Many states have enacted consumer collection practices laws that impose additional hurdles for lenders in their efforts to collect debts and foreclose mortgages. A Florida appellate court has just addressed what it considers may be a case of first impression in Florida: whether a collection practices statute can impose a condition precedent to provide written notice of the assignment of a mortgage loan to the borrower, and bar commencing foreclosure notwithstanding the lender’s compliance with its contractual obligations to assign the mortgage and provide notice of acceleration. Although Florida’s Second District Court of Appeal held in Brindise v. U.S. Bank National Association that the notice of assignment required by the Florida Consumer Collection Practices Act (“FCCPA”) is not a condition precedent to foreclosure, “because innumerable foreclosure cases are pending in the trial and district courts where defendants have raised section 559.715 as a bar to foreclosure,” it certified the question to the Florida Supreme Court as one of great public importance. Brindise v. U.S. Bank National Association, __ So. 3d __, 41 Fla. L. Weekly D223a (Fla. 2d DCA January 20, 2016).
The borrowers had defended the foreclosure on the basis that prior to filing suit, the holder of the note did not give them written notice of its assignment at least 30 days before filing suit, as required by section 559.715, Florida Statutes (2012). The note had been acquired by an assignment through a blank indorsement.
Focusing on whether the foreclosure suit is an effort to collect a consumer debt, the court declined “to become ensnared unnecessarily in a briar patch,” noting that the “federal cases to which they cite offer no meaningful consistency.” Even if a foreclosure suit is an effort to collect a consumer debt, several reasons “compel[led]” the court to conclude the statutory notice was not a condition precedent.
The Florida statute did not mandate that the state courts obey federal precedent and requires only that “due consideration and great weight shall be given.”
Although section 559.715, Florida Statutes, provides that “the assignee must give the debtor written notice of such assignment as soon as practical after the assignment is made, but at least 30 days before any action to collect the debt,” the court said this is not specific-enough language to make written notice a condition precedent to suit. Because the statute provides that the assignee is “a” real party in interest empowered to collect the debt, “[t]he open-ended ‘a’ indicates that the assignee is not the only real party in interest,” and that right “does not rest exclusively with the assignee.”
Because the FCCPA prohibits specified debt collection practices and does not extend the remedies of a private action to the failure to give notice under section 559.715, making that section “a condition precedent is not necessary to the primary purpose of the FCCPA,” which provides administrative enforcement mechanisms for such a violation.
The court then held that “[a]s a matter of contract, section 559.715 is inapplicable” because Paragraph 20 of the mortgage the borrowers executed provides that the note “can be sold one or more times without prior notice.” The court also noted it was “significant” that the borrowers contractually agreed with their lender on the procedure by which they would receive notice of any default and the manner in which the lender could accelerate all payments due, under Paragraph 22 of the mortgage. Such a notice is independent of the statute.
Although there was a strongly worded dissenting opinion from one of the judges, it remains to be seen whether the Florida Supreme Court will weigh in on this issue.