Rogers Towers, P.A. welcomes you to its Florida Banking Law Blog! A product of the firm’s Banking and Financial Services Practice Group, the blog will serve as a convenient way for us to share our expertise in banking-related legal issues. We represent banks and other providers of financial services in a broad range of matters throughout the state of Florida. As a result of our significant experience, we will have much to share in the upcoming blog posts and we hope that you will find these posts to be informative and beneficial to you in your respective positions in the industry. We appreciate your interest in the field and in Rogers Towers, P.A., and we look forward to your comments in response to our blog.
Florida’s Fifth District Court of Appeal recently filed an opinion that emphasizes the importance of properly authenticating evidence in support of a motion for summary judgment. In Colon v. JP Morgan Chase Bank, N.A. et al., 2015 WL 477629 (Fla. 5th DCA Feb. 6, 2015), the court considered the argument of a borrower who appealed summary judgment of foreclosure on the grounds that the bank failed to authenticate certain evidence in support of its motion for summary judgment.
In this case, the borrower defaulted on his mortgage payments. In response, the bank elected to accelerate the amount due under the loan and to foreclose its mortgage on the property. However, the loan documents required that the bank provide the borrower with notice of default (together with an opportunity to cure the default) prior to acceleration. While the bank claimed that it sent a demand letter that provided sufficient notice, the borrower denied that he ever received the letter and raised the alleged lack of notice as an affirmative defense.
Unfortunately for the bank, its counsel failed to file an authenticated copy of the demand letter with the court. Since no authenticated evidence rebutted the borrower’s affirmative defense, the trial court erred when it granted summary judgment of foreclosure. As a result, the case now returns to the trial court for renewed litigation after spending over 18 months on appeal.
Under Florida law, unauthenticated documents cannot support a motion for summary judgment. Even a verified complaint is insufficient if it is not based on the personal knowledge of the loan officer who swears it is accurate. Furthermore, a party moving for summary judgment must serve all evidence that supports its motion at least 20 days before a summary judgment hearing.
In practice, this burden is not difficult to meet. The Fifth District Court of Appeal itself noted that bank would have prevailed if it authenticated the acceleration letter with an affidavit, attached the letter to the affidavit, and filed the affidavit 20 days before the hearing.
In the latest chapter of “lien stripping,” the Honorable Judge Erik P. Kimball of the Southern District of Florida, Bankruptcy Court, recently grappled with the issue of whether a debtor can strip a completely unsecured junior mortgage on abandoned property. In Bodensiek, a creditor held two mortgages on the debtor’s homestead property. However, the minimal value of the homestead property rendered the creditor’s second mortgage completely under water. Prior to the debtor filing a motion to strip creditor’s second mortgage, the Chapter 7 Trustee issued a Notice of Abandonment related to the homestead property.
The creditor argued that because the homestead was abandoned, it was no longer property of the estate. Consequently, the creditor asserted that the debtor could no longer strip the second mortgage pursuant to 11 U.S.C. 506. The Court disagreed with creditor’s analysis and found that when construing 11 U.S.C. 506, property should be classified at the time of filing the bankruptcy petition. Relying on Justice Scalia’s dissent in Dewsnup v. Timm, the Court held that a debtor can strip a completely unsecured lien without regard to whether the property is, or will be, abandoned. The Court noted the similarities between abandoned and exempt property, and determined that a contrary result could lead to complicated issues arising if, for example, a debtor amended its schedule of exempt assets prior to the case being closed.
Creditors and their counsel within the Eleventh Circuit should take notice of Bodensiek and anticipate motions to strip being filed by debtors regardless of whether the subject property is claimed exempt or abandoned.
As previously discussed on this blog, the Equal Credit Opportunity Act (the “ECOA”) prohibits creditors from discriminating against credit applicants based on race, religion, sex, national origin, marital status, and age among other things. But what happens when a lender violates the ECOA? What penalties will a lender be subject to for noncompliance?
Enforcement and penalties for those who violate the ECOA are set forth in 15 U.S.C. § 1691e(b) and 12 C.F.R. § 1002.16.
Here is a brief look at possible penalties for a lender who violates provisions of the ECOA:
- Civil liability for actual damages.
- Civil liability for punitive damages.
- Punitive damages are limited to non-governmental entities.
- Punitive damages are capped as follows:
- The lesser of $500,000 or 1% of a creditor’s net worth in a class action lawsuit.
- $10,000 on an individual claim.
- Costs and attorney’s fees awarded to an aggrieved applicant in a successful private action.
- Equitable and declaratory relief.
In addition to the consumer’s ability to bring a private cause of action, the ECOA provides for administrative enforcement and regulation. Although numerous governmental agencies are empowered to enforce compliance with the ECOA, the Consumer Financial Protection Bureau is the primary agency responsible for its enforcement.
It is also important for lenders to understand that a violation of the ECOA may also constitute a violation of other federal laws. There are times when a failure to comply with the ECOA is not a violation because of an inadvertent error, but it is nonetheless important for lenders to correct a violation immediately when any type of error implicating the ECOA is made.