McIntosh v. Wells Fargo Bank, N.A.

• Decision Date: 18 September 2017
• Docket Number: Case No. 5D16–2189
• Citation: 226 So.3d 377
• Parties: Elna F. MCINTOSH and Christopher Hallman, Appellants, v. WELLS FARGO BANK, N.A. and Bellalago and Isles of Bellalago Community Association, Inc., Appellees.
• Court: Florida District Court of Appeals

226 So.3d 377

Elna F. MCINTOSH and Christopher Hallman, Appellants,

v.WELLS FARGO BANK, N.A. and Bellalago and Isles of Bellalago Community Association, Inc., Appellees.

Case No. 5D16–2189

District Court of Appeal of Florida, Fifth District.

Opinion filed September 18, 2017

Andrew B. Greenlee, of Andrew B Greenlee, P.A., Sanford, and Anthony N. Legendre, II, of Law Offices of Legendre & Legendre, PLLC, Maitland, for Appellants.

Kimberly S. Mello and Laura J. Bassini, of Greenberg Traurig, P.A., Tampa, and Michele L. Stocker, of Greenberg Traurig, P.A., Ft. Lauderdale, for Appellee, Wells Fargo Bank, N.A.

No Appearance for Appellee, Isles of Bellalago Community Association, Inc.

ORFINGER, J.

Elna F. McIntosh and Christopher Hallman (collectively "Borrowers") appeal a final judgment of foreclosure entered in favor of Wells Fargo Bank, N.A., following a non-jury trial. On appeal, Borrowers contend that the trial court erred by concluding that United States Department of Housing and Urban Development (HUD) regulations were not conditions precedent to bringing the foreclosure action, denying Borrowers' motions for involuntary dismissal, and entering a final judgment of foreclosure. We agree and reverse.

In April 2010, Borrowers executed a note to FBC Mortgage, LLC, and secured its payment with a mortgage. The Federal Housing Administration (FHA) insured the loan. Eventually, Wells Fargo became the holder of the note and mortgage. In its operative complaint, Wells Fargo generally alleged that it had complied with all conditions precedent to filing the lawsuit. In their answer, Borrowers denied that Wells Fargo had satisfied all conditions precedent and asserted several affirmative defenses, including that Wells Fargo failed to comply with the HUD requirement to send proper delinquency notices under 24 C.F.R. § 203.602 (2016). Ultimately, the case proceeded to trial. After Wells Fargo rested its case, Borrowers moved for an involuntary dismissal, asserting several grounds, only one of which has merit—Wells Fargo's failure to demonstrate compliance with applicable HUD regulations prior to filing suit.

The mortgage in this case specifically incorporates HUD regulations as limitations on acceleration and foreclosure. Paragraph 9 of the mortgage states, in pertinent part:

9. Grounds for Acceleration of Debt. (a) Default. Lender may, except as limited by regulations issued by the Secretary [of Housing and Urban Development], in the case of payment defaults, require immediate payment in full of all sums secured by this Security Instrument ...

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(d) Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender's rights, in the case of payment defaults, to require immediate payment in full and foreclose if not paid.

This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary.

Paragraph 6(B) of the note similarly provides:

(B) Default

If Borrower defaults by failing to pay in full any monthly payment, then Lender may, except as limited by regulations of the Secretary in the case of payment defaults, require immediate payment in full of the principal balance remaining due and all accrued interest. Lender may choose not to exercise this option without waiving its rights in the event of any subsequent default. In many circumstances regulations issued by the Secretary will limit Lender's rights to require immediate payment in full in the case of payment defaults. This Note does not authorize acceleration when not permitted by HUD regulations. As used in this Note, "Secretary" means the Secretary of Housing and

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