The date of maturity of mortgage debt in contracts is not always clear cut. In a recent decision, a Florida appeals court ruled that a reverse mortgage may be due and payable at maturity date instead of the borrower's debt. This ruling can impact the foreclosure defense for all types of mortgages.
This case concerned an action by the borrower daughter's action to fight foreclosure. After the borrower's 2008 death, the property was left to his daughter who moved into the home. The holder of the reverse mortgage filed a foreclosure action the following year and claimed that the case was closed in 2013. The subsequent holder of that mortgage filed this foreclosure case in Sept. 2014.
A clause in the mortgage contract allowed the lender to accelerate payments if the borrower died but the lender initiated the action after the loan matured. The heir sought dismissal of the action under Florida's legal time period for filing legal actions, its statute of limitations, because the borrower's death and the transfer of the property occurred over five years before the filing of this foreclosure action.
The trial court and appeals court upheld foreclosure last year. The appeals court judges found that the mortgage contract indicated that any acceleration of payments was at the option of the mortgage lender. As the contract was drafted, the lender could elect to have payment due when the mortgage note matured or upon the borrower's death.
This case could govern foreclosures for other types of mortgages. The appeals court reached its decision through its analysis of cases addressing forward mortgages.
Borrowers need to scrutinize mortgages to determine whether lenders are following Florida's legal time limits or have the option to base their actions on other events. An attorney can help assure that borrowers can protect their rights in the contract and state law. Legal representation is also beneficial for reviewing and negotiating mortgage documents.