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REQUIREMENTS FOR FORECLOSING | key points

  1. In 2016 the Fourth DCA reversed a mortgagee’s final judgment of foreclosure and dismissed the case due to the mortgagee’s failure to introduce the written loan modification into evidence at trial. Rattigan v. Central Mortgage Co., 199 So. 3d 966 (Fla. 4th DCA 2016). Several trial courts interpreted Rattigan to mean that the original of the modification, not just a copy, was required to foreclose a modified loan. The Fourth DCA clarified the issue in its opinion in Liukkonen where it stated that a loan modification was not a negotiable instrument and therefore the original modification was not necessary to foreclose. However, to prove the modified terms the bank must produce a copy of the modification agreement, relying solely on witness testimony was not sufficient. Liukkonen v. Bayview Loan Servicing, LLC, 243 So. 3d 981, 982 (Fla. 4th DCA 2018).
  2. The Fourth DCA pointed out an additional requirement for enforcing a loan modification in its recent decision in Schroeder. Schroeder v. MTGLQ Inv’rs, L.P., 4D18-3177, 2019 WL 4458739 (Fla. 4th DCA Sept. 18, 2019). In Schroeder, the Fourth DCA reversed a foreclosure judgment “[b]ecause the required documentary stamp and intangible taxes were not paid on a portion of the loan enforced by the judgment…” Although the mortgagee paid the taxes and documentary stamps while the appeal was pending, it admitted they were not paid prior to entry of judgment. Despite the fact the borrowers failed to raise this issue as a defense the Fourth DCA agreed the failure to pay the required taxes rendered the note and mortgage unenforceable under sections 201.08(1)(b) and 199.282(4), Fla. Stats., and such a failure did not constitute an affirmative defense that had to be pled to be preserved. The DCA remanded the matter with instructions to vacate the judgment, but also directed “that another final judgment may be entered…upon the submission of proof that the required documentary stamp and intangible taxes have been paid.”
  3. The takeaway from all these cases is that foreclosing a modified loan must be handled differently than a standard foreclosure to avoid costly delays and additional litigation expenses. The written modification should be sent to counsel for review prior to filing the complaint and to ensure compliance with statutory and common law requirements.

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