Borrower and Creditor MUST Give Notice and Opportunity to Cure before Suing
Jennifer Sandoval bought a Florida home with money she borrowed from Suntrust Bank and secured the debt with a mortgage. She later obtained a loan modification, and later defaulted on the loan. The creditor hired law firm Ronald R. Wolf & Associates to sue Sandoval for breach of contract and to foreclose the loan. Sandoval hired a lawyer who sent a Qualified Written Request letter to Suntrust, and Suntrust responded with a letter explaining the requirements for reinstatement. Wolf charged fees for the reinstatement to bring the loan current and dismiss the foreclosure. Sandoval sued Suntrust and Wolf in the Southern District of Florida US District Court for violating RESPA, FCCPA, and FDCPA (Real Estate Settlement Procedures Act, Florida Consumer Collection Practices Act, and Fair Debt Collection Practices Act).
Suntrust filed a motion to dismiss the case for failure to state a claim for which the court could grant relief. The court dismissed the case against Suntrust with prejudice, and then amended the dismissal. The reader should take note of three important factors in the issue:
- Suntrust did not violate any of those laws in the manner Sandoval alleged; and
- Most importantly, Sandoval had failed to allege in her compliant that she had given Suntrust the statutory and contractually required notice of grievance and opportunity to cure prior to suing Suntrust.
- The court amended its dismissal order as follows (emphasis added):
“The Court’s January 19, 2017 Dismissal Order is AMENDED as follows: While the FDCPA and RESPA claims against SunTrust are dismissed with prejudice, the FCCPA against SunTrust is dismissed without prejudice, with leave to provide mandatory pre-suit notice to SunTrust of the alleged FCCPA violation and an opportunity to cure, prior to initiating a lawsuit against SunTrust that attempts to state a claim for a violation of the FCCPA. Because the dismissal of the FCCPA claim is without prejudice to Plaintiff attempting to comply with the requirements of the preceding paragraph, Defendant SunTrust’s Motion for Entry of Final Judgment Pursuant to Rule 54(b) [DE 69] is DENIED WITHOUT PREJUDICE.”
Thus it becomes clear that Sandoval has no more opportunity in this matter against Suntrust in federal court, and if she decides to sue Suntrust in state court for FCCPA violations, she must first send Suntrust a proper notice of grievance and give Suntrust an opportunity to cure, because her mortgage contract requires it.
Why You Should Always Read Your Contract
The mortgage and the note comprise a single legal contract even though they exist in separate documents. Sandoval’s failure to give notice and opportunity to cure constituted a breach of that contract, specifically of the second paragraph of section 20 of the uniform Form 3010: Florida Mortgage security instrument. The mortgage, in section 20, provides the following (red emphasis added):
“Neither Borrower nor Lender may commence, join, or be joined to any judicial action (as either an individual litigant or the member of a class) that arises from the other party’s actions pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party (with such notice given in compliance with the requirements of Section 15) of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action. If Applicable Law provides a time period which must elapse before certain action can be taken, that time period will be deemed to be reasonable for purposes of this paragraph. The notice of acceleration and opportunity to cure given to Borrower pursuant to Section 22 and the notice of acceleration given to Borrower pursuant to Section 18 shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this Section 20.”
The mortgage, in Section 22, imposes a similar obligation, in bold face type, on the creditor:
“Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration following Borrower’s breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 unless Applicable Law provides otherwise). 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 of the sums secured by this Security Instrument, foreclosure by judicial proceeding and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. If the default is not cured on or before the date specified in the notice, Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may foreclose this Security Instrument by judicial proceeding. Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Section 22, including, but not limited to, reasonable attorneys’ fees and costs of title evidence. “
Notice that section 20 refers to “Applicable Law.” That could refer to state law, or to federal (e.g., RESPA) law. The applicable federal law, RESPA, (at 12 USC 2605(e)) obligates the servicer to acknowledge receipt of a Qualified Written Request or answer it within 20 business days (about 4 weeks) , and to answer it within 60 business days (about 3 months). Regulation X in the Code of Federal Regulations requires the lender to acknowledge a notice of error (grievance) within 5 days (about 1 week) and correct the error within 30 days (about 6 weeks). Read 12 USC 2605 and the corresponding part of Regulation X in the Code of Federal Regulations 12 CFR 1024.35 in their entirety.
So in this case neither the borrower Jennifer Sandoval nor her attorney read or heeded the mortgage security instrument section 20. And even if they had, Sandoval did not allege in her complaint against Suntrust that she had sent the notice of grievance and given opportunity to cure in compliance with RESPA. And now not only has she lost in federal court, but also she will have to pay Suntrust’s (and her own) legal fees.
Mortgage Attack hopes other borrowers learn from Sandoval’s mistake.
READ YOUR CONTRACT!