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Florida From The Bench

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Our contribution to the June issue of #DSNEWS @DSNEWSDAILY www.dsnews.com

Our contribution to the June issue of #DSNEWS @DSNEWSDAILY www.dsnews.com

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  • 1. AS SEEN IN DSNEWS mation and best practices, and they are quite in part on data retrieved by a prior servicer of Florida savvy in the defense of these actions. One example of such savviness, the subject loan. The appellate court applied the business rank: 1 90+ Day Foreclosure Unemployment combined with, quite frankly, a loan records hearsay exception to the employee’s Delinquency Rate Rate Rate servicer’s sloppiness, is seen in the Florida march 2012 testimony and ruled that the affidavit could Fourth District Court of Appeal’s case of 3.93% 14.02% 9.0% Glarum v. LaSalle Bank National Association, not be admitted into evidence under Section year ago 4.85% 13.87% 10.7% So. 3d, 2011 WL 5573941 (Nov. 17, 2011). 90.803(6)(a) and, as such, was inadmissible percent point change LaSalle filed a foreclosure action against hearsay. The court found that the witness did -19.1% 1.1% -15.9% a homeowner. The homeowner’s counsel not know who, how, or when the data entries Top County filed an answer admitting that payments were made into the servicer’s computer MIAMI-DADE COUNTY 90+ Day Foreclosure had not been made according to the terms system, neither could he state if the records Delinquency Rate march 2012 Rate of the note, but denied LaSalle’s allegations were made in the regular course of business. 4.85% 20.39% regarding the amount of the default. To As the witness had no knowledge of how his year ago establish the amount of the indebtedness, 6.01% 21.14% own company’s data was produced, he was LaSalle filed the affidavit of a “specialist” percent point change from the loan servicer in support of its not competent to authenticate the data. The -19.3% -3.6% motion for summary judgment. This court thus reversed the lower court’s entry of Top Core-Based Statistical Area specialist attested that the homeowner was summary judgment in favor of LaSalle and MIAMI-FORT LAUDERDALE-MIAMI BEACH, FL in default pursuant to the note and owed in sent the case back to the trial court. 90+ Day Foreclosure Delinquency Rate Rate excess of $340,000. The trial court granted While the Glarum case is very specific in march 2012 4.21% 17.17% summary judgment in LaSalle’s favor. The its holding, lenders and servicers can learn year ago homeowner appealed the decision. some broad lessons. First, don’t assume that a 5.52% 17.64% Pursuant to Florida law, the affidavit homeowner won’t obtain counsel, and com- percent point change constituted “hearsay” evidence. “Hearsay” -23.8% -2.7% petent counsel at that. Second, don’t assume is a statement, other than one made by an note: The 90+ Day delinquecy rate is the percentage of outstanding mortgage loans that are 90- individual while testifying at a trial or hear- the counsel will not take the deposition of plus days delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the March 2012 foreclosure rate. All figures are rounded to the nearest decimal. The unemployment rate reflects preliminary March 2012 figures released by the Bureau of Labor ing, offered in evidence to prove the truth any individual swearing to an affidavit—or affiant—that supports a motion for summary Statistics. All other data courtesy of Lender Processing Services. of the matter asserted. Hearsay evidence is inadmissible in a Florida court unless a judgment. statutory exception applies. In this case, the The law does not require an affiant who FROM THE BENCH business records hearsay exception would be relies on computerized bank records to be applicable. the records custodian who entered or created The Application of Pursuant to Section 90.803(6)(a), Florida the data, nor must the affiant identify who the Florida Business Statutes, documentary evidence may be admitted into evidence as a business record if entered the data into the computer. Like- Records Hearsay the proponent of the evidence demonstrates wise, there is no rule which precludes the admission of computerized business records Exception to the following through a records custodian or other qualified person: acquired from a prior loan servicer. What is Foreclosure Litigation (1) the record was made at or near the time required is that the affiant knows the basics of the event; as set forth in Section 90.803(6)(a). According to the Mortgage Bankers (2) the record was made by or from infor- Finally, if it is suspected that an affiant Association’s recently released National mation transmitted by a person with Delinquency Survey, more than 24 percent of does not have the ability to testify in compli- knowledge; ance with the law, a court may permit affida- home loans in Florida were in some stage of (3) the record was kept in the ordinary delinquency or foreclosure in the last quarter vits to be supplemented by further affidavits. course of a regularly conducted business of 2010. About 14 percent of Florida homes activity; and It is highly recommended that lenders and were actively in foreclosure, meaning that a (4) it was a regular practice of that business servicers work closely with their counsel to foreclosure action had been initiated by the to make such a record. avoid this costly and embarrassing situation. lender, but the mortgage had not been sold This From the Bench article is provided via foreclosure sale, been brought current by As was his legal right, counsel for the by Michael J. Barker and Keith M. Hoffman. the homeowner, or a workout (loan modifi- homeowner took the deposition of the loan Barker is a partner in the Jacksonville, Florida, cation, short sale) had not taken place. servicer’s employee. The witness explained office of Quintairos, Prieto, Wood & Boyer, P.A., This issue has created a booming business that he derived the $340,000 figure from and heads up the firm’s financial services practice for attorneys that specialize in defending his company’s computer system. However, homeowners in foreclosure litigation. While group. Hoffman is a partner in the firm’s Tampa he did not know who entered the data into some attorneys simply take their clients’ the computer and could not verify that the office and a member of the Financial Services money, buy them some time, and have no entries were correct at the time they were Practice Group. Both represent clients in the real expertise in this evolving area of law, made. In addition, to calculate the home- default servicing, banking, mortgage lending, other lawyers have organized, shared infor- owner’s payment history, the witness relied mortgage servicing, and title insurance industries. 92

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