Florida Statute of Limitations – The Supreme Court has ruled (decision released 11/3/2016)
Two great and historic events occurred this week. The Cubs won the World Series and the Florida Supreme Court clarified on how the statute of limitations is applied to mortgage foreclosure suits. Hopefully these two happy events will keep smiles on our faces as we approach next weeks’ election.
The Florida Supreme Court just decided on the case, U.S. Bank v. Bartram, which questioned whether servicers can restart foreclosures after five years, or if they will be barred by the Florida statute of limitations.
The Question of Great Importance
“Does Acceleration of payments due under a residential note and mortgage with a reinstatement provision in a foreclosure action that was dismissed pursuant to rule 1.420(B), Florida rules of civil procedure, trigger application of the statute of limitations to prevent a subsequent foreclosure action by the mortgagee based on payment defaults occurring subsequent to dismissal of the first foreclosure suit?”
The Supreme Court of Florida Ruled
NO. The lender is not precluded by the statute of limitations from filing a subsequent foreclosure action based on payment defaults occurring subsequent to the dismissal of the first foreclosure action, as long as the alleged subsequent default occurred within five years of the subsequent foreclosure action.
When a mortgage foreclosure action gets dismissed by a Florida court, it resets the clock on the state’s five-year statute of limitations. However, the lender can only go after payments subsequent to the dismissal of the first foreclosure action. That’s still good.
This now clears the way for servicers to begin a new wave of foreclosure filings in Florida. We believe there are 18,870 loans Florida ($5.4 billion) in Non-Agency RMBS that are 5 years or more delinquent and yet to be repossessed. The Florida Supreme Court just removed an obstacle hanging over many of these loans and hopefully servicers will now act on behalf of investors.
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