Banks Can Now Collect Missed Payments More Than Five Years Old!
Updated: Dec 10, 2019
Here is the question: If you are in foreclosure, can the foreclosing bank try to collect payments missed more than five years ago? Yes it can! Four Florida appellate courts have ruled on this issue and they have each answered "yes."
Recently, in Grdic v. HSBC Bank USA, N.A., the Second District Court of Appeal stepped in and ruled on this issue, finding that a foreclosing bank can indeed collect payments missed more than five years prior to the filing of the foreclosure lawsuit. This means as long as the bank pleads it correctly, the bank can collect the entire balance of the loan, including default interest going all the way back to the original default on the loan, no matter how long ago that was!
I will give you an example of how this plays out. Let's say you went into default in 2010, missing the March 2010 payment and all payments thereafter. An initial foreclosure action was filed against you in 2011 and involuntarily dismissed by the Court in 2017. The bank files a new foreclosure action against you today. As long as the bank's new lawsuit properly requests everything be awarded, the bank could seek to collect the entire balance of the loan, including default interest and escrow disbursements (for taxes and insurance) going back to March 2010. This will often lead to a surprisingly huge total balance due and owing on the loan!
We on the defense side were hoping that the appellate courts would rule that any missed payments more than five years old would be time-barred by operation of the statute of limitations, but unfortunately that is not the way things have turned out.