Sarah J. Harris and Bradley C. Harris v. U.S. Bank National Association, etc.
223 So. 3d 1030
| Fla. Dist. Ct. App. | 2017Background
- U.S. Bank sued Sarah and Bradley Harris to foreclose an FHA-backed mortgage containing express language that acceleration and foreclosure are limited by HUD regulations.
- 24 C.F.R. § 203.604 requires a face-to-face interview (or reasonable effort) with a mortgagor before three full monthly installments are unpaid, with exceptions including when the property is more than 200 miles from the servicer or branch.
- The Bank’s foreclosure complaint did not allege compliance with HUD regulations; the Borrowers did not plead noncompliance as an affirmative defense or move to dismiss on that basis.
- At trial the Bank’s analyst testified there was no face-to-face attempt because the Bank’s servicing branch was more than 200 miles from the property; no evidence refuted that testimony.
- The Borrowers raised HUD noncompliance for the first time during closing argument; the trial court entered final judgment for the Bank and the Borrowers appealed.
Issues
| Issue | Plaintiff's Argument (U.S. Bank) | Defendant's Argument (Harris) | Held |
|---|---|---|---|
| Whether HUD face-to-face regulation is a condition precedent to foreclosure | HUD regulations are guidelines, not conditions precedent, so plaintiff need not plead compliance | The note and mortgage expressly incorporate HUD regs; compliance is a condition precedent to acceleration/foreclosure | HUD regulation is a condition precedent (court: mortgage/note language conditions foreclosure on HUD compliance) |
| Whether failure to plead or timely raise noncompliance bars the defense | Borrowers waived the defense by not pleading it or timely asserting it before closing argument | Noncompliance can be raised as a defense and should prevent foreclosure | Borrowers waived the defense by failing to plead it specifically and with particularity; issue not preserved |
| Whether the face-to-face requirement actually applied here (200-mile exception) | Even if condition precedent, the 200-mile exception applies so no face-to-face meeting was required | HUD rule did not apply because the servicer/branch was more than 200 miles from the property | Evidence (unrebutted testimony) supported that the 200-mile exception applied; Bank was not required to comply |
Key Cases Cited
- Gunderson v. Sch. Dist. of Hillsborough Cnty., 937 So. 2d 777 (Fla. 1st DCA 2006) (contractual language governs whether a provision is a condition precedent)
- Cross v. Federal Nat’l Mortgage Ass’n, 359 So. 2d 464 (Fla. 4th DCA 1978) (HUD guidelines historically treated as nonmandatory guidance)
- Custer Med. Ctr. v. United Auto. Ins. Co., 62 So. 3d 1086 (Fla. 2010) (failure to satisfy conditions precedent is generally an affirmative defense requiring pleading and proof)
- Deutsche Bank Nat’l Trust Co. v. Quinion, 198 So. 3d 701 (Fla. 2d DCA 2016) (borrower bears burden to specifically plead noncompliance when bank alleges compliance)
- Laws v. Wells Fargo Bank, N.A., 159 So. 3d 918 (Fla. 1st DCA 2015) (note incorporating HUD regs allows borrower to assert failure to comply as a defense)
- Bank of Am., N.A. v. Asbury, 165 So. 3d 808 (Fla. 2d DCA 2015) (raising noncompliance for first time at trial is untimely and barred)
AFFIRMED.