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Court Ruling: When Can Banks Foreclose?

Last month, Florida’s Third DCA affirmed a foreclosure judgment entered in favor of U.S. Bank National Association finding the bank proffered competent, substantial evidence that the borrower breached the terms of a modified note and mortgage. 3499 Saraev Properties, LLC v. US Bank Nat’l Ass’n.

The appellant, 3499 Saraev Properties (“Saraev”), was a third-party purchaser who took title to the property subject to US Bank’s mortgage. The bank sought to foreclose its mortgage when the borrower failed to make timely payments.

The matter proceeded to trial and the lower court entered a final judgment of foreclosure in favor of US Bank. Saraev appealed that final judgment asserting “the bank failed to adequately plead and prove an independent breach of a binding loan modification agreement.”

The Third DCA disagreed, explaining the bank “properly relied upon the composite of documents in pleading and proving its entitlement to foreclosure.” Specifically, the court explained that the bank (1) properly “referenced the modification agreement in its verified complaint;” (2) attached a copy of the loan modification agreement to its verified complaint; (3) successfully proffered an authenticated copy of the modification into evidence at trial; and (4) proffered competent testimony regarding “both the balance due under the modification” and the mortgagors’ failure to pay.

The court refused to disturb the lower tribunal’s factual findings on the issues of breach and damages. The DCA explained the trial court’s findings could only be reversed if the lower court abused its discretion by drawing “arbitrary, fanciful, or unreasonable” conclusions based on the evidence. The DCA affirmed the bank’s judgment. Although the substance of the bank’s evidence was not discussed in detail, this decision still provides helpful guidance on the general evidentiary requirements for pleading and proving entitlement to foreclosure of a modified loan.

Editor's note: The author is Chairman of Legal League 100, a professional association of financial services law firms in the United States that is a membership group of Five Star Global, which publishes DS News.

Learn about Legal League 100 membership here.

About Author: Roy Diaz

Roy A. Diaz is the Managing Shareholder of Diaz, Anselmo Lindberg, P.A. The firm provides representation in Florida, Illinois, Ohio, Indiana, Kentucky, Wisconsin and Michigan. Diaz has been a member of the Florida Bar since 1988. He has concentrated his practice in the areas of real estate, litigation, and bankruptcy. He has represented lenders, servicers of both conventional and GSE loans, private investors, and real estate developers throughout his career with an emphasis on the mortgage servicing industry for over 25 years.

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