Foreclosure turned over Paragraph 22 of the Mortgage

Written By: Emil FleysherMay 19, 2016

In this Third District Court of Appeals case, the bank tried to foreclose the homeowner's mortgage at summary judgment; it entails that there be no questions of material fact. And, the bank should have permission to a foreclosure judgment as a matter of law - a stage before trial. Read more to find out how this connects to paragraph 22.

What Happened?

The homeowner also filed for summary judgment; in dispute that the bank did not fulfill paragraph 22 of the mortgage. This paragraph involves the bank notifying the homeowner of the default and certain rights and defenses the proprietor may have. The bank filed two separate affidavits proving that the paragraph 22 notice of default was mailed and significantly complied with the requirements of this paragraph of the mortgage.

The trial court judge ruled that the bank's notice of default failed to comply with paragraph 22 of the mortgage; decided that the bank's affidavits attesting to the mailing of paragraph 22 notice of default was hearsay. Then, denied the bank's motion for summary judgment, approved the homeowner's motion for summary judgment, entered a final money judgment for the bank, not a foreclosure judgment, for the amount claimed due on the mortgage (which the bank had not sought for or requested) and canceled the promissory note. The bank appealed.

Overturning of Rulings Because of Paragraph 22

The appellate court overturned all rulings above; specifically holding that the bank's notice of default did significantly comply with paragraph 22 of the mortgage. And, the appellate court cited multiple new cases in support of that finding.

Notably, the appellate court determined that the bank's notice of default was not hearsay. This is because its presentation was in the form of a verbal act going to show that the notice of default was known and complied with paragraph 22 of the mortgage; not to prove the truth of what was declared in the notice of default.  This is a seemingly stronger argument banks may make to have notices of default entered in future cases. This is because most banks depend on the business records exception to hearsay (meaning the notice of default is technically hearsay, but there is a reason that it should have an allowance); while the verbal act argument deems the notice of default not even hearsay.

If you have questions about Foreclosure, Loan Modification, Bankruptcy, Short Sale, or other alternatives, please feel free to call my office at 888-886-0020, send an e-mail to, or complete the contact form below.

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