Before your mortgage company can file a foreclosure on your Florida home, it must send you a very specific letter known as a “Notice of Intent to Accellerate” or “Default Letter.” If your mortgage servicer fails to serve you with a proper notice, your foreclosure is improper and subject to dismissal.
Nearly every residential mortgage is a Freddie Mac/Fannie Mae Uniform Instrument, regardless of whether either Fannie Mae (FNMA) or Freddie Mac (FHLMC) owns the mortgage. The mortgage servicing industry created the “Uniform Instrument” because Fannie and Freddie own 60% of all mortgages, but before they will purchase a mortgage loan from a bank, the security instrument (ie. the mortgage) must meet Fannie or Freddie guideline. So, for the sake of uniformity and ease of servicing by the banks, the same uniform mortgage is used throughout the country in almost every case.
The standard Fannie/Freddie mortgage has all the basic terms already completed. All that is left to do during a closing is fill in information on the lender, the borrower, the dates, the address, the property description, and so on.
In addition to the uniform paragraphs that exist in nearly every single mortgage in the United States, there are state-specific, special paragraphs, known as non-uniform covenants, which are inserted into the Fannie/Freddie mortgage. The Notice of Intent to Accelerate is a non-uniform covenant because the requirements vary, depending upon the applicable state foreclosure law. The biggest difference between state foreclosure laws is whether a state is judicial or non-judicial, and the uniform mortgage is modified based upon which type of foreclosure process exists in the state where the property is located.
Florida is a judicial foreclosure state, meaning the lender files a foreclosure action in state court. In non-judicial foreclosure states, a third-party trustee sells the property without help from the court. In these non-judicial foreclosure states, it is the borrower who brings a court action to stop the foreclosure.
**This article focuses on the language found in judicial foreclosure states like Florida. Remember, the language is different in non-judicial foreclosure states, like California.**
The requirements of the acceleration notice are spelled out in paragraph 22 (sometimes paragraph 21) of the mortgage. Paragraph 22 is often the only paragraph written in bold typeface–meaning that the text of the paragraph is emphasized as important, and this paragraph uses the word “shall” in spelling out the exactly what your mortgage company must include in the notice of acceleration letter to you.
In pertinent part, “The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration . . .”
Further, the lender shall specify that failure to cure the default may result in foreclosure by judicial proceeding. The notice of acceleration shall also inform the borrower of the right to assert defenses in the judicial foreclosure proceeding that is filed by the lender.
The requirement most frequently violated by the servicer is its failure to clearly state “the action required to cure the default.” The problem occurs because the default letter usually states, “To cure your default, you must, on or before [the 30th day], pay [the servicer] the amount of $*** plus any additional monthly payments, late charges and fees which come due.”
Even if a payment comes due during that default period, the homeowner should know what that amount is unless it changes monthly, BUT how would a homeowner know what late charges and fees are without specifically being told? Therefore, the homeowner does not know the action required to cure the default.
Sometimes the default letter goes on to say, “You should call us to get an exact figure.” The mortgage requires the letter itself to identify “the action.” Instructing the homeowner to call the servicer to find out what action is required fails to comply.
In Florida, the notice of acceleration requirements spelled out above, are intended to be the borrower’s “Miranda Rights” in the mortgage foreclosure context. This notice of acceleration is the borrower’s last–and utmost serious–warning before foreclosure proceedings are begun.
In summary, because the mortgage uses very clear, bolded language including terms such as “shall,” and because Florida is a judicial foreclosure state, it clear that these notice of acceleration requirements were intended to be strictly followed. In fact, Florida appellate courts have held that strict compliance with the notice of acceleration requirements of Paragraph 22 is required before the lender can foreclose. However, servicers often fail to provide the notice of acceleration at all, or the notice fails to comply with the strict requirements of the mortgage.
Has your lender provided you with proper notice of acceleration? Likely not. What should you do? Contact a law firm with thousands of hours of experience representing homeowners in foreclosure cases.