Residential Foreclosures

Expert Navigation Through The Legal Process


A foreclosure is enforcement of a security interest by judicial sale of collateral. This secured interest is documented by a written instrument called a mortgage, which is a specific lien against the property. The entity who lends the money for the purchase and thereby places the lien, or “holds the mortgage” is called a mortgagee. During the life of the mortgage, the legal title and right of possession is owned by the individual/entity who is promising to make payments against the lien. This individual/entity is called a mortgagor. When payments are not made in accordance with the agreement or are missed entirely the mortgagor may become in default of the mortgage. The lender/lien holder, or mortgagee, must follow a specific process to ensure the loan is paid back. This process is called a foreclosure. All mortgages shall be foreclosed in equity.

The Foreclosure Process requires making a determination of default by fact finding on the amounts due and identifying missing payments. There is a pre-foreclosure mitigation period in which the mortgagee (lender) attempts to mitigate the loss by allowing the mortgagor (individual/entity assuming the obligation on the property – the homeowner) time and sometimes a more lenient process to make up the missed payments or overdue amounts owed. In the event that the mortgagor cannot or will not correct the payment deficiency, the mortgagee prepares a Notice of Default. Defenses against a Notice of Default may lie within the loan documents or the original promissory note.

After the pre-foreclosure period and providing the Notice of Default, a mortgagee pursuing foreclosure must order a Foreclosure Title Commitment and Municipal Lien Search. Title Commitment and Lien Search will identify any other potential hurdles to foreclosure. Once those are clear, the foreclosure process may continue as the mortgagee has a right to foreclosure and it has been found to be constitutional to uphold a mortgage. The right to foreclosure accrues upon the mortgagor’s default whether it’s delinquency in loan payments, tax payments, or upkeep of appropriate insurance. In some cases, authority has been provided to acceleration or to declare the entire mortgage due and payable upon default. Absent acceleration clause, lender can only sue for amount in default. Again, this is where the need lies for review of the loan documents and original promissory note. A mortgage foreclosure action must by bought within the state of limitations which has been set at 5 years.

Once the foreclosure action has been filed, the Plaintiff is NOT the homeowner, but actually the holder of the note as of the date of filling suit. The absence of the note does not make a mortgage unenforceable. In the US, there is an electronic registry tracking system which keeps track of mortgage loan servicing and ownership rights. The company who manages the system is called MERS – Mortgage Electronic Registration Systems. The foreclosure action must also identify proper defendants, which is not always an easy task. A proper defendant could be the owner of the fee simple title – the only indispensable party defendant to a foreclosure action. Failure to join other necessary parties may hamper the foreclosure action. An omitted party can only be remedied by compelling redemption or the re- foreclosure in a suit de novo. In the event of death of titleholder prior to entry of final judgment the beneficiaries and the personal representative become indispensable parties. All subordinate interests recorded or acquired subsequent to the mortgage, such as secondary lienholders identified in the title commitment and lien searches, then become necessary parties to the foreclose action. Prior titleholders that signed the note and mortgage do not have to be named in the foreclosure actions unless there are (1) Junior Mortgages; (2) Superior Interest; (3) Association Liens and Assessments; or (4) Judgment Liens.

Just as a notice was required before beginning the default determination, initiating the residential foreclosure process requires filing of the pen dens, or lis pendens, which is a recorded notice that a law suit has been filed involving a particular piece of real estate. Next, a foreclosure complaint is filed, which must be verified. The lender/mortgagee must present the original promissory note or provide a satisfactory explanation as to its absence. The Fair Debt Collection Practices Act (FDCPA) was enacted to eliminate abusive debt collection practices by debt collectors. Mediation is mandatory when attempting foreclosure of a mortgage against which homestead has been filed. This mandatory mediation was set in place due to an increase in filing of mortgage foreclosure cases. Finally, Service of Process is essential to satisfy jurisdictional requirement over the subject matter.

Assuming everything in the process is correct and accurate, a Summary Judgment may be filed. This is a lengthy document that tells the story of the situation. It lays out for the Court the legal standards and burdens of proof for each party. This highly persuasive document explains why foreclosure is appropriate by pointing to documents or affidavits filed within the court. A Response to the Summary Judgment will set out any arguments against foreclosure by attempting to establish the existence of material fact and question the legal sufficiency. After both are filed, a hearing takes place and oral arguments for and against foreclosure are made before the Court makes a Final Judgment of Foreclosure.

Florida has an Expedited Foreclosure Statute which, upon filling of verified complaint, allows the Plaintiff/mortgagee to move for immediate review of the foreclosure by an order show cause.

Finally, with the Disbursement of Sale Proceeds, any surplus to the amount owed is sent ________. In the event that the sale did not meet the amount owed, a Deficiency Judgment may be entered against the former mortgagor/homeowner. It should be noted that Bankruptcy enjoins proceedings against the debtor and the property.