Florida Case Reviews Unethical Practices in the Foreclosure Process

The Florida state Supreme Court is set to review a foreclosure case dealing with unethical mortgage industry practices. The question the court will answer is whether a mortgage lender who files a forged claim may later re-file a legitimate claim if their fraudulent actions are discovered.

The Foreclosure Case in Question

The case involves a Palm Beach homeowner and his lender, the Bank of New York Mellon. In a now familiar scenario, the homeowner purchased a home in 2006 at the height of the housing bubble. Several years later, the homeowner fell behind on payments. The bank started foreclosure proceedings.

However, the mortgage company backdated files and forged the homeowner’s signature when it started the home foreclosure process. When the fraud was discovered, the bank dismissed the first foreclosure filing and re-filed using real dates and signatures. Under current law, lenders are able to dismiss foreclosure lawsuits before jury selection occurs without interference from the state. This practice is known as voluntary dismissal.

In the case of the Palm Beach homeowner, the trial court rejected the homeowner’s claim, because the foreclosure was over and the owner had since settled with the bank. The court agreed with the lender and found that since the owner reached a settlement, the homeowner did not incur any damages.

How the Court’s Decision Could Affect Florida Homeowners

If the courts decide in favor of lenders, mortgage banks will be able to commit fraud without legal repercussion, apart from current sanctions. When mortgage companies fast track foreclosures with unethical practices, it harms homeowners who are already facing financial difficulties.

Thousands of foreclosure cases involving falsified documents could be reopened, if the court rules in favor of the homeowner. A decision by the court in favor of underwater homeowners in Florida would send a message and help stave off the predatory practices of lenders in the Sunshine State.

The first step to take if you are facing foreclosure is to contact an experienced debt relief attorney. A bankruptcy filing, for example, may allow you to stay in your home. An attorney can offer advice to put you in a better position for future financial security after reviewing your specific circumstances.

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