Article Courtesy of The Sun
By Paul Owers
Published November 7, 2012
A foreclosure sale isn’t necessarily the end for some homeowners, as one South Florida couple has found.
An appeals court last week sided with Cesar and Ruth Vidal, who appealed a Broward County Circuit Court ruling granting a lender’s right to repossess their North Lauderdale home.
The home was sold to a third party at a foreclosure auction in April 2011, but the Fourth District Court of Appeal ruling means that the foreclosure must be overturned, said John H. Ruiz, the couple’s Miami lawyer.
The appeals court also ruled that the Vidals could continue to seek damages and try to have the mortgage canceled on the grounds that the lender, Liquidation Properties Inc., allegedly violated the federal Truth in Lending Act, Ruiz said.
He said both rulings could be precedent-setting and have the potential to affect thousands of other foreclosures in Florida. “This is a victory for homeowners in a huge way,” he said.
Still, other legal experts aren’t as optimistic, saying the Vidal win on appeal isn’t likely to change the end result because the lender simply can refile the foreclosure.
“This may force the lender to the settlement table, but it’s not a sure thing,” said Jerron Kelley, a foreclosure defense lawyer in Boca Raton not involved in the case.
Kelley and other lawyers say foreclosure sales have been overturned, but delinquent borrowers ultimately don’t get to live in the homes for free.
What’s more, courts rarely have sided with homeowners seeking to prove violations of the Truth in Lending Act, which bars lenders from misrepresenting loan terms, among other things.
Gary Singer, a Sunrise lawyer also not involved in the Vidal case, said the third party that bought the home in foreclosure likely will have to surrender it after getting a refund from the lender.
But the bottom-line benefit to the Vidals “is basically nil,” Singer said.
In late 2010, several big lenders temporarily stopped filing thousands of foreclosures nationwide while they investigated possible paperwork errors. Bank employees admitted to signing foreclosure affidavits without reviewing them.
In the furor that followed, homeowners and their lawyers accused lenders and judges of rubber-stamping foreclosures and compromising defendants’ rights to due process.
Some homeowners say banks lost the mortgages and improperly submitted back-dated paperwork in an effort to show ownership.
In the Vidal case, the Broward court ruled that Liquidation Services proved its right to foreclose.
But the Fourth District Court of Appeal disagreed, saying the lender didn’t produce an affidavit showing it owned the mortgage prior to filing the foreclosure, as required by law.
Lawyers for Liquidation Services could not be reached for comment.
“In filing a mortgage foreclosure suit ... it is incumbent on the plaintiff to be in a position to prove he, she, or it owns and holds the note as of the date suit is filed,” the appeals court wrote.
Singer said the ruling is the latest from an appeals court trying to ensure lenders strictly follow the rules for filing foreclosures in the wake of previous problems.
“They’re holding lenders more accountable to the letter of the law,” Singer said.