lien holder's foreclosure takes, the more profitable this tactic becomes. Unsatisfied with simply waiting for the foreclosure or even subsidizing a borrower's foreclosure defense tactic, some of these outfits have taken to actively intervening in foreclosures. The timing of the intervention is always strategically timed for maximum delay and occurs sometime after judgment and before the sale, with claims that the non-joinder of the title holder requires the sale be cancelled and judgment vacated. Florida's appellate courts however, have issued several opinions that should allow first lien holders to stop such delay tactics quickly. Specifically, Florida's Second, Third, and Fourth District Court of Appeals have issued opinions on the issue including, De Sousa v. JP Morgan Chase, P.A., 170 So. 3d 928, 929 (Fla. 4th DCA 2015), Bymel v. Bank of Am., N.A., 159 So. 3d 345, 347 (Fla. 3d DCA 2015), and Whitburn, LLC v. Wells Fargo Bank, N.A., 2D14-5563 (Fla. 2d DCA Dec. 18, 2015). The opinions hold that where title is taken during a pending foreclosure, a lis pendens in Florida serves to place the new title holder on notice of the foreclosure, makes the new title holder's interest in the property entirely subject to the outcome of the litigation, and as such, the new title holder lacks standing to intervene in the foreclosure, especially post judgment. The Court also rejected claims by the new title holder that redemption rights were thwarted by failing to provide an estoppel letter to the new title holder. The proper remedy for the title holder under such circumstances was to pay the judgment in accordance with Fla. Stat. 45.0315, and not to seek an estoppel letter to repay the mortgage. These opinions can be employed to terminate improvident efforts of new title holders to intervene or seek estoppel letters, especially post judgment. If such motions to intervene are not promptly and successfully opposed, the late intervention of the new title holder in the foreclosure can set back the foreclosure for a long period of time and delay the first lien holder's recovery. It should be noted that these opinions only apply where the new title holder takes title after the lis pendens is properly recorded.