Articles Posted in Deficiency Waivers and Lawsuits

In the past year, Floridians have been hit with ten thousand or more deficiency lawsuits by Dyck-O’Neal, a collector hired by Fannie and Freddie to go after unfortunate homeowners. Many defaults have been obtained against homeowners which should not have occurred due to lack of personal and/or subject matter jurisdiction. Many folks did not even know these additional lawsuits have been filed against them. A recent New York Times article recently addressed this focusing on the ability of Dyck-O’Neal to go after deficiencies even in cases in which the underlying foreclosure action was suspect.

Some defenses raised by defense counsel in these cases are now hitting the appellate courts. In one such case decided May 1, 2015, Reid v. Compass Bank, 1D14-930 (Fla. 1st DCA May 1, 2015), the First DCA affirms the rule that a plaintiff in a foreclosure case cannot file a new lawsuit to seek a deficiency if the foreclosure court reserved jurisdiction for the purpose of entering future orders relating to the foreclosure.

“Notwithstanding the fact that First Federal Savings supports the argument that a party is not entitled to pursue an action at law on a promissory note where that party includes a prayer for a deficiency judgment in its foreclosure complaint and the trial court reserves jurisdiction to enter a deficiency judgment, we have determined that affirmance is warranted in this case based upon the circumstances presented.”

Mortgage companies in Florida must think money really does grow on trees as they are now suing for deficiency judgments on past foreclosures of homes. July 1, 2014 was the deadline in Florida for lenders to file deficiency lawsuits for foreclosure Judgments issued between July 1, 2009 and July 1, 2013. This is the result of the foreclosure bill last summer drastically dropping the number of years for a mortgage company to sue for a deficiency from five years to only one year.

So we’ve seen a flurry of filings from a couple groups: Dyck-O’Neal, Inc. and Collins Asset Group. The approaches have differed somewhat, Dyck-O’Neal files new actions for primarily FNMA while Collins substitutes plaintiffs and simply files a motion in an existing case that is likely re-opened to do so. Until recently, actions seeking a deficiency have been limited mostly to small local banks or credit unions. The Washington Post described Fannie and Freddie filing more deficiency actions through debt collection firms such as Dyck-O’Neil in order to stop strategic defaulters and try to collect debts on behalf of taxpayers. However, Dyck-O’Neal has been sanctioned in Georgia and Texas for improper actions.

Former Florida homeowners are just learning of this now when they are being served by process servers with a summons or a motion for deficiency judgment. Just when they thought their problems were behind them noted a recent Marketplace article.