Too Late to Foreclose?

On December 30, Mike Provenzale, senior associate in the Creditor’s Rights practice area for Lowndes, Drosdick, Doster, Kantor & Reed, P.A. authored an article discussing the Florida statute of limitations for mortgage foreclosures and the question of timeframes for a second foreclosure suit after the first has been dismissed.

Too Late to Foreclose?

As many lenders know, Florida has a five year statute of limitations for mortgage foreclosures.  This requires that a foreclosure lawsuit be filed within that amount of time following the borrower’s default.  But what happens if a foreclosure is filed and then dismissed?  Does the clock start again following the dismissal or does the lender still need to bring the second foreclosure suit within five years of the original default?  At the moment, these appear to be open questions in Florida.  Although the courts have provided some guidance, the question may not ultimately be answered until the Florida Supreme Court weighs in, which it is expected to do in 2015.

Earlier this year, the Fifth District Court of Appeal in U.S. Bank v. Bartram held that after a foreclosure action was dismissed by the court, it could be re-filed based upon a new default that occurred after the dismissal of the suit, even if the original default which formed the basis of the first suit occurred more than five years ago.  Under this “continuing default” theory, the dismissal nullified the acceleration of the loan such that payments would continue to come due each month after the dismissal and therefore the loan could be reaccelerated following a new default.  Accordingly, the statute of limitations would then be five years from the new date of acceleration, allowing the lender ample time to bring a second foreclosure action.

Two months after Bartram, the Fourth District Court of Appeal in Evergrene Partners v. Citibank appeared to agree and extended the law further as it found the same result when the initial foreclosure suit was voluntarily dismissed by the lender, noting that “the claims of acceleration and subsequent acts of default have never been adjudicated on their merits” so “any acts of default still within the statute of limitations may be raised in a subsequent suit.”

Finally, and most recently, the Third District Court of Appeal joined in the discussion with its December 2014 decision in Deutsche Bank v. Beauvais, which sharply disagreed with both Bartram and Evergrene Partners.  In Beauvais, like in Bartram, the first foreclosure action was dismissed by the court, however, this time the court held that the dismissal “did not by itself negate, invalidate or otherwise decelerate the lender’s acceleration of the debt in the initial action.”  Since the lender took no affirmative steps to reinstate the loan following the dismissal, the second foreclosure action filed more than five years after the original default and acceleration was untimely and thus barred by the statute of limitations.

As referenced above, Bartram has been accepted for review by the Florida Supreme Court and is currently in the process of being briefed.  Additionally, in its ruling in Beauvais, the court certified conflict with Evergrene Partners, likewise inviting the Florida Supreme Court to take up that case and make a final determination on the issue.

In the meantime, lenders who have dismissed a prior foreclosure action should carefully evaluate the original date of default and when the statute of limitations would run based upon that date.  If a new lawsuit will not be filed within that time frame, taking affirmative steps to decelerate the loan appears to be prudent.  While a mutual agreement with the borrower establishing new terms and tolling the limitations period would be ideal, even a unilateral “deceleration notice” may prove to be helpful in prosecuting a second foreclosure action.

 If you are interested in learning more please contact Michael S. Provenzale, Gary Soles, or any other members of our Creditors’ Rights Group.

Please click here to view the article online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

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CEO

Alan Jaffa

Alan Jaffa is the Chief Executive Officer for Safeguard Properties, steering the company as the mortgage field services industry leader. He also serves on the board of advisors for SCG Partners, a middle-market private equity fund focused on diversifying and expanding Safeguard Properties’ business model into complimentary markets.

Alan joined Safeguard in 1995, learning the business from the ground up. He was promoted to Chief Operating Officer in 2002, and was named CEO in May 2010. His hands-on experience has given him unique insights as a leader to innovate, improve and strengthen Safeguard’s processes to assure that the company adheres to the highest standards of quality and customer service.

Under Alan’s leadership, Safeguard has grown significantly with strategies that have included new and expanded services, technology investments that deliver higher quality and greater efficiency to clients, and strategic acquisitions. He takes a team approach to process improvement, involving staff at all levels of the organization to address issues, brainstorm solutions, and identify new and better ways to serve clients.

In 2008, Alan was recognized by Crain’s Cleveland Business in its annual “40-Under-40” profile of young leaders. He also was named a NEO Ernst & Young Entrepreneur Of The Year® Award finalist in 2013.

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Esq., General Counsel and EVP

Linda Erkkila

Linda Erkkila is the General Counsel and Executive Vice President for Safeguard Properties, with oversight of legal, human resources, training, and compliance. Linda’s broad scope of oversight covers regulatory issues that impact Safeguard’s operations, risk mitigation, strategic planning, human resources and training initiatives, compliance, insurance, litigation and claims management, and counsel related to mergers, acquisition and joint ventures.

Linda assures that Safeguard’s strategic initiatives align with its resources, leverage opportunities across the company, and contemplate compliance mandates. She has practiced law for 25 years and her experience, both as outside and in-house counsel, covers a wide range of corporate matters, including regulatory disclosure, corporate governance compliance, risk assessment, compensation and benefits, litigation management, and mergers and acquisitions.

Linda earned her JD at Cleveland-Marshall College of Law. She holds a degree in economics from Miami University and an MBA. Linda was previously named as both a “Woman of Influence” by HousingWire and as a “Leading Lady” by MReport.

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COO

Michael Greenbaum

Michael Greenbaum is the Chief Operating Officer of Safeguard Properties, where he has played a pivotal role since joining the company in July 2010. Initially brought on as Vice President of REO, Mike’s exceptional leadership and strategic vision quickly propelled him to Vice President of Operations in 2013, and ultimately to COO in 2015. Over his 14-year tenure at Safeguard, Mike has been instrumental in driving change and fostering innovation within the Property Preservation sector, consistently delivering excellence and becoming a trusted partner to clients and investors.

A distinguished graduate of the United States Military Academy at West Point, Mike earned a degree in Quantitative Economics. Following his graduation, he served in the U.S. Army’s Ordnance Branch, where he specialized in supply chain management. Before his tenure at Safeguard, Mike honed his expertise by managing global supply chains for 13 years, leveraging his military and civilian experience to lead with precision and efficacy.

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CFO

Joe Iafigliola

Joe Iafigliola is the Chief Financial Officer for Safeguard Properties. Joe is responsible for the Control, Quality Assurance, Business Development, Marketing, Accounting, and Information Security departments. At the core of his responsibilities is the drive to ensure that Safeguard’s focus remains rooted in Customer Service = Resolution. Through his executive leadership role, he actively supports SGPNOW.com, an on-demand service geared towards real estate and property management professionals as well as individual home owners in need of inspection and property preservation services. Joe is also an integral force behind Compliance Connections, a branch of Safeguard Properties that allows code enforcement professionals to report violations at properties that can then be addressed by the Safeguard vendor network. Compliance Connections also researches and shares vacant property ordinance information with Safeguard clients.

Joe has an MBA from The Weatherhead School of Management at Case Western Reserve University, is a Certified Management Accountant (CMA), and holds a bachelor’s degree from The Ohio State University’s Honors Accounting program.

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Business Development

Carrie Tackett

Business Development Safeguard Properties