Florida Appellate Court holds that lender does not have to send new notice of default after voluntary dismissal of first foreclosure

In HSBC Bank USA, N.A. as Tr. for Registered Holders of Renaissance Equity Loan Asset-Backed Certificates, Series 2007-3 v. Leone, No. 2D17-2851 (Fla. Dist. Ct. App. May 3, 2019) a Florida Appellate Court reversed a trail court ruling that because the lenders first foreclosure was voluntarily dismissed it had to send a new notice of default prior to filing a second foreclosure.

Following the borrower’s default, the lender’s loan servicer sent two notices advised the borrowers of their default and ability to cure within thirty days. The lender then filed foreclosure. In response, the borrowers moved to dismiss arguing in part that the lender failed to provide the notice required under paragraph 22 of the mortgage because it failed to attach any documents to its complaint showing it provided such notice. The trial court granted the motion and dismissed the case without prejudice, finding that the borrowers’ affidavit, which was unrefuted, established that the lender failed to provide the required notice.

The lender then filed a second foreclosure predicated on the same default. At trial, it introduced the two notices of default into evidence. After it rested, the borrowers moved to dismiss arguing that a new default notice was required to be mailed prior to filing the second foreclosure. The trial court granted the motion, finding that there should have been a new paragraph 22 letter sent prior to the filing of the second foreclosure. The trial court reasoned that a new default notice was required because the amount due to cure the default would be much higher than the one stated in the prior default notice.

The Second District appellate court reversed. It looked to the language of the mortgage. Paragraph 22 indicates that after a default and prior to acceleration, the lender is required to provide the borrowers with notice of the default and an opportunity to cure. Relying on Florida case law, Bartram v. U.S. Bank National Ass’n, 211 So.3d 1009 (Fla. 2016), and Schindler v. Bank of New York Mellon Trust Co., 190 So.3d 102 (Fla. 4th DCA 2015), the borrowers argued that the lender has to provide a fresh notice of default prior to commencing a new foreclosure.

The appellate court disagreed, finding those cases inapposite. Bartram dealt with a different paragraph of the mortgage, paragraph 19, relating to de-accelerating the loan. Bartram does not suggest that the dismissal of a foreclosure action without prejudice requires the lender to re-establish its right to exercise its option to accelerate by sending a new default notice under paragraph 22. And nothing in paragraph 22 requires the lender to send a new default notice prior to filing a second foreclosure action based on the same default. Schindler was inapposite because the dismissal of the prior action was on the merits where the instant case was without prejudice.

The trial court’s assertion that a new default notice must be sent after a dismissal without prejudice because the amount due to cure the default would be different than the one stated in the prior default notice was misplaced. The mortgage does not require that a new default notice must be sent for each subsequent default prior to filing a foreclosure action. Because the default was never cured, the lender was not required to send a new default notice before filing a second foreclosure action based on the same default. Accordingly, we reverse the trial court’s order of dismissal and remand for further proceedings.

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