Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
In the past year, Floridians have been hit with ten thousand or more deficiency lawsuits by Dyck-O’Neal, a collector hired by Fannie and Freddie to go after unfortunate homeowners. Many defaults have been obtained against homeowners which should not have occurred due to lack of personal and/or subject matter jurisdiction. Many folks did not even know these additional lawsuits have been filed against them. A recent New York Times article recently addressed this focusing on the ability of Dyck-O’Neal to go after deficiencies even in cases in which the underlying foreclosure action was suspect.
Some defenses raised by defense counsel in these cases are now hitting the appellate courts. In one such case decided May 1, 2015, Reid v. Compass Bank, 1D14-930 (Fla. 1st DCA May 1, 2015), the First DCA affirms the rule that a plaintiff in a foreclosure case cannot file a new lawsuit to seek a deficiency if the foreclosure court reserved jurisdiction for the purpose of entering future orders relating to the foreclosure.
“Notwithstanding the fact that First Federal Savings supports the argument that a party is not entitled to pursue an action at law on a promissory note where that party includes a prayer for a deficiency judgment in its foreclosure complaint and the trial court reserves jurisdiction to enter a deficiency judgment, we have determined that affirmance is warranted in this case based upon the circumstances presented.”
In that case, Dyck-O’Neal took a backdoor approach by moving to consolidate the old and new cases for which no objection was raised. Had the consolidation not occurred, the new case would have lacked subject matter jurisdiction and would have been subject to dismissal.
Lack of personal jurisdiction is another basis for dismissal. If the former homeowner has moved from the county and/or state, these deficiency suits which are debt collection cases are being brought where they used to live. In addition to potential dismissal of these cases for lack of personal jurisdiction, most if not all of them would be grounds for an action by the homeowner for violations of the Fair Debt Collection Practices Act (FDCPA). Finally, upon dismissal of the Dyck-O’Neal case, the statute of limitations has likely run preventing it being re-filed.
Even if a default has occurred, it is not too late to raise these defenses. An inadequate search may have been undertaken to find the former homeowner before tacking on a 100k judgment. In Bartell v National Collegiate Student Loan Trust 2005-3, D. Ct. ND Cal (2015), the court ruled a sole attempt to provide Bartell with service of process took place at her former residence in Berkeley, where she last lived in 2009–not San Francisco–and involved no good-faith or systematic effort to find her current address.
Obviously these are highly technical objections and should be raised by an attorney experienced in these areas. There is plenty of stake, the average judgment that we’ve seen being sought by Dyck-O’Neal is in the six figures. And once a final judgment is entered, unless grounds like this exist to try and overturn it, the judgment itself entitles a debt collector to seize assets and begin wage or bank account garnishment for a period of no less than 20 years. For more information, please contact Christie D. Arkovich. P.A.