In a new ruling, the Florida’s Fifth DCA affirmed a Circuit Court’s order in Fambro v. Wells Fargo Bank, N.A., No. 5D22-2868 (November 7, 2023). The Appellate Court agreed with the Trial Court that entered a final summary judgment of foreclosure in favor of the Lender, where the Borrower, represented by Attorney Malcolm Harrison, argued the Lender failed to comply with HUD regulations prior to the institution of the action. The Fifth DCA agreed the Trial Court correctly found the Lender’s evidence provided in support of its Motion for Summary Judgment was sufficient to show compliance despite the self-serving affidavit filed by the Borrower.
The underlying case stems from an FHA-insured loan originated on November 24, 2009. The loan was modified on or about August 25, 2015. A default occurred on the modified loan in or around October 2018. On March 11, 2019, a foreclosure action was instituted seeking to foreclosure the subject mortgage. The Borrower filed an answer with affirmative defenses through counsel on September 10, 2019, challenging, among other things, compliance with multiple HUD regulations. The case was heavily litigated with multiple discovery requests from both sides and competing Motions for Summary Judgments. An Order granting the Lender’s final summary judgment was entered on November 7, 2022. Defendant’s main argument was that the Lender failed to conduct a face-to-face meeting or to make a reasonable effort to arrange such meeting as required under 24 C.F.R. § 203.604.
This specific defense has recently been a hot topic in the Florida foreclosure arena. When the subject mortgage specifically incorporates the HUD regulations, the Lender will need to show compliance if the Borrower raises the issue in the foreclosure case and no exceptions exist (see Palma v. JP Morgan Chase Bank, 208 So. 3d 771, 775 [Fla. 5th DCA 2016]).
As stated above, the HUD regulation requires a face-to-face meeting with the Borrower OR for the Lender to make a reasonable effort to arrange such meeting. Reasonable effort is defined in the Regulation as sending at least one letter to the mortgagor “certified by the Postal Service as having been dispatched” and at least one trip to see the mortgagor at the mortgaged property [24 C.F.R. § 203.604(d)].
The Lender in the case submitted what the Trial Court deemed to be “undisputed evidence that Wells Fargo:
- Mailed the required notice to Fambro, and
- Through its agent, visited the property and delivered the required notice to Fambro.
See Order Granting Final Judgment for Wells Fargo Bank, N.A., 18th Judicial Circuit Case, Seminole County No. 2019-CA-000773 (November 7, 2022).
An affidavit had been filed by the Borrower, but the Trial Court concluded the affidavit was “self-servicing” and “… rife with hearsay, legal conclusions, and improper bolstering of his credibility.” The Court struck most of the affidavit of the Borrower which left an unsupported denial which was not enough to avoid summary judgment.
The case law appears to be moving in a direction where substantial compliance with the HUD Regulations will be sufficient and these frivolous arguments raised by defense counsels are finally being invalidated. The Courts have clarified that a face-to-face meeting does not actually have to occur if the evidence establishes the mortgagee made a reasonable effort. Lakeview Loan Servicing, LC v. Walcott-Barr, 307 So. 3d 705, 708 (Fla. 4th DCA 2020). The Courts have also clarified that compliance with 24 C.F.R. § 203.604 can be satisfied by business records establishing the mailing of a letter to the borrower and a visit to the property. PennyMac Loans Servs. LLC v. Ustarez, 303 So. 3d 578, 581 (Fla. 4th DCA 2020).
Regardless, arguments are still being made that the evidence presented to show compliance is insufficient and that Lenders should be held to a much higher standard than the law requires. Lenders need to be prepared to rebut these arguments and not allow unscrupulous counsel to confuse the Court.