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Foreclosure Plaintiffs Win Against Wells Fargo

gavel-fiveHomeowners in Florida recently succeeded in getting a judgment in favor of Wells Fargo dismissed, allowing them to reverse a foreclosure action previously decided in the bank’s favor.

The case—Hicks v. Wells Fargo—reached the Fifth District Court of Appeals in the State of Florida. The issue turned on the statute of limitations, with the Fifth District holding that the bank’s foreclosure claim was time barred by Florida’s five-year statute of limitations for foreclosure filings, according to the complaint.

In the petition for reversal of the prior decision, the homeowners claim that it all began when an initial default occurred on June 1, 2006. At some point, a prior holder of the note sued to foreclose on Sept. 8, 2006, but the case was voluntarily dismissed in 2008. Then, in 2011, the current note holder (Wells Fargo) sent a notice to accelerate to the borrowers. The second foreclosure action did not occur until 2013, which is seven years past the original default date.

The appellate court agreed with the borrowers that the 2013 foreclosure action by Wells Fargo is time-barred by the state’s five-year statute of limitations; however, the court noted that the bank is not barred from pursuing new or remaining foreclosure claims that fall within the statute of limitations period.

The court wrote, “Despite the previous acceleration of the balance owed in both the instant suit and prior suit, Bank is not precluded from filing a new foreclosure action based on different acts or dates of default not previously alleged, provided that the subsequent foreclosure action on the subsequent defaults is brought within the statute of limitations period…”

What is the takeaway from this case? Florida's statute of limitations period is sensitive and acceleration actions cannot suffice without a timely foreclosure action. However, not all is lost if a bank fails to file on time, as long as they have a new valid claim to bring forth.

Click here to read the court's opinion.

About Author: Kerri Panchuk

Kerri Panchuk is an attorney and financial writer with more than a decade of experience covering real estate, default servicing, residential mortgage-backed securities, retail, macroeconomics, and commercial real estate. Panchuk graduated from the Southern Methodist University Dedman School of Law and texas Tech University, Panchuk previously served DSNews.com as online managing editor/producer and webcast anchor. In April, she rejoined the Fiver Star Institute as executive director of member groups, overseeing the development and growth of the National Appraisal Congress and Title and Closing Coalition. Panchuk is a member of the State Bar of Texas.

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