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Default Notice sent to the Wrong Address Kills Foreclosure

Deutche Bank Trust Co. lost a foreclosure trial because it sent a notice of default to a post office box rather than the property address which was the address noted in the mortgage as the official notice address.

The mortgagor’s attorney argued that the bank violated the express terms of the mortgage by sending the required Notice of Default to an address other than the notice address set forth in the mortgage.

It is an interesting holding by the Fourth District Court of Appeals because the house was vacant at the time and it is unlikely that the borrower/owner would have actually gotten the notice had it been served there. In fact, it was more likely that the owner would have received due process by delivering to a known PO Box rather than a vacant street address. Nevertheless, the appeals court remanded the case to the trial court for dismissal with prejudice for noncompliance with the mortgage’s acceleration requirement. The decision does not note whether or not the debtor/owner had actual notice notwithstanding the method of delivery.

Interestingly, the court’s decision did not address the owner’s other more interesting defenses, including an argument that the bank presented a backdated mortgage assignment and did not prove standing to foreclose on the property.

This decision is the second one in several weeks which holds that the banks must meet, to the letter, the required formalities regarding foreclosure action paperwork. The case Holt v. Calchas, just recently ruled against a servicer which had purchased a note and mortgage which had been previously transferred twice. The court in this action held:

“The asset manager testified that he had never worked for any prior note holders and did not know who transferred the records he was testifying about and had never seen their policy manual”

This was not enough to get the note mortgage into evidence and the bank lost.

So, it appears that the appellate courts are holding mortgagees’ feet to the fire regarding the establishment of the chain of title and other due process issues. It does not appear that these holdings are a result of any particular trend toward giving borrowers a break but rather, this is the courts’ response to the myriad of foreclosure case irregularities which mire the courts’ dockets. These irregularities include robo-signing, backdating, lack of first-hand knowledge about the facts and other irregularities which would never have been allowed in non-foreclosure cases. If nothing else, the courts are sending a message to lenders, servicers and attorneys, that they had better have all their ducks in a row before commencing a foreclosure matter or bringing one to trial.

So, if anyone is behind in their mortgage or in foreclosure, it is imperative that experienced legal counsel be consulted and that a strategy to address the underlying problem is put in place. In addition to defense litigation, there are also other workouts that can be explored such as a loan modification, short sale or deed in lieu of foreclosure. Larry Bray of the Law Offices of Larry E. Bray, P.A. is an experienced real estate and business attorney who can assist you evaluate your circumstances and advise you how it is best proceed.

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