Sunday, April 19, 2015

Trial & Litigation Section: New Pleading Requirements for Mortgage Foreclosures

By Morgan W. Streetman

Residential mortgage foreclosures remain a minefield for the unwary practitioner.  Without much notice and over the holiday season last year, the Florida Supreme Court made fast-track out-of-cycle changes to the pleading requirements for mortgage foreclosures.

In In Re Amendments to the Florida Rules of Civil Procedure, 153 So. 3d 258 (2014), the court adopts the amendments effective immediately, without the usual 60-day comment period preceding such changes. Though not explicitly stated in the opinion, the comment period appears to have been suspended until after adoption in an effort to more timely conform the Florida Rules of Civil Procedure to the legislative mandate of Chapter 2013-137, Laws of Florida. (The court's opinion misidentifies the relevant citation to the Laws of Florida; Chapter 2013-137 is the correct reference.)

The court adopts the new Rule 1.115, which relates only to pleading mortgage foreclosures. The verification requirement has been moved from Rule 1.110, the general pleading rule, into the new Rule 1.115 with a slight change in wording. The verification has been changed from being under “penalty” of perjury to being under “penalties” of perjury, though the legal effect of such a change is not clear. The Supreme Court also adopted new forms to comply with the new rule, which make it relatively straightforward for practitioners to comply with the changes.

Essentially, the amendments require the plaintiff in a mortgage foreclosure case to specifically allege the location, possession, ownership, and condition of the mortgage and note. The new forms indicate that case-specific facts are required to establish the right to foreclosure where a plaintiff is acting under an entitlement of law or a delegation of authority, as required by the statutory changes. See § 702.015(2)-(5), Fla. Stat. (2014).

The Legislature enacted section 702.015, Florida Statutes, to help relieve Florida courts of the backlog of foreclosure cases by streamlining the issues and procedure for handling those cases. As it states, “The Legislature intends that this section expedite the foreclosure process by ensuring initial disclosure of a plaintiff’s status and the facts supporting that status, thereby ensuring the availability of documents necessary to the prosecution of the case.” § 702.015(1),  Fla. Stat. (2014).

The amendments to the Rules of Civil Procedure, like section 702.015, are designed to address the core of many of the arguments raised by foreclosure defendants regarding the actual ownership of their mortgages. These arguments were in many cases effective in slowing the pace of foreclosures because the speed and complications introduced by the financial industry had outpaced the development and understanding of the law governing the transactions. Banks and investors had to play catch-up in learning what they actually owned, or didn’t own, and many residential homeowners had to play catch-up in understanding the complex ownership of their mortgages and loans by securitized trusts.  

The changes to the Rules of Civil Procedure apply to all mortgage foreclosures filed on or after July 1, 2013, and have taken immediate effect. Practitioners should review their pending matters to address any unwaived pleading deficiencies, and they should remain vigilant in checking The Florida Bar’s website for the most up-to-date rules and forms.