To Foreclose, Your Lender Must Prove What You Owe

If you have a mortgage, it may surprise you to find out that lenders don’t always keep good records. Sure, they know when you default on your mortgage, and they’re good at adding on fees and interest. In a foreclosure case, they’ll come up with an amount that they say is your total indebtedness.

But they don’t always have the evidence to back up that claim. And that lack of evidence can sometimes defeat a foreclosure.

Before a court can order foreclosure in Florida, the lender must submit enough evidence to prove the amount owed on the mortgage. Usually, the lender will introduce internal records such as a payment history into evidence, and a representative of the lender will testify that those records are accurate.

But sometimes lenders don’t have good records or don’t do a very careful job of presenting their case. Sometimes a mortgage has been sold or transferred so many times that important documents have been lost.

In a recent Florida Court of Appeal case, Doyle v. Citimortgage, Inc., a couple challenged a final foreclosure judgment because the lender had not presented adequate evidence of the amount of indebtedness.

At the trial, the lender introduced a payment history into evidence that showed the principal amount due on the loan. But the lender didn’t offer any evidence at all to back up its claim that there were also other charges due, totaling $365,938.51.

In a similar case decided in 2014, the lender did an even worse job of proving the amount owed. In Wolkoff v American Home Mortgage Servicing, Inc., the borrowers had attempted to get the lender’s records during the course of the litigation, but the lender never provided them. At the trial, the lender introduced payment records that were incomplete and out of date and did not show the current amount due on the mortgage. The lender did not introduce any evidence of amounts owed for interest, taxes, property inspections and evaluations or attorney’s fees. Yet those amounts were included in the court’s final judgment.

In the Wolkoff case, the Florida Court of Appeal reversed the foreclosure judgment. The lender asked for another chance to establish the amount of indebtedness, but the court said it saw no reason to give the lender another opportunity to prove its case. The foreclosure was dismissed.

The borrowers in the more recent Doyle case also asked the court to dismiss the foreclosure. But the court said the circumstances were different: in Doyle there was partial evidence of the amount of indebtedness, whereas in Wolkoff there was no evidence at all to support the amount. Therefore, the court sent the Doyle case back to the trial court to determine the exact amount owed.

These two cases show that lenders must prove the exact amount owed on a mortgage before they can get a foreclosure judgment. That amount includes not only the principal balance, but also interest, fees, late charges and any other items that the lender claims. If a lender doesn’t provide this evidence, there may be grounds for dismissing the foreclosure.