Right of Redemption: Going After the Money Trail

If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Comment and Analysis: Most people and lawyers I talk to think there is no life after sale of the property. This is not the case in my opinion and I encourage lawyers to start getting up to speed on the causes of actions and remedies that are available for attacking a foreclosure judgment and separately the foreclosure sale or “auction.”

Of course we know that a cause of action for wrongful foreclosure, slander of title and quiet title, to name a few, are available to attack the foreclosure judgment or the final order in non-judicial states that allows the foreclosure sale to go through. There is also the semi-final order from the bankruptcy court which lifts the stay to allow for the foreclosure wherein the court frequently inserts that the movant is the owner of the loan. (When a different entity than the movant initiates the foreclosure and bids in the property as a creditor without getting leave of court to amend judgment or the motion to lift stay there are some very weighty issues raised that have been covered in earlier posts).

And as pointed out by one reader, the “opportunity to Cure” is another attack that is available before Judgment if you properly challenge the amount demanded. Proof of loss and Proof of Payment is NOT the note and Mortgage. It is a showing that the a party actually paid value for the debt and stands to lose money (economic loss) if it isn’t paid by the homeowner. If they can’t prove the loss, the court has one of two options, one of which is ridiculous: (1) it can order the foreclosure and prohibit the initiator of the foreclosure from submitting a credit bid (they must pay cash at auction) or (2) it can dismiss the foreclosure with prejudice because no injured party is present which is jurisdictional — i.e., STANDING.

In Florida and many other states (pro se litigants: check with local licensed counsel to make sure you know what the procedure is and what is available) there is both a statutory and equitable right of redemption. In some states the sale can be attacked during the redemption period because the consideration was faked or insufficient.

Florida Statute 45.0315 allows for redemption at the amount set forth in the final judgment. The common law equitable right of redemption in Florida has a short window — 10 days — in which you can challenge the sale based on the violation of court ordered procedures (which opens the door to wrongful foreclosure by a non-creditor), bid rigging, unfair practices which are loosely defined, or anything else that leads to a determination of a deficiency.

The deficiency is in Florida a judgment which the bank can pursue after the sale based upon the difference between the amount of the judgment and the amount of the sale which of course the bank fully controls and the cases are replete with references to the obvious fact that the sale price is more often than not governed by an arbitrary decision of the lender.In non-judicial states the deficiency is waived but there could be and usually are tax consequences arising from the “forgiven principal and interest” that cannot be offset by the loss taken on the house.

Some people, at my suggestion are starting funds in which the homeowner is given the means to exercise the right of redemption on one condition: that the forecloser prove loss and prove payment so the new lender can be assured that there are no claims on or off record.

This is leading to some interesting settlements and high profit margin for those people with money who can put up the full amount of the judgment but end up not laying out any money or very little and getting a mortgage from the homeowner that is valid and enforceable and in an amount far less than the original debt — when the pretender lender fails to produce evidence of loss (canceled check, wire transfer receipt etc.).

Frankly I am looking for investors and a manager who can handle that business which is very lucrative. An off shoot of the same idea is to buy the HOA’s lien, and foreclose on it, which is cheaper and messier. Either way the homeowner gets to stay in the home, creditors are paid what theyshould be paid, and the equity in the home is restored.

Procedurally, lawyers should pay close attention to the time limits lest they miss it and commit malpractice. A homeowner can come back at a foreclosure defense attorney alleging that the redemption period was not used properly. My suggestion is that immediately after sale the motion is filed to have the court set the proper amount of redemption based upon evidence of actual loss. You might be met with res judicata arguments or collateral estoppel, because you should have challenged the forecloser to prove their loss before judgment, but I think the period of redemption raises the issue again, or at least does so within the scope of reasonable argument.

It might well be that the pretender lender, now faced with a final judgment they procured, or a final order they procured will be estopped from maintaining the shell game they were able to conduct before judgment and finally pinned down to show that XYZ Bank actually has a receipt showing they paid for the loan either at origination or in a transfer.

At the risk of repeating myself, if you lead with an attack on the documents you are tacitly admitting that the underlying monetary transaction was real. If you lead with an attack on the monetary transactions (the money trail) then the deficiencies in the documents are abundantly clear. The documents should reflect the realities of the monetary transactions. If they don’t, the documents are either invalid or at least lose most of their credibility and all of their presumptions.

Think it through, do the research and don’t do anything until you are satisfied that what I am saying here applies to whatever case you are working on. In the end, you will most likely come tot he same conclusion I did — denial of the debt, note, mortgage and default is not only proper, it is the only truthful thing to do.

In discovery you will prove that the debt did not arise from any transaction between the borrower and the forecloser or any predecessor or successor. The documents, which point to the pretender, are therefore invalid as naming the wrong (and usually a strawman) party as payee and secured party. Add to that the conversion of the promissory note to a mortgage backed bond where the repayment terms offered the lender are different than the repayment terms offered the buyer, and you have a pretty strong argument to set the pretender back on its heels and draw some blood.

Bank of America is desperately trying to rid itself of these mortgages and mortgage bonds almost at any cost or price. They understand that every mortgage carries a potential huge liability. Taking my previous (see yesterday’s post) article, there could be a zero balance owed to the “creditor” after offset for mitigation payments, and the fabrication and forgery of documents, together with general application of TILA provisions might entitle you to recover treble damages plus attorneys fees and costs. In a wrongful foreclosure action the money really piles up, especially where the homeowner was evicted.

And it all can start in motions directed at setting the correct amount of the redemption.

Below is the oddly worded Florida Statutory right of redemption. remember, if you are not an attorney licensed in the state in which the property is located, you are far more likely to make procedural mistakes than the pretender lender and lose a case you might otherwise win. Advice, counsel and preferably representation by competent counsel is in my opinion an absolute requirement. If local counsel disagrees with the application of these principles to the situation presented his or her opinion should be taken as authoritative rather than this blog which is meant to be only informative.

45.0315 Right of redemption.—At any time before the later of the filing of a certificate of sale by the clerk of the court or the time specified in the judgment, order, or decree of foreclosure, the mortgagor or the holder of any subordinate interest may cure the mortgagor’s indebtedness and prevent a foreclosure sale by paying the amount of moneys specified in the judgment, order, or decree of foreclosure, or if no judgment, order, or decree of foreclosure has been rendered, by tendering the performance due under the security agreement, including any amounts due because of the exercise of a right to accelerate, plus the reasonable expenses of proceeding to foreclosure incurred to the time of tender, including reasonable attorney’s fees of the creditor. Otherwise, there is no right of redemption.

Tags: Bank of America, business plan, creditor, deficency judgment, deficiency amount, equitable right of redemption, F.S. 45.0315, HOA liens, non-creditor, proof of loss, proof of payment, statutory right of redemption, sufficiency of consideration, wrongful foreclosure
Posted in Corruption, Eviction |