Florida appeals court permits disputed mortgage foreclosure

A Florida appeals court ruled that a mortgage accounting fight did not relieve homeowners of their duty to keep making scheduled payments. The November 4 ruling, decided 2-1, revived Bank of New York Mellon’s foreclosure case involving a Hillsborough County house. The couple borrowed $160,000 in 2007 and modified the loan following a Chapter 13 bankruptcy in 2012. Their account remained up to date until Bank of America undid four payments on August 21, 2015. Its records gave no reason for that action.

The homeowners continued sending monthly checks through April 2017, and the servicer accepted them. In May 2017, Bank of America sent back the latest payment, treating it as insufficient because the earlier four amounts were also due. The wife later made two attempts to pay at a branch, but neither was accepted. Payments stopped beginning in June 2017. When the foreclosure complaint arrived in January 2021, the couple acknowledged they lacked enough money to restore the account.

A lower court had favored the homeowners, but the appellate majority disagreed. Under Florida law, it treated every unpaid installment as its own breach. The judges also found that the lender’s conduct, though criticized in the decision, did not meet the fraud-like standard required for an unclean-hands defense. The recalculated judgment must exclude the four reversals, interest before June 2017 and fees before July 2017. The opinion remains subject to revision before formal publication.