Florida 1st District Affirms $250K Punitive Damage Award in Pate v BOA

All of you who simply cannot believe that borrowers can beat the bank by proving the bank and its agents and allies injured the borrower, TAKE HEART.  Here I present a crystal clear example of the MORTGAGE ATTACK methodology:

Bank of America, NA v. Pate, 159 So. 3d 383 – Fla: Dist. Court of Appeals, 1st Dist. 2015

https://scholar.google.com/scholar_case?case=9278967945135979893

Don’t waste your time whining about the banking industry, fractional reserve lending, the Federal Reserve, the money system, securitization, and such irrelevancies.  Get a mortgage examination if necessary to find the causes of action, and use them to HAMMER the lender, creditor, servicer, appraiser, loan broker, closer, title company, etc (whoever hurt you) IN COURT.

As you can see, the Florida appeals court upheld the BENCH TRIAL (not jury) award of $250,000 in PUNITIVE DAMAGES and over $60,000 in compensatory damages for the INJURIES the BANK did to the BORROWER.  The Pates could probably have won much more in a jury trial.

If you want to deploy the MORTGAGE ATTACK strategy in your own mortgage dispute, visit http://MortgageAttack.com to learn what works and what does not.

159 So.3d 383 (2015)

BANK OF AMERICA, N.A., and Third-Party Defendant, Homefocus Services, LLC, Appellants,
v.
Phillip V. PATE and Barbara Pate, Robert L. Pohlman and Marcia L. Croom, Appellees.

No. 1D14-251.
District Court of Appeal of Florida, First District.

March 16, 2015.
J. Randolph Liebler and Tricia J. Duthiers of Liebler, Gonzalez & Portuondo, Miami, for Appellants.

384*384 Jonna L. Bowman of Law Office of Jonna Bowman, Blountstown, for Appellees.

PER CURIAM.

AFFIRMED.

ROWE and OSTERHAUS, JJ., concur; THOMAS, J., CONCURS SPECIALLY WITH OPINION.

THOMAS, J., Specially Concurring.

In this civil foreclosure case, the trial court found that Appellant Bank of America (the Bank) engaged in egregious and intentional misconduct in Appellee Pates’ (Pate) purchase of a residential home. Thus, based on the trial court’s finding that the Bank had unclean hands in this equity action, it did not reversibly err in denying the foreclosure action and granting a deed in lieu of foreclosure. In addition, the trial court did not err in ruling in favor of the Pates in their counterclaims for breach of contract and fraud, and awarding them $250,000 in punitive damages and $60,443.29 in compensatory damages, against the Bank and its affiliate, Homefocus Services, LLC, which provided the flawed appraisal discussed below. Finally, the trial court did not reversibly err in granting injunctive relief and thereby ordering the Bank to take the necessary measures to correct the Pates’ credit histories.

In the bench trial below, the trial court found that the Bank assured the Pates, based on the appraisal showing the home’s value far exceeded the $50,000 mortgage loan, that it would issue a home equity loan in addition to the mortgage loan. This was a precondition to the Pates’ agreement to purchase the home, which was in very poor condition but had historical appeal for the Pates. The Pates intended to restore the home, but needed the home equity loan to facilitate restoration.

Before the closing on the property, the Bank informed the Pates that it would close on the home equity loan “later,” after the mortgage loan was issued. The Bank later refused to issue the home equity loan, in part on the ground that the appraisal issued by Homefocus was flawed. The Pates were forced to invest all of their savings and much of their own labor in extensive repairs. Thus, the trial court found that the Pates detrimentally relied on the representations of the Bank that it would issue the home equity loan. The record supports the trial court’s conclusion that the Bank acted with reckless disregard constituting intentional misconduct by the Bank. See generally,Lance v. Wade, 457 So.2d 1008, 1011 (Fla.1984) (“[E]lements for actionable fraud are (1) a false statement concerning a material fact; (2) knowledge by the person … that the representation is false; (3) the intent … [to] induce another to act on it; and (4) reliance on the representation to the injury of the other party. In summary, there must be an intentional material misrepresentation upon which the other party relies to his detriment.”).

The trial court further found that the Pates complied with the Bank’s demand to obtain an insurance binder to provide premiums for annual coverage, and that the Bank agreed to place these funds in escrow, utilizing the binder to pay the first year of coverage and calculate future charges to the Pates. Although the Pates fulfilled this contractual obligation, the Bank failed to correctly utilize the escrow funds. Consequently, the Pates’ insurance policy was ultimately cancelled due to nonpayment. The Pates attempted to obtain additional coverage but were unsuccessful due to the home’s structural condition. The Bank then obtained a force-placed policy with $334,800 in coverage and an annual premium of $7,382.98, which was 385*385 included on the mortgage loan, quadrupling the Pate’s mortgage payment.

The Pates offered to pay the original $496.34 monthly mortgage payment, but the Bank refused, demanding a revised mortgage payment of $2,128.74. The trial court found it “disturbing that Bank of America could financially profit due to [the Bank’s] failure to pay the home insurance…. [T]he profits for one or more months of forced place insurance would have been substantial.”

The trial court further found that during the four years of litigation following the Pates’ default, the Bank’s agents entered the Pate’s home several times while the Pates resided there, attempted to remove furniture, and placed locks on the exterior doors. Following the Bank’s action, the Pates had to have the locks changed so their family could enter the residence. During two of the intrusions, the Pates were required to enlist the aid of the sheriff to force the Bank’s agent to leave their home. The trial court found as fact that, due to the Bank’s multiple intrusions into their home, the Pates were forced to obtain alternative housing for 28 months, at a cost of thousands of dollars.

The Bank’s actions supported the trial court’s finding that punitive damages were awardable. In Estate of Despain v. Avante Group, Inc., 900 So.2d 637, 640 (Fla. 5th DCA 2005), the court held that “[p]unishment of the wrongdoer and deterrence of similar wrongful conduct in the future, rather than compensation of the injured victim, are the primary policy objectives of punitive damage awards.” See also Owens-Corning Fiberglas Corp. v. Ballard, 749 So.2d 483 (Fla.1999); W.R. Grace & Co.-Conn. v. Waters, 638 So.2d 502 (Fla.1994).

In Estate of Despain, the court held that “[t]o merit an award of punitive damages, the defendant’s conduct must transcend the level of ordinary negligence and enter the realm of willful and wanton misconduct….” 900 So.2d at 640. Florida courts have defined such conduct as including an “entire want of care which would raise the presumption of a conscious indifference to consequences, or which shows… reckless indifference to the rights of others which is equivalent to an intentional violation of them.” Id. (quoting White Constr. Co. v. Dupont, 455 So.2d 1026, 1029 (Fla.1984)). Here, the Bank’s intent to defraud was shown by its reckless disregard for its actions. The facts showing the Bank’s “conscious indifference to consequences” and “reckless indifference” to the rights of the Pates is the same as an intentional act violating their rights. See White Constr. Co., 455 So.2d at 1029. The record evidence provides ample support for the trial court’s ruling in favor of the Pates’ claim for punitive damages against the Bank.

The learned trial judge found that the Bank’s actions demonstrated its unclean hands; therefore, the Bank was not entitled to a foreclosure judgment in equity. Unclean hands is an equitable defense, akin to fraud, to discourage unlawful activity. SeeCongress Park Office Condos II, LLC v. First-Citizens Bank & Trust Co., 105 So.3d 602, 609 (Fla. 4th DCA 2013) (“It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief[.]”) (quoting Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814 (1945)). The totality of the circumstances established the Bank’s unclean hands, precluding it from benefitting by its actions in a court of equity. Thus, the trial court did not err by denying the foreclosure action.

Should You Report the Mortgage Broker for Fraud?

A mortgage victim recently wrote this to me:

“I sent the lender a letter. They responded within 2 weeeks with a letter that  had a 2 copies of the loan application from a bank with different information in spots and signed by a TLC. One set was different than what was given to me at settlement.  An extra year was added to my years of employment. Also a $1000 bonus was added to my salary, and they changed the reason for refinance from cash out to home improvement. I never told them any of those things. I have no idea why that is on the papers and I wasn’t aware of it until I got their letter.  Could they have changed it to pass the loan through at the time and sent it to me by mistake? “

Clearly, this borrower feels acutely aware of misbehavior by the mortgage broker or lender through falsification of the loan application.  The borrower does not admit signing the loan application, but of course we know he must have signed a loan application, the note, and the security instrument at closing.  Typically, the closing officer shoves one form after another across the table to the borrower and shows where to sign it.  Typically, the borrower never bothers reading it or having an attorney review it in advance.

And, look at this text from the Acknowledgement and Agreement section of FannieMae’s Uniform Residential Loan Application, which most mortgage borrowers sign:

“Each of the undersigned specifically represents to Lender and to Lender’s actual or potential agents, brokers, processors, attorneys, insurers, servicers, successors and assigns and agrees and acknowledges that:  (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec. 1001, et seq. …”

I have supplied that and other criminal laws from the Legal Information Institute that might interest you.  These and other federal criminal laws might stimulate you into reporting your crooked mortgage broker to the FBI.  However, if you signed the loan application at closing, FBI agents, DOJ attorneys, and federal judges might construe that as meaning you read and understood and agreed with the content of every document you signed BEFORE signing it.  If so, whom might they consider committed bank fraud, etc?

In spite of this, Congress has established statutes that impose time limitations for prosecuting people for crimes.  If too much time goes by between commission of the crime and indictment, the government might lose the authority to prosecute.  These statutes can get a little complicated and non-uniform, so attorneys must study them carefully to learn the effect on their clients.  The student can find a Congressional Research Service report on the Statutes of Limitations here.

Note that this article deals only with federal crimes.  Your state has its own criminal and civil laws that might affect appraisers, mortgage brokers, title companies, Realtors, lenders, servicers, and borrowers.

This author thinks it makes sense to contact a competent attorney and seek legal advice about whether and how to report suspicions that a mortgage broker or other entity involved in your mortgage loan transaction has committed a crime by hoodwinking you.

You might have many kinds of criminal and civil issues in your mortgage transaction.  It makes most sense to get a competent professional to examine your mortgage so as to find ALL of those issues so you can identify them to your attorney in preparation for suing or filing a criminal complaint.  If you want a comprehensive mortgage examination, notify Maven via Mortgage Attack‘s Contact page.

————— Start of US Code ————-

18 USC 4 – Misprision of felony.

Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

18 USC 1001 – Statements or entries generally.

(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
(2) makes any materially false, fictitious, or fraudulent statement or representation; or
(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;
shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.
(b) Subsection (a) does not apply to a party to a judicial proceeding, or that party’s counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding.
(c) With respect to any matter within the jurisdiction of the legislative branch, subsection (a) shall apply only to—

(1) administrative matters, including a claim for payment, a matter related to the procurement of property or services, personnel or employment practices, or support services, or a document required by law, rule, or regulation to be submitted to the Congress or any office or officer within the legislative branch; or
(2) any investigation or review, conducted pursuant to the authority of any committee, subcommittee, commission or office of the Congress, consistent with applicable rules of the House or Senate.

18 USC 1341 – Frauds and swindles.

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both.

18 USC 1344 – Bank Fraud. 
Whoever knowingly executes, or attempts to execute, a scheme or artifice—
(1) to defraud a financial institution; or
(2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;
shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
18 USC 1346 – Scheme or Artifice to Defraud.
For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services.

 

————— End of US Code ————-

 

Fight the Right Battle to Cure Your Mortgage Crisis

How to Solve Mortgage and Foreclosure Woes

Do you have an underwater mortgage (you owe more than the value of the property)?

Do you face foreclosure?

You can solve those problems with relative ease and minimize damage to your credit rating if you follow the below decision tree.

You have two battles to fight in the war against the bank over your mortgage.

1.  Foreclosure Defense –  On one side of the hill you have the foreclosure.  If you fight the foreclosure battle, you always lose because of several factors – you signed the note and mortgage, failed to pay, and must forfeit the collateral.

2.  Mortgage Attack – On the other you have the mortgage itself.  When you fight the mortgage (challenge its validity), you can get the loan balance reduced (a “cram-down” loan mod) or get financial compensation or the house free and clear IF you find sufficient causes of action and prosecute them effectively.  The mortgage examination  finds those causes of action.  The examination report shows the causes of action so you can point them out to the bank or judge.

It’s that simple.

Now you face a variety of courses of action depending on your financial condition and the mortgage exam results:

Mortgage Examination Decision Tree

  1. If you are broke
    1. go to Minimize Loss
  2. Else (you are not broke)
    1. get the mortgage examined
    2. If the exam shows causes of action
      1. Negotiate settlement with lender (may need to hire lawyer for $1000)
      2. If you can accept the settlement
        1. embrace the settlement
        2. go to Enjoy Life
      3. else (settlement unacceptable)
        1. Sue lender for causes of action or file counter/cross claim
        2. embrace the result
        3. go to Enjoy Life
    3. else (no causes of action)
      1. go to Minimize Loss
  3. Minimize Loss:
    1. Do Short Sale, Deed in Lieu, or beneficial Loan Mod
    2. go to Enjoy Life
  4. Enjoy Life:
    1. Live happily ever after

I imagine you signed a note and mortgage in which you admitted receiving a loan, having seisen (possession) of the estate, and conveying the estate to the mortgagee for purposes of the mortgage.  Article I Section 10 of the Florida Constitution forbids any law from impairing the obligation of contracts (like the note and mortgage) and Section 21 grants injured persons (including banks) the right to use the courts for redress and justice.  You must forfeit the house for defaulting on the note.  You might drag out the process through legal shenanigans, but I guess you will lose the house in the end at great expense to your fortune and peace of mind…

Unless you can prove that the lender or lender’s agents injured you first.

The key to saving a house from foreclosure AND obtaining financial compensation lies in a comprehensive, competent mortgage examination, and negotiating with or suing the originating lender for the related causes of actions.  If the exam report reveals tortious conduct, legal errors, or contract breaches underlying the mortgage loan, those will provide a measure of opportunity to hammer the lender into a settlement.  Otherwise you don’t negotiate from a position of power, and you lose.  Done right, settling or suing stops the foreclosure, of course.

I know only one mortgage examiner with any degree of competence.  He does not negotiate on price, period.  You fill in a non-disclosure agreement and a questionnaire.  You scan and zip them and all your mortgage and foreclosure related documents (plus loan app and appraisal) and upload the file to the examiner.  He invoices you by PayPal.  You pay with Credit Card or PayPal account.  7 business days later you receive the report.  If it shows causes of action (red ink), you or your attorney negotiate settlement with the originating lender and plaintiff.  If you like the settlement, you settle.  If you don’t, you hire another attorney (fee or contingency) and sue.  The process might drag out a couple of years, but you will probably win (just like the mortgagee wins foreclosures).

  • Click the Contact menu item on the Mortgage Attack web site.
  • Email a request for the Non-Disclosure and Services Agreement, and the  QUESTIONNAIRE.
  • When you receive them, fill them in and execute the agreement.
  • Scan those with all mortgage and foreclosure related documents (closing docs plus appraisal, loan application, etc.) and compress them in a ZIP archive file.
  • Contact Mortgage Attack again for an explanation of how to send the archive file.  You will receive necessary details.
  • Upload the archive to the location provided.  The examination firm will invoice you.  Pay the fee, then receive the report in 7 business days
  • Settle or sue for the causes of action in the report, or (if no causes) walk from the  house with short sale, deed in lieu, keys for cash, etc.

Some gentle reminders…

Contact me by phone (727 669 5511) or Email for further details. I’ll put you in touch with the Chief Examiner after I have answered all your questions.

Yes, you may distribute this article Far and Wide.

Mort Gezzam photo
Mort Gezzam

Mortgage-Related Laws, Regs, Rules, Cases

Whether or not a person can afford an attorney, it makes good sense to know the law, rules, regulations related to the case, and to know how and where to find case law.  OBVIOUSLY, you should go to a law library or consult an attorney if you can find a competent one willing to fight for you and with some kind of proven track record.

It also makes sense to have a subscription to prepaid legal service like Legal Shield so you can talk to a lawyer inexpensively about your rights and options.

Unfortunately I have learned better than to trust an attorney to develop a sound strategy or to manage a case efficiently  or to advocate my cause aggressively.  In the end YOU are responsible for winning or losing your case, and YOU suffer (the lawyer doesn’t) if you lose your case.   So, you need to keep your “thumb on the pulse” of the case at all times, to keep the lawyer “honest” so to speak, particularly if you have had the sad misfortune of hiring a foreclosure pretender defender (don’t make me name names).

In order to remain aware and capable, you need to learn the law and become disposed to using it.  And you should learn about litigation practice   – rules of procedure and evidence.  I have collected some links to federal and Florida laws, and legal research sites.  Enjoy.

Federal mortgage related Law/Regulations

ConsumerFinancialProtectionBureau Chapter X

  • Equity skimming on HUD property or VA loan property a Federal Crime – 12 USC 1709-2
12 USC 1709-2
Whoever, with intent to defraud, willfully engages in a pattern or practice of—
(1) purchasing one- to four-family dwellings (including condominiums and cooperatives) which are subject to a loan in default at time of purchase or in default within one year subsequent to the purchase and the loan is secured by a mortgage or deed of trust insured or held by the Secretary of Housing and Urban Development or guaranteed by the Department of Veterans Affairs, or the loan is made by the Department of Veterans Affairs,
(2) failing to make payments under the mortgage or deed of trust as the payments become due, regardless of whether the purchaser is obligated on the loan, and
(3) applying or authorizing the application of rents from such dwellings for his own use,
shall be fined not more than $250,000 or imprisoned not more than 5 years, or both. This section shall apply to a purchaser of such a dwelling, or a beneficial owner under any business organization or trust purchasing such dwelling, or to an officer, director, or agent of any such purchaser. Nothing in this section shall apply to the purchaser of only one such dwelling.

Florida Mortgage Related Civil Litigation

Florida Evidence code Chapter 90
Witnesses, Records, Documents Code Chapter 92
Civil Practice
Rules of Civil procedure and Judicial Admin – http://floridabar.org
Go to Florida Judicial Circuit web site to find local court rules and administrative orders
Florida Code of judicial conduct
Oath of Admission to the Florida Bar
Rules regulating Florida Bar

Florida Consumer Collection Practices Act
Article III Chapter 673 and IX Chapter 679 UCC
marketable titles Chapter 712
Foreclosure Chapter 702
Florida Equity Skimming Chapter 697,

Books:

Trawick’s Florida Practice and Procedure
Florida Causes of Action
Florida Evidence Code with Objections
https://pushlegal.com/ online/phone law, rules, etc $1 per book per month rent.

Cheap legal research

http://www.stetson.edu/law/library/ –  Sometimes one can call with a question and get it answered

LII / Legal Information Institute

http://www.law.cornell.edu/wex legal dictionary/encyclopedia
http://law.lexisnexis.com/infopro/zimmermans/  Zimmerman research guide

http://constitution.org – founding documents, scholarly articles, searchable Statutes at Large
Google Scholar
http://Archive.org
Federal Digital System (laws etc)
Florida Appellate court web sites
  Florida appellate Opinions

http://www.findlaw.com/casecode/
http://www.justia.com/
http://www.plol.org/Pages/Search.aspx
http://www.lawguru.com/ilawlib/
http://thelawengine.com/
ABA Free Full-text Online Law Review/Law Journal Search Engine
Law Journals: Submissions and Rankings
http://www.fastcase.com/
http://www.versuslaw.com/
http://estore.loislaw.com/
http://www.lexisweb.com/ – Expensive
http://westlaw.com – Expensive
http://www.lexisone.com/freecaselaw/formulatingsearches.html
http://www.law.gmu.edu/library/research
http://www.law.duke.edu/lib/researchguides/intresearch
Federal case dockets and documents:  http://pacer.gov (you’ll need a credit card)