THENUTSANDBOLTSOFAMORTGAGE FORECLOSUREDEFENSE PRESENTEDBYJAMESA.

BONFIGLIO RitzCarlton Manalapan,Florida September25,2009

Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

THENUTSANDBOLTSOFAMORTGAGEFORECLOSUREDEFENSE PRESENTEDBYJAMESA.BONFIGLIO RitzCarltonManalapan,September25,2009 INDEXTOHANDOUT/NOTEBOOKMATERIAL 1.OutlineofLecture a.Oct.1,2008HOPEGuidelines; b.March4,2009MakingHomesAffordableModificationProgram(HAMP) c.April28,2009HAMPUpdate 2.Cross.v.Fed.Natl.MortgageAssn,359So.2d464(Fla.4thDCA1978). 3.ClientDeclineRepresentationform 4.NoticeofIntenttoCancel(IrvinCase) 5.BACvs.TryniszewskiCaseNo.:0925630AWAttorneysNoticeofAppearance,etc. 6.BACvs.TryniszewskiCaseNo.:0925630AWBACComplaint 7.BACvs.TryniszewskiCaseNo.:0925630AWTryniszewskisMotiontoDismiss 8.USBankvs.CarneyCaseNo.:0921854AWUSBankComplaint 9.USBankvs.CarneyCaseNo.:0921854AWCarneyMotiontoDismiss 10.Onewestvs.CarlsenCaseNo.:0919045AWOnewestComplaint 11.Onewestvs.CarlsenCaseNo.:0919045AWCarlsenMotiontoDismiss 12.DeutscheBankvs.AfriatCaseNo.:0915421AWAfriatMotiontoAmendAnswer 13.DeutscheBankvs.AfriatCaseNo.:0915421AWAfriatAmendedAnswer& 14.Chemtovvs.LedisCaseNo.:0831449AWLedisAmendedAnswer&AffirmativeDefenses 15.FCLLCvs.HartmanCaseNo.:08204747AWHartmansAmendedAnswer,Affirmative Defenses&Counterclaim 16.BACvs.TryniszewskiCaseNo.:0925630AWTryniszewskisRequesttoProduce 17.BACvs.TryniszewskiCaseNo.:0925630AWTryniszewskisInterrogatories 18.BACvs.TryniszewskiCaseNo.:0925630AWTryniszewskisNoticeofTaking DepositionDucesTecum 19.Chemtovvs.LedisCaseNo.:0831449AWLedisResponsetoMotiontoStrike

20.USBNAvs.SaperstoneCaseNo.:0919713AWUSBNAs(Sneaky)Requestto ProduceRequestforAdmissionsandInterrogatories,andSaperstonesResponses a.Saperstone:InterrogatorieswithAnswers: b.Saperstone:AnswerstoInterrogatories: c.Saperstone:NoticeofServingAnswerstoInterrogatories: 21.Residentialvs.AbrahamCaseNo.:0721396AWResidentialsMotionforSummary JudgmentandAbrahamsResponsetoMotionforSummaryJudgmentandMotiontoStrike Affidavit 21a.AbrahamResponsetoSummaryJudgment,etc: 22.LandmarkNationalBankv.Kesler,2009Kan.LEXIS834Kan.Sup.Ct. http://www.kscourts.org/CasesandOpinions/opinions/supct/2009/20090828/98489.htm

23.IrvinResponseinOppositiontoSummaryJudgment 24.LectureOutlineEthicsbyMikeFlynn a.DepositionEthicsandProfessionalismandtheObstructionistLawyer. b.TheEthicsofSolicitationofClientsunderFloridaLaw ADDITIONALRESOURCES: AnnualPercentageRateCalculationProgramforWindows(APRWIN) TheWindowsbasedversionoftheAnnualPercentageRateprogram(APRWINv6.2Released 5/2008)isanefficienttoolforverifyingannualpercentageratesandreimbursement adjustments.ThisversionincludesrelevantfinancechargeandAPRtolerancesforverifyingthe accuracyofannualpercentageratesandfinancechargesonloanssecuredbyrealestateora dwelling. http://www.occ.treas.gov/aprwin.htm

1.OutlineofLecture

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Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

OUTLINE FORECLOSURE DEFENSE - TILA & HOEPA I. INITIAL CLIENT INTERVIEW A. Clients Goal - Realistic Expectations (Need to see all closing documents) 1. Keep the Home - at some point lender will in all probability be entitled to foreclose either for the full amount due, small reduction or large reduction 2. Short Sale - No Buyers/No Money 3. Modify Mortgage - No Mandatory Programs: The July HOPE program effective Oct. 1, 2008 is a voluntary lender program. Eligibility required owner occupied home and a loan issued between January 2005 and June 2007. Client must spend at least 31% of his gross monthly income on mortgage debt. The client can be current with the existing mortgage or in default, but either way the client must prove that you will not be able to keep paying their existing mortgage and attest that it is not a deliberate default just to obtain lower payments. All second liens must be retired or paid such as a home equity loan or line of credit, or Condo or Home Owner Ass'n lien. The client cannot take out another home equity loan for at least five years, unless to pay for necessary upkeep on the home. The client will need approval from the FHA to get the new home equity loan, and total debt cannot exceed 95% of the home's appraised value at the time. *** According to Mortgage Daily News, this program resulted in 1 mortgage modification *** Also contact the city in which the client resides or county to see if they have a homeowner's assistance program. West Palm Beach will give up to $10,000 to keep its residents from going into default. *** WEST PALM BEACH PROGRAM IS NOW A COUNTY WIDE PROGRAM. FANNIE MAE and FREDDIE MAC announced that they will set aside millions to rewrite mortgage terms so its homeowner can remain in their home. ** You can go to the FANNIE MAE and FREDDIE MAC web sites to determine if either owns your clients mortgage****. Fannie Mae: http://www.fanniemae.com/index.jhtml http://loanlookup.fanniemae.com/loanlookup/ Obamas New Making Homes Affordable Plan - outline of program http://www.fanniemae.com/homepath/homeowners/in_foreclosure.jhtml The President's Plan was created to help millions of homeowners refinance or modify their 1

mortgages to a payment that is affordable, both now and in the future. Home Affordable Refinance: Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today's lower mortgage rates, perhaps due to a decrease in the value of their home. The Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae refinance into a more affordable mortgage. Home Affordable Modification: Many homeowners are struggling to make their monthly mortgage payments either because their interest rate has increased or they have less income. The Home Affordable Modification will provide them with mortgage payments they can afford. For more information, go to the U.S. Department of Treasury web site, MakingHomeAffordable.gov. Act Now to Prevent Foreclosure. ****AS OF MARCH 2009 IF LENDER/SERVICER TOOK TARP MONEY MUST FOLLOW THE FANNIE/FREDDIE GUIDELINES FOR MORTGAGE MODIFICATIONS *****HAMP PROGRAM Voluntary If Lenders or Servicers voluntary agreed to the program, they have to follow the Fannie/Freddie Guidelines If you have missed any home mortgage payments ... if you are about to miss a payment due to hardship ... or if your loan already has been referred to an attorney -- please call your mortgage servicer immediately. The telephone number is on your mortgage bill or coupon book. Your mortgage servicer has a variety of options for many qualified borrowers to modify their mortgages to lower their monthly payments and avoid foreclosure. You can also call Fannie Mae at 1-800-7FANNIE. If we have your mortgage, we can help you get in touch with your mortgage servicer to get the assistance you need. Counseling and Information If you need advice, you can call your local homeowner or financial counseling agency, or the Homeowner's HOPE Hotline at 1-888-995-HOPE. Experienced counselors can help you develop the best plan for your situation. This counseling is free. Other resources are available on our related links page. Gather the Information You Will Need Before you call your mortgage servicer or homeownership counselor for help, it would be helpful to gather the following information to facilitate your discussion: * letters or communications from your lender * foreclosure notices * recent mortgage statements showing your loan number 2

* homeowner's insurance policy * last two pay stubs and most recent tax return for all borrowers named on the mortgage * proof of other income, such as child support, alimony, Social Security, or pension * bank account statements * a list of major monthly bills, including child care, utilities, credit cards, and cell phone.

Freddie Mac: http://www.freddiemac.com/ https://ww3.freddiemac.com/corporate/ Bank of America, which includes Countrywide, and JP Morgan Chase announced that they will set aside millions to rewrite mortgage terms so its home mortgagors can remain in their home. They announced that the terms or conditions for the modification will be available sometime in December/January. Most of the time they try to recapture what they have lost. 4. Stay in the home and try to defeat the foreclosure under TILA RESPA and Lost Note, etc. II. DEFENDING A MORTGAGE FORECLOSURE A. Prepare Client for Litigation 1. Client needed for 4 Events a. Answer Interrogatories, Request to Produce b. Clients Deposition c. Mediation - Remember mortgage cases like most cases have a high percentage of settling. d. Trial 2. Cases move slowly even more now because of the volume of foreclosures and the reduction of court budgets 3. Cases move on a 30/60/90 day tickler system - one side does something the other side gets to respond or sets a hearing. 4. If the client fails to do any of the above timely or fails to appear for any of the events, he may lose his case automatically 5. Because of the way the system works the client may not hear from you for several weeks - not ignoring the case - that is just how the system works but feel free to call or write and ask questions

6. Keep in contact with the lawyer and advise of changes in circumstances/goals and contact info 7. Explain a Foreclosure - The legal mechanism by which the mortgage lender ends the equity of redemption by having a judge determine the amount of debt and a specific date, usually in 30 or 60 days to pay the money, and if not paid by that date, the judge allows the clerk to auction the property. Fla. Stat. 697.02, which changed the old English common law notion that the mortgage gave the lender an interest in the borrowers land, makes the mortgage a lien against title. Fla. Stat. 45.0315 tells the mortgage lender that the borrower has the right to redeem the property after final judgement of foreclosure, until shortly after the clerk conducts the auction, when the clerk issues the certificate of sale. The client still has legal, recorded title to the property throughout the foreclosure process until the clerk issues the certificate of sale (ends redemption) then the certificate of title (transfers title) 10 days after the clerks sale if no objection to sale filed. 8. Deficiency - The judgement will determine the amount of the debt. A deficiency is the difference between the debt owed and the fair market value of the home at the date of the clerks sale. 9. If the client declines to retain you, make sure he knows that the complaint must be answered in 20 days or he could automatically lose B. Read the Summons Complaint, the Mortgage, Note and the Assignments 1. Check the Summons for proper service and if not prepare a motion to quash 2. The vast majority of foreclosure complaints are filed by foreclosure factories and will generally have 2 counts - reestablish a lost mortgage and note and foreclose. Fertile area for a motion to dismiss (see the sample motions to dismiss) 3. A good defense lawyer can find a basis to make a good faith motion to dismiss most of the form mortgage foreclosure complaints. 4. If you practice in a Circuit/County that has UMC for its mortgage foreclosure cases, you set the motion to dismiss for hearing 30 days out or so. Otherwise, let the opposing counsels office set the hearing. 5. Can reestablish a negotiable instrument under Fla. Stat. 71.011 but cannot enforce it. Fla. Stat. 673.3091 is not a reestablishment statute - it is an enforcement statute. Lawyers Title Ins. v. Novastar Mortg., 862 So.2d 793 (Fla. 4th DCA 2003) 6. Person suing to foreclose must have the right to foreclose and reestablish when he files the lawsuit - post lawsuit assignments establish the lender did not own at time 4

of suit unless pre-suit equitable assignment. See: Mason v. Rubin, 727 So.2d 283 (Fla. 4th DCA 1999); National Loan Invest. v. Joymar Ass., 767 So.2d 549 (Fla. 3rd DCA 2000); State Street Bank v. Lord, 851 So.2d 790 (Fla. 4th DCA 2003). For an example of how far courts will go to find mortgages enforceable see: State Street Bank v. Badra, 765 So.2d 251 (Fla. 4th DCA 2000), Mtg. Elec. Regis. Sys. v. Badra, 991 So.2d 1037 (Fla. 4th DCA 2008). (Also notes distinction between enforcement under Fla. Stat. 673.3091 and reestablishment under Fla. Stat. 71.011). C. Answer Affirmative Defenses and Counterclaim 1. A general denial of allegations regarding the lost note is not enough. The defendant must specifically deny lost note allegations (see forms). 2. Generally speaking, I like to file a counterclaim with the affirmative defenses because the lender then cannot take a voluntary dismissal without court order and the SOL may expire for the TIL claims. You have more control over the suit, but now you must pay a filing fee for the counterclaim. 3. I have not done a specific RESPA Yield Spread defense recently because in 1999 the FRB changed the regulations so the payment is not automatically a kickback for the referral of business (In my opinion this was the beginning of the mortgage mess we have now). Call me if you want a sample for a RESPA YSP defense. 4. Making Home Affordable Act and failure to modify the mortgage defense - The regulations upon which these guidelines are based are impossible to find. I asked a HUD employee who attended a mortgage foreclosure symposium if she had a copy and she is still looking. However, I think the failure of creditors to modify mortgages under the Make Homes Affordable Act can be used as an equitable defense under the same reasoning used in Cross. v. Fed. Natl. Mortgage Ass'n, 359 So.2d 464 (Fla. 4th DCA 1978). The Program is at: http://makinghomeaffordable.gov/ The Guidelines are at: http://www.treas.gov/press/releases/reports/modification_program_guidelines.pdf D. Discovery 1. I usually send out the Interrogatories and Request to Produce with the Answer, also serve Notice of Taking Ps Deposition DT. See attached Notice for the wording. Gives more control over the case 2. Usually the lenders firm will call and ask 3 things 1) What do you really want an extended sale date? 2) Can I have more time to answer discovery? 3) Can I have more time to find you a witness? Answer to 1) I really want to rescind for my client - do you want to agree to a rescission? 2 & 3) No problem as long as you 5

agree not to set any dispositive motion for hearing until a reasonable time after I get the discovery or take the deposition so that I can prepare and I do not incur an expedited deposition fee. 3. Lender Depositions: I used to recommend that there was no need to spend the money to actually depose the lender because their testimony rarely varied, and it could work to your disadvantage because if you actually take the pre-trial deposition for the lender or his servicing agent, you will have preserved the lenders testimony for trial. If for some reason the lender cannot appear on the scheduled trial date, he will either take a voluntary dismissal or settle the case. I have won a half dozen cases or forced favorable settlements when the lenders representative could not appear at the trial. However, I am changing this tactic because the person they send rarely has the information requested in the Notice of Taking Deposition DT that you want to cover, and you can move to compel the lender to provide the correct person. They can also help to establish that there are other documents they have that they did not produce in discovery i.e. servicing agreements, trust agreements, etc. as listed in the Notice of Deposition DT. 4. Closing Agents depositions: There is rarely a need to actually depose the closing agent because the testimony rarely varies and you will have preserved the testimony for trial. I have not changed my view on this point. They either say: 1) I do not remember the closing because I do hundreds and this was years ago, but it is my regular business practice to do A B and C and I followed my regular practice for this loan. - the most credible and the usual testimony; 2) 1) I remember this closing and I gave all the required disclosures to the consumer and explained all the documents. Not credible unless they tie the closing to an exceptional memorable event because the closing generally took place years and hundreds of closings earlier and you can usually catch them on cross So name the next loan you closed and describe that closing 3) 1) I remember this closing and I gave the consumer nothing and explained nothing. Rare - this happened once in my career. You do need the closing file so you can do a notice of production to non-party. 5. Mortgage Broker depositions: Again, there is rarely a need to actually depose the broker because the testimony rarely varies and you will have preserved the testimony for trial. They either say: 1) I do not remember this borrower because I do hundreds and this was years ago, but it is my regular business practice to do A B and C and I followed my regular practice for this loan. - the most credible and the usual testimony; 2) 1) I remember this borrower and I gave all the required disclosures to the consumer and explained all the documents. Not credible unless they tie the borrower to an exceptional memorable event. 3) I remember this closing and I broke the mortgage brokerage laws and violated TIL. Rare - this has never happened. You do need their application package so do a notice of production to non-party.

6. Compare the documents in all of the closing packages: Lenders underwriting, closing agent and mortgage broker. I have seen 3 different sets of documents, one in each package. The key is what was given to the client at the closing. 7. Your clients deposition - very important if the case turns on a factual issue of what happened at the closing. The client needs to be very precise and sure as to what occurred at the closing. E. Motions to Strike 1. Lenders counsel frequently move to strike the defenses. These motions are generally not well taken, and simply prolong the case. See Response to Motion to Strike. 2. There are two rules for striking a partys pleadings; one arises under Fla. R. Civ. P. 1.140(f), and the other arises under Fla. R. Civ. P. 1.150. 3. Under Rule 1.140(f): A party may move to strike . . . redundant, immaterial, impertinent, or scandalous matter from any pleading at any time. Fla. R. Civ. P. 1.140(f). 4. Under Rule 1.150, a party can move to strike a sham pleading at any time before trial. This rule requires the Court to hear the motion, take evidence of the respective parties, and if the motion is sustained, allows the Court to strike the pleading to which the motion is directed. The Rule 1.150(b) Motion to Strike as a sham must be verified and must set forth fully the facts on which the movant relies and may be supported by affidavit. 5. Lenders attorneys usually set their motions to strike for hearing on the UMC Calendar. This means that the Court cannot consider evidence or take testimony on the motion because UMC calendars are non-evidentiary. See: DAmato v. DAmato 4D03-1631 (Fla. 4th DCA 2003); Topp Telecom, Inc. v. Atkins, 763 So.2d 1197, fn 3 (Fla. 4th DCA 2000); Linville v. Home Sav. Of America, FSB, 629 So.2d 295 (Fla. 4th DCA 1993). F. Lenders Motions for Summary Judgment Rule 1.510

Courts sparingly grant summary judgment to avoid infringing on the constitutional right to trial. If fact issues exist and the slightest doubt remains, the Court must resolve the doubt in favor of the non-movant and deny summary judgment. Manning v Clark, 71 So.2d 507 (Fla.1954), Williams v. City of Lake City, 62 So.2d 732 (Fla.1953). Courts hold the movant to a strict standard and must resolve all facts in evidence and reasonable inferences against the movant. Majeske v. Palm Beach Kennel Club, 177 So.2d 7

531 (Fla.4 DCA 1965). If facts are undisputed but conflicting issues arise over the inferences, a Court must deny summary judgment. Distribution Company v. Sav-A-Stop, Inc., 124 So.2d 753 (Fla. 1 DCA 1960). As a result, all doubts and inferences must be resolved against the moving party, and if there is the slightest doubt or conflict in the evidence, then summary judgment is not available. See Albelo v. S. Bell, 682 So.2d 1126, 1129 (Fla. 4th DCA 1996). Bernstein v. New Beginnings Trustee, LLC, 988 So.2d 90 (Fla. 4th DCA 2008) holds that: [T]he burden is upon the party moving for summary judgment to show conclusively the complete absence of any genuine issue of material fact. Fini, 936 So. 2d at 54 (quoting Albelo v. S. Bell, 682 So. 2d 1126, 1129 (Fla. 4th DCA 1996)). A trial court may enter summary judgment only when there are no genuine issues of material fact conclusively shown from the record and the movant is entitled to judgment as a matter of law. See Albelo, p.1129. 1. The lenders attorney will no doubt file a motion for summary judgment, usually including the affidavit of a servicing agent who has reviewed the file, many times not attaching the documents that he is attesting are true an accurate. The court should rule that the affidavits are hearsay and lack a foundation or predicate because the affiant is summarizing the legal import of documents, usually trust agreements and servicing agreements, without attaching copies. See the Summary Judgment memorandum for the legal basis to object to the lenders summary judgment. 2. You must be mindful of the Summary Judgment procedures and meet the time limits under 1.510(c). See Form Notice Pursuant to Rule 1.510(c). 3. You can timely serve the affidavits in opposition without the clients/witness signature notarized as long as you have the notarized affidavit at the hearing and there are no material changes to the notarized affidavit at the hearing. See: Silva v. Hernandez, 612 So.2d 1377 (Fla. 1993) reversing Silva v. Hernandez, 595 So.2d 230 (Fla. 3rd DCA 1992), affirming Burton v. GOV Contracting Corp., 552 So.2d 293 (Fla. 2nd DCA 1989). 4. Even if you do not have affidavits in opposition to summary judgment at the hearing, you can file them afterwards in conjunction with a motion for rehearing. However, it is an abuse of discretion standard as to whether to accept the affidavit filed with rehearing. Knowles v. JPmorgan Chase Bank, N.A., 994 So.2d 1218 (Fla. 2nd DCA 2007); Nard, Inc. v. Devito Contr. & Supply, 769 So.2d 1138 (Fla. 2nd DCA 2000), citing to Fatherly v. California Fed. Bank, FSB, 703 So.2d 1101 (Fla. 2d DCA 1997); Verdino v. Charcoal Pit, Inc., 898 So.2d 246 (Fla. 4th DCA 2005). 5. Court must consider deposition that is physically in existence before the court even if not filed, to satisfy the requirements of Rule 1.510(c). See: Elliott v. Dugger, 542 So.2d 392 (Fla. 1st DCA 1989); Ferguson v. VSL Corporation, 528 So.2d 32 (Fla. 3d DCA 1988), review denied, 537 So.2d 568 (Fla. 1988). 8

5. Must produce a written notice of acceleration as required by the mortgage, usually around Para. 22,, which is a condition precedent to foreclose. See: State Street Bank v. Badra, 765 So.2d 251, pg. 252-253 (Fla. 4th DCA 2000): During trial, the trial court addressed the issue as to whether all conditions precedent to the initiation of the foreclosure action had been complied with. The Badras argued that in order to accelerate payment under the terms of the mortgage, notice had to be mailed to the borrowers at the property address or any other address designated by the borrower. Instead notices dated December 15, 1992 and March 22, 1993 were sent to incorrect addresses, and thus, were never received by the borrowers. Because of State Street Bank's failure to meet its burden of proof with regard to the conditions precedent under the mortgage, the trial court granted the Badras' motion for judgment on the pleadings. State Street Bank, pg. 252-253. See also: Mortgage Elec. v. Badra, 991 So.2d 1037 (Fla. 4th DCA 2008): The final judgment, however, was in favor of the Badras because that trial court concluded, as to the foreclosure of the mortgage based on the re-established note, that State Street failed to meet a condition precedent to accelerating the mortgage. Specifically, State Street did not give proper notice prior to accelerating. *****FROST v. REGIONS BANK 4th District. Case No. 4D08-3168. 34 Fla. L. Weekly D1575b August 5, 2009.******* 4th DCA affirms that the creditor must prove it sent a notice of acceleration and opportunity to cure as a condition precedent before the lower court can grant summary judgment. G. Lenders Requests For Admissions Rule 1.370

*****Some Defense Firms Bury the Request for Admissions by Attaching them by staple behind a Request to Produce - Watch this Tactic***** 1. The lender may serve Requests for Admission. You have 30 days to respond, and if you do not the requests are deemed admitted. However, you can file the responses untimely with a motion and it should be granted even without a showing of excusable neglect for the untimely filing. See: Wilson v. Dept. Of Admin., Div of Ret, 538 So.2d 139, p. 141 (Fla. 4th DCA 1989), relying on Melody Tours, Inc. v. Granville Market Letter, Inc., 413 So.2d 450 (Fla. 5th DCA 1982); Love v. Allis Chalmers Corporation, 362 So.2d 1037 (Fla. 4th DCA 1978). 2. A judge should be even more mindful about relieving a party from the effects of an untimely response if there is other record evidence that the admitted fact is not true or in dispute. Ramos v. Growing Together, Inc., 672 So.2d 103, p. 104 (Fla. 4th 9

DCA 1996); Melody Tours, Inc. v. Granville Mkt. Letter, Inc.,413 So.2d 450, 451 (Fla. 5th DCA 1982). See also Habib v. Maison Du Vin Francais, Inc., 528 So.2d 553, 553 (Fla. 4th DCA 1988). The use of admissions obtained through a technicality should not form a basis to preclude adjudication of a legitimate claim. Sterling v. City of West Palm Beach, 595 So.2d 284, 285 (Fla. 4th DCA 1992); see also Sher v. Liberty Mut. Ins. Co., 557 So.2d 638 (Fla. 3d DCA 1990) 3. Rule 1.370(b) provides its own remedy for failure to timely respond to the requested admissions, and a basis to deny a request for relief when prejudice results to the requesting party; the request is deemed admitted. Accordingly a court should not add more penalties via sanctions like striking pleadings for failure to timely file a response. See: Winn Dixie Stores, Inc. v. Gerringer, 563 So.2d 814, p. 816, fn 3 (Fla. 3rd DCA 1990); Mahmoud v. King, 824 So.2d 248, 249-250 (Fla. 4th DCA 2002). 4. Ruiz v. De Varona, 785 So.2d 508 (Fla. 3rd DCA 2000) went so far as to say that the Court would not require a Motion for Relief from an untimely response, and reversed summary judgment where the record otherwise established material issues of fact by virtue of Affirmative Defenses and a timely filed supporting affidavit in opposition. In the 4th DCA you must file a motion before the court can relieve you from the untimely response. Singer v. Nationwide Mut. Fire Ins. Co., 512 So.2d 1125 (Fla. 4th DCA 1987). III. TRUTH IN LENDING A. Overview 1. Congress passed TIL to remedy fraudulent practices in the disclosure of the cost of consumer credit, assure meaningful disclosure of credit terms, ease credit shopping, and balance the lending scales weighted in favor of lenders. Beach v. Ocwen, 118 S.Ct.1408 (1998), aff'g Beach v. Great Western Bank, 692 So.2d 146,148-149 (Fla.1997), aff'g Beach v. Great Western, 670 So.2d 986 (Fla. 4th DCA 1996), Dove v. McCormick, 698 So.2d 585, 586 (Fla. 5th DCA 1997), Pignato v. Great Western Bank, 664 So.2d 1011, 1013 (Fla. 4th DCA 1996), Rodash v. AIB Mortgage, 16 F.3d 1142 (11th Cir.1994). 1 2. TIL creates several substantive consumer rights. 1640(a)(1) gives consumers actual damages for TIL errors in connection with disclosure of any information. 1640(a)(2)(A)(iii) gives consumers statutory damages of twice the amount of any finance charge, up to $2,000.00 for errors in connection with violations of 1635 or

All 11th Circuit TIL decisions and pre- 11th Circuit 5th Circuit cases are binding in Florida. Kasket v. Chase Manhattan Mtge. Corp., 759 So.2d 726 (Fla. 4th DCA 2000) (Kasket, II) 10

1638(a)(2) through (6), or (9), and the numerical disclosures, outside of the $100.00 error tolerance. See Beach, 692 So.2d p.148-149, Kasket v. Chase Manhattan Bank, 695 So.2d 431,434 (Fla.4 DCA 1997) [Kasket I,] Dove, p.586-587, Pignato, p.1013, Rodash, p.1144. 2 See also 1605(f)(1)(A). 3 3. 1635(a) allows a consumer to rescind home secured non-purchase credit for any reason within 3 business days from consummation. If a creditor gives inaccurate required information, TIL extends the rescission right for 3 days from the date the creditor delivers the accurate material TIL disclosures and an accurate rescission notice, for up to three years from closing. Pignato, p.1013 (Fla. 4th DCA 1995) (TILA permits the borrower to rescind a loan transaction until midnight of the third business day following delivery of all of the disclosure materials or the completion of the transaction, whichever occurs last.]. See also: Beach, cases, supra, Rodash, Steele v Ford Motor Credit, 783 F.2d 1016,1017 (11th Cir.1986), Semar v. Platte Valley Fed. S&L, 791 F.2d 699, 701-702 (9th Cir. 1986). 4. HOEPA loans (Also called a 1639 or Section 32 loan.) TIL requires additional disclosures and imposes more controls on loans that meet either the T-Bill Trigger or Points and Fees Trigger set forth at 1602(aa). 1639, Reg Z 226.31 & Reg Z 226.32, require the creditor for a 1602(aa) loan to give additional early [3 days before consummation] disclosures to the consumer and prohibits loans from containing certain terms [i.e. a prohibition on certain balloon payments]. It also has a special actual damage provision at 1640(a)(4). (HOEPA can make a lender a TIL creditor for the first HOEPA loan). (The trigger for Floridas Fair Lending Act is based on the HOEPA triggers. This may affect a many loans and may provided post 3 year rescission. See: Fla. Stat. 494.00792(2)(d)). 5. Zamarippa v. Cy's Car Sales, 674 F.2d 877, 879 (11th Cir. 1982), binding in Florida under, Kasket II, holds: An objective standard is used to determine violations of the TILA, based on the representations contained in the relevant disclosure, documents; it is unnecessary to inquire as to the subjective deception or misunderstanding of particular consumers. 1640s last paragraph has the 1640(a)(2) damage limit: In connection with the disclosures referred to in section 1638 of this title, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 1635 of this title or of paragraph (2) (insofar as it requires a disclosure of the "amount financed"), (3), (4), (5), (6), or (9) of section of this title... This subsection provides that numerical disclosures in connection with home secured loans shall be treated as being accurate if the amount disclosed as the finance charge does not vary from the actual finance charge by more than $100, or is greater than the amount required to be disclosed. See also Williams v. Chartwell Financial Services, Ltd., 204 F.3d 748 (7th Cir. 2000). (Over-disclosure can also be a violation under certain circumstances.) 11
3 2

6. In 1995, Congress created a defensive right to rescind when a lender sues a consumer to foreclose the mortgage. See 1635(a) & (i)[1995], Reg. Z 226.23(a)(3) & (h) [1996]. The 1635(i) amendment triggers the consumers defensive right to rescind when the creditor overstates the amount financed by more than $35.00, or errs in the Notice of Right to Cancel form, and the claim is raised to defend a foreclosure. See also Reg Z 226.23(h). 7. Florida defers to the FRB's interpretation of TIL and its own regulations. Beach, 692 So.2d p.149, Pignato, p.1013, Kasket, I p.434. The U.S. Supreme Court requires deference to the FRBs interpretations of the Statute and its own regulations. Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 560, 565-570 (1980). TIL is remedial, so courts expansively and broadly apply and interpret TIL in favor of the consumer. Rodash, p. 1144; Schroder v. Suburban Coastal Corp., 729 F.2d 1371, 1380 (11th Cir. 1984); Kasket II, W.S. Badcock Corp. v. Myers 696 So.2d 776, p. 783 (Fla. 1st DCA 1996) adopting Rodash, p.1144: TIL is remedial legislation. As such, its language must be liberally construed in favor of the consumer. 8. Pignato, p. 1013 also holds: Creditors must strictly comply with TILA. Rodash, 16 F.3d at1144; In re Porter, 961 F.2d 1066, 1078 (3d Cir. 1992). A single violation of TILA gives rise to full liability for statutory damages, which include actual damages incurred by the debtor plus a civil penalty. 15 U.S.C.A. 1640(a)(1)(2)(A)(i).Moreover, a violation may permit a borrower to rescind a loan transaction, including a rescission of the security interest the creditor has in the borrower's principal dwelling. 15 U.S.C.A. 1635(a). See also the Beach cases. This is in harmony with W.S. Badcock, p. 779, which holds: Violations of the TILA are determined on an objective standard, based on the representations in the relevant disclosure documents, with no necessity to establish the subjective misunderstanding or reliance of particular customers. B. Assignee Liability 1.1641(a)(1) and 1641(e)(1)-(2) provides that assignees are liable for 1640(a) damages if the disclosure errors are apparent on the face of the disclosure statement and other documents assigned. Congress statutorily designated the TIL disclosure statement, the TIL notice of right to cancel, and any summary of the closing costs as documents assigned. See 1641(e)(2). 2.1641(c) provides that assignees are liable for 1635 rescission regardless of the apparent on the face of the documents assigned standard for damages claims. Belini v. Washington Mut. Bank, FA, 412 F.3d 17, p. 28 (1st Cir. 2005). 3. You must make sure that you rescind as to the correct creditor. See: Miguel v. Country Funding Corp., 309 F.3d 1161 (9th Cir. 2002).

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4. Assignees are also liable under Floridas Fair Lending Act. See Fla. Stat. 494.00793. C. Right to Rescind 1. Each consumer with the right to rescind must receive one [1] copy of the correct TIL Disclosure Statement and two [2] copies of a correct Notice of Right to Cancel form. If not, the consumer can rescind for up to 3 years after closing. See: Reg Z 226.23(a)(3), fn 48; Beach v. Ocwen, 118 S.Ct.1408 (1998), affg Beach v. Great Western Bank, 692 So.2d 146,148-149 (Fla.1997), affg Beach v. Great Western Bank, 670 So.2d 986 (Fla. 4th DCA 1996); Rodash v. AIB Mortgage, 16 F.3d 1142 (11th Cr.1994); Steele v Ford Motor Credit, 783 F.2d 1016 (11th Cir.1986), all binding here under Kasket v. Chase Manhattan Mtge. Corp., 759 So.2d 726 (Fla. 4th DCA 2000) (11th Circuit cases on federal TIL issues are binding on Florida courts). 2. The error must be a material error which is defined at Reg Z 226.23 fn 48: The term material disclosures means the required disclosures of the annual percentage rate, the finance charge, the amount financed, the total payments, the payment schedule, and the disclosures and limitations referred to in sections 226.32(c) and (d). 3. A HOEPA loan requires additional disclosures 3 days before consummation. See: Reg Z 226.31(c)(1) (The creditor shall furnish the disclosures required by section 226.32 at least three business days prior to consummation of a mortgage transaction covered by section 226.32.). The failure to deliver the HOEPA forms is an additional TIL material disclosure which extends the right to rescind for violations. See: Reg Z 226.23(a)(3): The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures,[fn]48 whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation.... See also fn 48 above. 4. Floridas Fair Lending Act is based on the HOEPA triggers and appears to adopt TIL right to rescind without the 3 year limit. See: Fla. Stat. 494.00792(2)(d). This theory has not been tested in any appellate court. 5. Most creditors closing/underwriting files will have a signed acknowledgment that the consumer received 2 copies of the TIL notice of right to cancel. Under TIL 15 U.S.C. 1635(c) this creates a rebuttable presumption of receipt: Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof. Once the consumers affidavit or interrogatory answer or deposition stares that the consumer did not receive the 2 notices, this 13

rebuts the presumption of receipt in the acknowledgment and presents a question of fact for trial. See: Cintron v. Bankers Trust Company, 682 So.2d 616 (Fla. 2nd DCA 1996). 6. The critical issue is what did each consumer receive not what is in the creditors underwriting or closing file. Make sure that the TIL Right to Rescind form is correctly filled out and the loan closed on the date it purports to have closed. If the lender directs the consumer to deliver the notice of right to cancel form to a post office box, this should extend the right to rescind. D. Material Errors 1. The TIL Disclosure Statement Federal Box will contain the following material information. These numbers are taken from the Norwest v. Queen Martin trial memorandum: 4
Annu al Percentag e Rate 11.227% Finance Charge $176,073.12 Amount Financed $70,708.16 To tal of Payments $246,781.28

PAYM ENT S: Your payment schedule will be: Num ber of P ayments Amount o f Paym ents W hen Payments Are Due Mo nthly beginning 10/01/99 09/01/29

359 1

685.52 679.60

2. At the bottom of the TIL Disclosure Statement, usually just inside the bottom part of the federal box, you will see a place for the creditor to place an X next to: e means an estimate; and a second box to place an X next to: all dates and numerical disclosures except the late payment disclosures are estimates. Estimated disclosures violate TIL. 3. If no Reg Z 226.18(c) required Itemization of Amount Financed (not a material disclosure error) one work backwards to determine how the creditor arrived at the TIL disclosures. First, one must deduct the $70,708.16 amount financed from the face amount of the note. Lets assume this note was for a $76,500.00 loan. Therefore the creditor had to use $5,791.84 as the total of prepaid finance charges. In order to arrive at the disclosed $70,708.16 amount financed. Then one must examine the

The disclosures are interrelated. If one multiplies the monthly payment amounts by the number of payments, and adds the sums, this equals the total of payments. Adding the finance charge to the amount financed equals the total of payments. The annual percentage rate is the percent of these figures, based on 360 monthly payments, using either the American or actuarial method. 14

HUD-1 charges to find the charges that equal the $5,791.84 prepaid finance charges to determine the items from the HUD-1 that the creditor included in the $5,791.84 prepaid finance charges to determine if $5,791.84 correct reflects all the prepaid finance charges. See: 1638(a)(2)(A); Reg Z 226.18(b): The amount financed is calculated by: (1) Determining the principal loan amount or the cash price (subtracting any downpayment); (2) Adding any other amounts that are financed by the creditor and are not part of the finance charge (usually not applicable); and, (3) Subtracting any prepaid finance charge. 4. The Norwest/Martin Trial memo has a great deal of detail with respect to the specific charges and violations. F. Truth in Lending Remedies 1. 1635(b) and Reg Z 226.23(d)(1-4) rescission; and, 2) 1640 damages. 2. Semar v. Platte Valley Federal S & L Assn, 791 F.2d 69 (9th Cir. 1986) is the leading case used by virtually all courts to impose TILs 1635(b) and Reg Z 226.23(d)(1-4) rescission remedy in a non-1639, non-vesting case. 3. Semar, interpreted Reg Z 226.23(d)(1) Effects of rescission: When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge. The Semar, Court accepted the consumers rescission formula under Reg Z 226.23(d)(1), added all the finance charges listed on the HUD-1, plus the 2 $1,000.00 maximum statutory damage awards ($1,000.00 for the initial error and $1,000.00 for the improper response to rescission, increased to $2,000.00 in 1995), plus all the mortgage payments made, then deducted this sum from the face amount of the Semar, note to arrive at the net debt owed the creditor. 4. 1640(a)(2)(A)(iii) Statutory Damages $2,000.00 for initial errors and $2,000.00 for the improper response to rescission. See: 15 U.S.C. 1635(g); 15 U.S.C. 1640 (a)15 U.S.C. 1640(g); Gerasta v. Hibernia Nat. Bank, 575 F.2d 580 (5th Cir. 1978), binding in the 11th Circuit under Bonner. (TIL statutory damages available for initial TIL error and improper response to demand to rescind). 5. 1640(a)(1) Actual Damages for any errors: Hard to prove need to establish detrimental reliance on an erroneous disclosure. 6. 1640(a)(4) Enhanced HOEPA Damages: 1640(a)(4) enhances the damages: in the case of a failure to comply with any requirement under section 1639 of this title, an amount equal to the sum of all finance charges and fees paid by the consumer, unless the creditor demonstrates that the failure to comply is not material.

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5. Equitable Modification under 1635(b) and Reg Z 226.23(d)(4). Williams v. Homestake Mortg. Co., 968 F.2d 1137 (11th Cir. 1992) allows for equitable modification of TIL, Burden on lender to prove facts that justify the equitable modification. If not, Florida courts must follow Yslas v. D.K Guenther Builders, Inc., 342 So.2d 859, fn 2 (Fla. 2nd DCA 1977), which holds: The statutory scheme to effect restoration to the status quo provides that within ten days of receipt of the notice of rescission the creditor return any property of the debtor and void the security interest in the debtor's property. The debtor is not obligated to tender any property of the creditor in the debtor's possession until the creditor has performed his obligations. If the creditor does not perform within ten days of the notice or does not take possession of his property within ten days of the tender, ownership of the creditor's property vests in the debtor without further obligation. [emphasis added]. The 2nd District recently reaffirmed Yslas in Associates First Capital v. Booze, 912 So.2d 696 (Fla. 2nd DCA 2005). Associates, involved a partial 1635(b) and Reg Z 226.23(d)(1-4) rescission because the consumer refinanced with the same creditor, and the refinance included an additional advance of credit. In the Associates, the consumer can rescind only the additional advance. Important here, the Associates, consumer argued, and the Court agreed that the lender failed to perform a condition precedent to equitably modify TIL by failing to respond to his rescission notice within 20 days, as required by 1635(b) and Reg Z 226.23(d)(2): If a lender fails to respond within twenty days to the notice of rescission, the ownership of the property vests in the borrowers and they are no longer required to pay the loan. See 1635(b); Staley v. Americorp Credit Corp., 164 F. Supp. 2d 578, 584 (D. Md. 2001); Gill v. Mid-Penn Consumer Disc. Co., 671 F.Supp. 1021 (E.D.Pa. 1987). However, because 12 C.F.R. 226.23(f)(2) provides only a partial right of rescission where there is a refinancing, when the Lender failed to respond to the notice of rescission within twenty days, ownership of only the property subject to the right of rescission the $994.01 loaned for property taxes vested in the Borrowers without further obligation. Associates, p. 698. G. Truth in Lending Supplements State Remedies & Both Apply 1. Williams v. Public Finance Corp., 598 F.2d 349, rehearing denied with opinion at 609 F.2d 1179 (5th Cir. 1980), binding here under Bonner, holds that a consumer can get both TIL damages and usury damages because state usury laws and the Federal Truth in Lending Act provide separate remedies to rectify separate wrongs based on separate unrelated statutory violations. The 5th Circuit rejected the creditors double penalty argument by holding that if it accepted the argument, it would give special lenient treatment to the creditor when his loan violates 2 separate statutes, one state and one federal, designed to remedy 2 separate wrongs: 16

Moreover, we eschew an analysis of these statutory cases limited by the common law doctrines of compensation for breach of contract. These cases involve penal statutes, and we are compelled to enforce their clear and direct commands whether or not they seem to be overcompensating in a contract or tort analysis. There is nothing inherently wrong, excessive, or immoral in a borrower receiving two bounties for catching a lending beast who has wronged him twice first, by sneaking up on him from behind, and then by biting him too hard. The private attorney general who exposes and opposes these credit wolves is not deemed unduly enriched when his valor is richly rewarded and his vendor harshly rebuked. Nor does the states punishment for the usurious bite interfere with Congresss punishment for the wearing of sheeps clothing. We have come, or gone, a long way from Shakespeares ancient caution, Neither a borrower, nor a lender be. In todays world borrowing and lending are daily facts of life. But that a fact becomes diurnal does not mean it has been cleansed of its dire potential. We still heed the Bard's advice, but in our own modern way by strict regulation of the strong and careful protection of the weak and unwary. While the well-intended efforts of our many sovereigns may at times sound more like discordant and competing solos than mellifluous duets, we, as judges, must restrain our impulse to stray from the score. Williams, 609 F.2d pg. 359-360. In case the first opinion was unclear on this point, the Williams, rehearing opinion repeated and reaffirmed its lending wolf analysis: Noting that the effect of appellants argument was to ask for special lenient treatment to lenders who violate two laws instead of just one, we rejected the approach to the question proposed by the appellants and defined our inquiry in the following terms: [W]e think the real question in this case is a relatively standard one of statutory interpretation. More specifically, we think the question is whether Congress intended that the TIL Act would apply to loans which violated state usury laws punishable by forfeiture. At the outset we note that no exception for such loans is made explicitly in the TIL Act. Moreover, since the Act is to be construed liberally to effect its remedial purposes, Thomas v. Myers-Dickson Furniture Co., 479 F.2d 740, 748 (5th Cir. 1973), we are generally disinclined to read into the Act an implicit exception which benefits lenders at the expense of borrowers. However, the real test of whether this exception was intended or not must start with the question of whether it serves or disserves the purposes of the Act. In this analysis resides the real focus of our decision. The ILA and TIL Act provide separate remedies to rectify separate wrongs. The ILA limits what a lender subject to its provisions can charge for the use of its money; the TIL Act provisions involved here are designed to penalize and deter an independent wrong arising from nondisclosure.[fn5] We did not believe, and do not believe, that it subserves the purposes of the TIL Act to read into it an implied 17

exception for loans which violate unrelated state usury laws. As we have already said, we do not think it especially unfair or unjust to order two punishments for a lender who violates two laws. And more to the point, we think it would be directly contrary to the purposes and policies of the TIL Act to excuse a violator from federal penalty simply because he is also liable for a state penalty, especially where that state penalty may often be less harsh than the federal penalty....... ...... Appellants petition for rehearing have taken offense at our characterization of lenders who violate the ILA as credit wolves and as wearers of sheeps clothing when they also violate the disclosure provisions of the TIL Act. They suggest that such labels have obscured our analysis of the legal issues here. Such most certainly is not the case. Our analysis was and is based on our perception of the proper construction of the federal and state policies, even though their meshing is not nearly as perfect as we and appellants could wish. Nonetheless, as we read the ILA and the TIL Act, appellants have violated both and are subject to the penalties of both. Although appellants predations may be technical and they may feel we have cried wolf too readily, the fact remains that as we read the statutes appellants are guilty of the violations charged. Williams, 598 F.2d pg. 1181-1184. H. TILA Defenses 1. Lenders attorneys like to amend their complaint to allege fraudulent inducement of the mortgage and note in the face of a TIL rescission claim. I have supplied 2 motions to dismiss which address most of the issues when an assignee sues to foreclose then seeks to amend alleging fraudulently inducement of the mortgage. 2. A creditor can only raise statutory defenses to defend a TIL claim. Fraudulent inducement is not a statutory defense, and therefor prohibited. Purtle v. Eldridge Auto Sales, Inc., 91 F.3d 797, 801 (6th Cir. 1996). 3. 15 U.S.C. 1640(b) Correction of errors defense If lender discovers the errors he has 60 days to notify the consumer, adjust the account and provide corrected disclosures - I have never seen this defense raised 4. 15 U.S.C. 1640(c) Bona Fide error defense - must be a bona fide error, must have a procedure in place to catch and correct the error. Strictly clerical not error in legal judgment. I have seen this defense less than a dozen times non was successful at trial, usually abandoned. 5. Statute of Limitations: Damages have a 1 year limit but you can raise damages by recoupment or set off after the 1 year limit expires, and must allege for each rate change for a variable rate loan disclosure errors. 15 U.S.C. 1640(e).Key Sav. Bank, F.S.B. v. Dean, 695 So.2d 808 (Fla. 4th DCA 1997); Essex Home Mortgage Serv. v. Fritz, 740 So.2d 1224 (Fla. 4th DCA 1999). 18

6. Rescission has a 3 year limitation which is a statute of repose and cannot be raised after 3 years. See: Beach, cases; 15 U.S.C. 1635(f). There is some question in my mind as to whether the Fla. Stat. 494.00792(2)(d) adoption of 15 U.S.C. 1635(a) but not 15 U.S.C. 1635(f) gives an unlimited right to rescind at least HOEPA loans. 7. Sale of property terminates the right to rescind - signing the sale contract is treated as a sale. See: Dailey v. Leshin, 792 So.2d 527 (Fla. 4th DCA 2001) IV. FLORIDA FAIR LENDING ACT FLA. STAT. 494.0078 - 494.00797 A. Application 1. Must be a HOEPA Loan Fla. Stat. 494.0079(7) 2. Limited Application only to a Lender which means any person who makes a high-cost home loan or acts as a mortgage broker or lender, finance company, or retail installment seller. Excludes any entity chartered by the United States Congress when engaging in secondary market mortgage transactions as an assignee or otherwise. Fla. Stat. 494.0079(8) B. Prohibited Acts - Fla. Stat. 494.00791: 1. Prepayment Penalties prohibited unless within first 36 months after consummation and only if borrower was offered a choice of another loan without a prepayment penalty and borrower was given disclosure at least 3 business days before consummation, the terms of the prepayment penalty, including the benefit the borrower will receive for accepting the prepayment fee or penalty through either a reduced interest rate on the loan or reduced points or fees. 2. Default Interest Rate higher than loan rate prohibited unless in connection with a variable loan. 3. Balloon Payments prohibited 4. Negative Amortization prohibited 5. Collecting more than 2 prepaid payments prohibited 6. Extending credit without regard to the payment ability of the Borrower prohibited as a pattern or practice (equity loans) 7. Payments to a Home Contractor. Only 1 control. Can issue check only to borrower or jointly to Borrower and Contractor, or w/borrower consent to escrow agent with signed disbursal schedule. 19

8. Due-on-demand Clauses prohibited 9. Refinancing Within an 18-month Period prohibited unless the refinance has a reasonable benefit to the borrower considering all of the circumstances, including, but not limited to, the terms of both the new and refinanced loans, the cost of the new loan, and the borrower's circumstances. 10. Prohibited from making an Open-ended Loan to evade the act. 11. Prohibits recommending a default on existing loan as part of the refinance. 12. Prohibits offering or selling a high-cost home loan at the residence of a potential borrower without a prearranged appointment with the potential borrower or the expressed invitation of the potential borrower, except for mail solicitations 13. Prohibits certain late payment fees 14. Prohibits a charge to modify, renew, extend, or amend a high-cost home loan or to defer any payment due under the terms of a high-cost home loan on a minimum of one modification, renewal, extension, or deferral per each 12 months of the length of the loan. C. Required disclosures for high-cost home loans Fla. Stat. 494.00792 1. Required additional disclosure, format, and timing. Fla. Stat. 494.00792(1)(a). 2. APR and Variable Rate Disclosure. Fla. Stat. 494.00792(1)(b). 3. Notice of Liability to assignees. Fla. Stat. 494.00792(1)(c). 4. Timing - must be 3 days before closing, must change disclosures if terms change, and disclosures can be telephonic. Fla. Stat. 494.00792(2)(a)-(c). 5. Must give TIL 3 day notice of right to cancel form Fla. Stat. 494.00792(2)(d). D. Assignee Liability Fla. Stat. 494.00793 1. Imposes TIL assignee liability, as does Fla. Stat. 494.00792(1)(c). 2. Reconcile with definition of lender. E. Right to Cure High-Cost Home Loans. Fla. Stat. 494.00794 1. Consumer has right to reinstate by tendering the amount or performance as 20

specified in this section. Fla. Stat. 494.00794(1) 2. 2 bites of the cure apple - but the trigger is the lender providing 2 notices under the section, not 2 borrower defaults. Fla. Stat. 494.00794(1) 3. Must cure default as provided in the section which shall reinstate the borrower to the same position as if the default had not occurred and shall nullify, as of the date of the cure, any acceleration of any obligation under the security instrument or note arising from the default. Fla. Stat. 494.00794(1) 4. Meeting statutory obligation is condition precedent to foreclosure Fla. Stat. 494.00794(2). 5. Must deliver notice to cure the default to the borrower at the address of the secured property by postage prepaid certified mail, return receipt requested, which notice is effective upon deposit in the mail. Fla. Stat. 494.00794(1) 6. Notice shall inform the borrower: (a) Of the nature of default claimed; (b) borrower's right to cure the default by paying the sum of money required to cure the default. (c) If the amount necessary to cure the default will change during the 45-day period after the effective date of the notice due to the application of a daily interest rate or the addition of late payment fees, as allowed by this act, the notice shall give sufficient information to enable the borrower to calculate the amount at any point during the 45-day period. (d) the date by which the borrower shall cure the default to avoid acceleration and initiation of foreclosure not be less than 45 days after the date the notice is effective, (e) and the name and address and telephone number of a person to whom the payment or tender shall be made. (f) if borrower does not cure the default by the date specified, the creditor may take steps to terminate the borrower's ownership of the property by requiring payment in full of the home loan and commencing a foreclosure proceeding or other action to seize the home. (g) the name and address of the creditor and the telephone number of a representative for borrower to contact if he disagrees with the creditor's assertion of a default or the correctness of the creditor's calculation of the amount required to cure the default. 7. Charging fees or penalty attributable to the exercise of the right to cure a default including pre 45 day notice fees. F. Enforcement Fla. Stat. 494.00796 1. Forfeit the entire interest charged in the high-cost home loan or contracted to be charged or received, and only the principal sum of such high-cost home loan can be enforced in any court in this state, either at law or in equity. Fla. Stat. 494.00796(1) 2. Appears to adopt the TIL Bona Fide Error Defense - Good faith defense failure 21

was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such errors, the borrower has been notified of the compliance failure, appropriate restitution has been made to the borrower, and appropriate adjustments are made to the loan. Bona fide errors shall include, but not be limited to, clerical, calculation, computer malfunction and programming, and printing errors. An error of legal judgment with respect to a person's obligations under this section is not a bona fide error. Fla. Stat. 494.00796(2) 3. Remedies are cumulative. Fla. Stat. 494.00796(3) G. State Law Contractual and Statutory Attorney Fees 1. Most mortgages and notes have unilateral prevailing fees provisions that define costs to include fees. You must read these clauses carefully. 2. Fla. Stat. 57.105(7) makes unilateral fee shifting contract clauses bilateral. 3. Many mortgages have 2 unilateral prevailing creditor attorney fee provisions, both of which define attorneys fees as part of costs to collect the secured debt: The Most common Fannie Mae Freddie Mc approvd form has the first fee provision in Paragraph Seventh as follows: SEVENTH: That in case it should become necessary place [sic] this mortgage and the note secured hereby or either of them, in the hands of an attorney for collection, the said mortgagor covenants and agrees with the mortgagee to pay all costs, charges and expenses of such collection, including reasonable attorneys fees whether collected by foreclosure or otherwise. (Emphasis added). The second fee provision is located in an unnumbered Paragraph at the bottom of page 3 of 4 beginning with PROVIDED ALWAYS, as follows: PROVIDED ALWAYS, and this mortgage is on the express condition, that if the Mortgagor shall well and truly pay unto the Mortgagee the said sum of money mentioned in said promissory note referred to herein and secured hereby .... together with all costs, charges and expenses, including a reasonable attorneys fee, which the Mortgagee may incur or be put to in collecting the same by foreclosure or otherwise, or in protecting the security of the mortgage, whether by suit or otherwise..... (Emphasis added). 4. The most common note form likewise has a unilateral prevailing creditor attorney 22

fee provision, which also defines attorneys fees as part of the costs of collection: DEFAULT: .... We agree to pay all costs of collection, including reasonable attorneys fees if collected by or through an attorney, whether or not suit is instituted. (Emphasis added). 5. Fla. Stat. 57.105(7) makes unilateral contractual attorney fees bilateral: (7) If a contract contains a provision allowing attorneys fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorneys fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. This subsection applies to any contract entered into on or after October 1, 1988. 6. Fla. Stat. 59.46 , allows contractual or statutory attorney fees on appeal unless the contract, or statute providing for the payment of fees, here Fla. Stat. 57.105(7), expresses a contrary intent, at Fla. Stat. 59.46: 59.46 Attorneys fees. In the absence of an expressed contrary intent, any provision of a statute or of a contract entered into after October 1, 1977, providing for the payment of attorneys fees to the prevailing party shall be construed to include the payment of attorneys fees to the prevailing party on appeal. (Emphasis Added). 7. File your Motion for Costs and Fees within 30 days of the judgment.

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1a.Oct.1,2008HOPEGuidelines

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Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

October 1, 2008 TO: ALL APPROVED MORTGAGEES SUBJECT: HOPE for Hom eowners Servicing Guidance

MORTGAGEE LETTER 2008 - 30

The Housing and Economic Recovery Act of 2008 amends the National Housing Act to authorize a new, temporary Federal Housing Administration (FHA) mortgage insurance program called the HOPE for Homeowners Program (also referred to as the H4H Program). Under the Program, a borrower facing difficulty paying his or her mortgage will be eligible to refinance into an affordable FHA-insured mortgage. The H4H Program is effective for endorsements on or after October 1, 2008, through September 30, 2011. This mortgagee letter provides HUD-approved servicing mortgagees with servicing and loss mitigation guidance on the new H4H Program. The information, directions and guidance provided in the mortgagee letter reflect statutory requirements and the standards, policies and regulations adopted for the H4H Program by the Board of Directors of the H4H Program. I. Background

At origination of an H4H mortgage, the borrower will execute a Shared Equity note and mortgage (SEM) in favor of HUD with a fixed dollar amount inserted for initial equity. Likewise at origination, the borrower will execute a Shared Appreciation note and mortgage (SAM) in favor of HUD representing a fifty percent (50%) interest in future appreciation of the mortgage property. The SEM and SAM mortgage documents will be recorded as second and third priority liens, respectively, against the property. Initial equity is calculated as the difference between the H4H mortgage original balance and the appraised value at the time of the H4H loan origination. Based on the date of a sale, disposition or refinance, HUD is entitled to a percentage of the initial equity pursuant to the schedule as stated in the SEM.1 Upon sale or disposition of the mortgaged property; HUD is also entitled to receive fifty percent (50%) of any appreciation. Appreciation is defined as the growth, if any, in the value of the property between the time the borrower takes out the H4H mortgage and the time the borrower sells the property. HUD may share its 50% interest in future appreciation with a subordinate lien holder(s) who meet specific criteria for the H4H mortgage. Following the funding of the H4H mortgage, the originating lender (Originator) will record the H4H, SEM and SAM mortgage documents in the public records of the county in which the property is located and will deliver the original SEM and SAM notes and original
1

During Year 1 During Year 2 During Year 3 During Year 4 During Year 5 After Year 5

100% of equity is paid to FHA 90% of equity is paid to FHA 80% of equity is paid to FHA 70% of equity is paid to FHA 60% of equity is paid to FHA 50% of equity is paid to FHA
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recorded mortgage documents to HUD. The recording of the mortgages should enable the Originator to register the H4H, SEM and SAM notes and mortgages on the Mortgage Electronic Registration System (MERS);. The SEM and SAM will be serviced by HUD through its contractor, C&L Service Corporation/Morris-Griffin Corporation (Contractor).2 H4H mortgages will be serviced in accordance with the servicing policy for other FHAinsured forward mortgages as described in HUD Handbook 4330.1 REV-5 and any mortgagee letters that update this handbook, except as otherwise provided in this mortgagee letter. II. Prohibition Against Subordinate Financing

Under the H4H Program, borrowers are prohibited from taking out new subordinate liens for the first five years of the mortgage except when necessary to ensure maintenance of property standards. Therefore, during the first five years of the mortgage, FHA will permit a junior lien only if the proceeds are essential to preserve and protect the property, and: The condition to be repaired represents a health and safety hazard and/or the failure to make the repair will cause the property condition to deteriorate; The cost of the proposed repair is reasonable for the geographic market area as determined by HUDs residential property management contractor; The repairs are not primarily cosmetic or represent routine maintenance; The financing is a closed-end loan under Federal Reserve Boards Regulation Z; The financing does not reduce the amount of the governments equity share in the property; 3 and The new total debt does not exceed 95 percent of the propertys new appraised value.

HUD will not subordinate equity or appreciation sharing notes to any subordinate financing either within the first five years or thereafter except liens as described above or for FHA loss mitigation actions (mortgage modifications and partial claims). Should a borrower need to obtain a loan for property repairs, the borrower should contact HUD in care of its Contractor at the address at the end of this mortgagee letter and provide information documenting the need for the repairs, repair cost estimates and a current appraisal prepared by a FHA roster appraiser. III.
2

Refinancing

Contractor is subject to change. Mortgagees will be notified of any changes via future mortgagee letters. 3 That is, the sum of the unpaid principal balance and accrued interest on the H4H mortgage and the original principal balance of the new mortgage debt is less than the sum of (i) the appraised value of the property after completion of the proposed repair and (ii) HUDs share of the new equity created upon origination of the H4H mortgage as if a sale of the property occurred on date of origination of the new mortgage debt.

In the event of any refinance of the H4H mortgage, the borrower must pay to HUD its full equity interest as stated in the SEM. H4H mortgages may not be refinanced using the FHA streamline process. Refinance into another conventional loan product is permitted subject to the following restrictions: Refinance to Access Equity No earlier than 12 months from the date of closing on the H4H mortgage, HUD will subordinate its SAM to a refinance if: The refinance results in a 30 year amortizing fixed-rate loan with a principal and interest payment that is lower than the P&I payment due on the existing H4H mortgage, The proceeds from the refinance are sufficient to pay off the percent of initial equity due to HUD, and The cash received by or on behalf of the borrower is limited to the borrowers initial equity as stated in the SEM and any earned equity the borrower has accrued by paying down the principal balance of the loan. Refinance to Access Appreciation No earlier than five years from the date of closing on the H4H mortgage, HUD will allow a refinance if: The cash received by or on behalf of the borrower from the refinance is limited to the initial and earned equity and no more than twenty-five percent (25%) of the appreciation accrued since origination of the H4H mortgage, and The borrower consents to a modification of the SAM that specifies that HUD is entitled, upon the sale or other disposition of the property, to a fixed dollar amount equal to fifty percent (50%) of the appreciation (as adjusted for capital improvements as described below) that accrued between origination of the H4H mortgage and the date of the refinance, as well as fifty percent (50%) of any future appreciation that may accrue between the date of the refinance and sale of the property.

Additionally, if the H4H mortgage is being refinanced into a new FHA loan, the borrower must; (i) meet all standard eligibility and qualifying guidelines for FHA mortgage insurance, (ii) have made all of his or her mortgage payments during the previous 12 months, within the month due, and (iii) be current for the month due. Upon receipt of any request to subordinate the SAM to a refinance, HUD shall determine its equity interest based on the number of years since origination of the H4H mortgage and shall provide the amount required to pay off the shared equity mortgage to the refinance lender. If the borrower is requesting an appreciation refinance, HUD will, based on a new appraisal performed

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by a FHA roster appraiser and provided by the refinance lender, calculate the total appreciation (as adjusted for capital improvements) accrued since origination and multiply that amount by twenty-five percent (25%) to determine the maximum amount of appreciation the borrower may obtain from the refinance transaction. IV. Capital Improvements

Upon receipt of a written request from a borrower, the calculation of accrued appreciation in the mortgage property may be reduced by an amount equal to seventy-five percent (75%) of the actual expenditure for capital improvements completed at the borrowers expense after origination of the H4H mortgage, subject to the following conditions: The combined total cost of the capital improvements claimed must be equal to or greater than $2,500, The borrower must submit original or legible copies of paid invoices itemizing the work completed, The work must be of a nature that significantly changed and enhanced the value of the property including but not limited to room additions; full roof replacement; complete exterior painting, siding or stucco; full kitchen renovation; major landscape renovation; patio or deck additions; in-ground swimming pools, Expenses, including but not limited to interior dcor (paint, flooring, window and wall coverings); landscape maintenance (mowing, tree trimming or removal, reseeding, planting, fertilization) or normal maintenance or replacement of appliances, systems, and fixtures may not be included, and There will be no allowance for sweat equity. Default and Loss Mitigation

V.

Mortgagees shall follow the same documentation and reporting guidelines when providing loss mitigation to borrowers with H4H mortgages that apply to FHA-insured mortgages. HUDs Loss Mitigation Program allows for the following special considerations when evaluating an H4H borrower for loss mitigation. Loss Mitigation Options Special Forbearance follow existing Program guidance. Loan Modification HUD will subordinate the SEM and SAM to any modification of an H4H mortgage completed in accordance with HUDs Loss Mitigation Program. Partial Claim a partial claim note does not require subordination of the SEM and SAM. Pre-Foreclosure Sale the lender will include the total dollar amount of the SEM in the total debt calculation for the negative equity ratio calculations in addition to any existing Partial Claim. Net proceeds must fit into the eighty-two percent (82%) requirement and up to

$2,000 can be used to pay off any junior property preservation lien. If a junior property preservation lien does not exist, the borrower is not eligible for the $2,000. Deed-In-Lieu (DIL) HUD will accept a DIL subject to the SEM and SAM liens and will allow up to $2,000 to be used to satisfy a junior, property preservation lien. Impact of First Payment Defaults

VI.

Section 257 of the National Housing Act prohibits HUD from paying an insurance claim on any H4H loan where there was a first payment default (the borrower did not make at least one full payment within 120 days from the date of settlement). Though HUD is unable to pay claims for insurance benefits on these loans, they remain insured and they must be serviced in accordance with the HUDs servicing and loss mitigation guidance. Lenders must remit the portion of the annual mortgage insurance premium due each month. Prior to filing any claim for insurance benefits, the lender must verify that the loan did not experience a first payment default as defined herein. Loss Mitigation Borrowers must be considered for and offered all appropriate loss mitigation options. However, the lender may not file a claim for loss mitigation incentives, reimbursement of loss mitigation expenses, partial claim advances or forgiveness of principal and interest associated with pre-foreclosure sales, DIL, claim without conveyance or conveyance claims. These restrictions apply to loans with first payment defaults: Partial Claim Lenders are encouraged but not required to offer a loss mitigation option similar to a partial claim. HUD may subordinate the SEM and SAM to a partial claim advance note in favor of a lender if the advance generally complies with FHA Loss Mitigation Program guidance. However, HUD is unable to reimburse the lender for the advance. Pre-Foreclosure Sale (PFS) the lender is required to offer eligible borrowers the opportunity to participate in a Preforeclosure Sale Program with terms similar to that proscribed by FHA, however, the lender is not required to pay the borrower a consideration or to advance funds for satisfaction of junior liens as provided in the FHA Loss Mitigation Program. When a PFS generally complies with HUD guidance, HUD may release its SEM and SAM liens to accommodate the loss mitigation action. DIL Lenders are required to utilize the DIL option when appropriate. When a DIL generally complies with HUD guidance, HUD may release its SEM and SAM liens to accommodate the loss mitigation action. Voluntary Termination of Insurance Section 229 of the National Housing Act, as implemented by the H4H Regulations, provides that the Secretary shall terminate any insurance contract upon request by the mortgagor and the

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mortgagee. In the event the borrower and mortgagee mutually request termination of insurance and the request is granted, annual mortgage insurance premiums will no longer be due and payable to HUD. However, the borrower will not be entitled to a refund of any upfront mortgage insurance premium received by HUD and will remain obligated for the shared equity and appreciation mortgages, that can be discharged only as provided in other sections of this guidance. VII. Sale and Payoff

Upon sale or other disposition (transfer of title without sale) the borrower must satisfy both the SEM (if not already satisfied through refinance) and the SAM. Upon receipt of a payoff request, HUD will calculate the respective payoff amounts in the manner described herein and issue a payoff demand to the closing agent. Also, HUD will determine if there are prior subordinate lien holders who are entitled to a portion of any appreciation. HUD shall receive out of net proceeds its initial equity amount as stated in the SEM note. If net proceeds are less than HUDs share of the initial equity due to a deduction for allowable closing costs, then net proceeds will be shared as follows: First, HUD shall receive from the net proceeds its proportionate share (as determined using the schedule stated in the SEM) of any closing costs deducted from initial equity. Second, the remaining net proceeds (if any) will be distributed between HUD and the mortgagor according to the schedule stated in the SEM.

HUD shall accept net proceeds that are less than HUDs share of initial equity as payment in full of the SEM note subject to the following conditions: The sale represents an arms-length transaction with no identity of interest between the parties, The sale price was based on a current appraisal performed in accordance with the Uniform Standards of Professional Appraisal Practice and acceptable to HUD, and The net proceeds from the sale are equal to or greater than eighty-eight percent (88%) of the appraised value or such other value as may be approved by HUD based on circumstances beyond the control of the borrower.

Ex am ple Assuming that the original appraisal for an H4H loan is $100,000 and the original loan balance on the H4H loan is $90 ,000 ; therefore the SEM is $10 ,000 . The pro perty is so ld six years later for $10 3,00 0 with $ 7,00 0 in closing costs. The unpaid principal balance on the H4H loan is $88,000. Net proceeds equal $8,000 ($103,00088,0 00-$ 7,00 0). HUD receives $4,500 and the borrower receives $3,500; the deduction of closing costs resulted in the reduction in net proceeds being less than the initial equity amount by $2,000; HUD first receives 50% of this $2,000, or $1,000 out of the net proceeds; The remaining net proceeds ($7,000) are shared 50/50 between HUD and the borrower with each receiving $3,500.

To the extent that there is appreciation available from HUDs share for distribution, HUD will provide instructions to the closing agent to distribute the funds at closing to each prior

subordinate lien holder in order of their former priority. The lien holder that previously held the highest priority will receive up to the full dollar amount of its interest, not to exceed the amount of available appreciation. If additional appreciation is available, the lien holder with the next priority will be entitled to receive payment up to the full dollar amount of its interest, not to exceed the amount of available appreciation, and so on until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation will be remitted to HUD. Upon receipt of all equity and appreciation proceeds due to HUD, the Contractor will issue and record satisfaction and release of the SEM and SAM notes.

VIII. Correspondence All correspondence and mortgagor inquiries as noted above related to servicing H4H mortgage should be directed to: U.S. Department of HUD c/o C&L Service Corporation / Morris-Griffin Corporation 2488 East 81st Street, Suite 700 Tulsa, Oklahoma 74137 Any questions regarding this mortgagee letter may be directed to HUDs National Servicing Center at (888) 297-8685 or hsg-lossmit@hud.gov. This guidance is effective immediately.

Sincerely,

Brian D. Montgomery Assistant Secretary for HousingFederal Housing Commissioner

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1b.March4,2009MakingHomes AffordableModificationProgram(HAMP)

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April 28, 2009

Making Home Affordable Program Update

On February 18, the Obama Administration announced the Making Home Affordable (MHA) Program, a comprehensive plan to stabilize the U.S. housing market. As promised, two weeks later on March 4, the Administration published detailed program guidelines and authorized servicers to begin modifications and refinancings under the plan immediately. Servicers covering more than 75 percent of loans in the country have now begun modifications and refinancings under the Administrations MHA Program. As previewed in the guidelines released March 4, today we are announcing additional details on the Second Lien Program and the integration of Hope for Homeowners into the MHA Program. Millions of workers have lost their jobs or had their hours cut, and are now struggling to stay current on their mortgage payments. As a result, as many as 6 million families are expected to face foreclosure in the next several years, with millions more struggling to stay current on their mortgage payments. Second liens contribute to the number of American homeowners unable to afford their housing payments. Even where a first mortgage payment may be affordable, the addition of a second mortgage payment can increase monthly payments beyond affordable levels. In addition, second mortgages often complicate or prevent modification or refinancing of a first mortgage. We estimate up to 50 percent of at-risk mortgages currently have second liens. By offering homeowners a way to lower payments on their second mortgages through our Second Lien Program, we may potentially reduce payments further for up to 1 to 1.5 million homeowners, accounting for up to 50 percent of participants in the Home Affordable Modification Program, as well as maximize the effectiveness of our first lien modification program. The program ensures that first and second lien holders are treated fairly and consistent with priority of liens. Separately, the integration of an improved Hope for Homeowners program will help underwater borrowers, who often face heightened risks of foreclosure, by requiring principal writedowns to help homeowners increase the equity they own in their homes. These new details on the Second Lien Program and the integration of Hope for Homeowners mark ongoing progress of the Making Home Affordable Program in improving mortgage affordability for responsible homeowners and keeping more Americans in their homes.

Making Home Affordable Second Lien Program and Support for Hope for Homeowners
1. Second Lien Program To Create a Comprehensive Affordability Solution for Homeowners A Second Lien Program to Reach up to 1 to 1.5 Million Homeowners o Shared Efforts with Lenders to Reduce Second Mortgage Payments o Pay-for-Success Incentives for Servicers, Investors and Borrowers o Payment Schedule for Extinguishing Second Mortgages Automatic Modification of a Second Lien When a First Lien is Modified 2. Support for Hope for Homeowners Inclusion of Hope For Homeowners in the Making Home Affordable Program o Requirement that Servicers Seek Hope for Homeowners Refinancing in Tandem with a MHA Trial Modification o Pay-For-Success Incentives Similar to Other MHA Modifications More Principal Writedowns to Help Underwater Borrowers Support for Legislation to Strengthen Hope for Homeowners Treasury Purchase of Special Ginnie Mae Pools to Provide Liquidity for Hope for Homeowners Loans

April 28, 2009

1. Second Lien Program To Create a Comprehensive Affordability Solution for Homeowners: We estimate up to 50 percent of at-risk mortgages have second liens. Even if a first lien is modified to create an affordable payment, second liens can contribute to much higher foreclosure rates if not addressed. The Second Lien Program coordinates with the first mortgage modification program to lower payments on second liens and offer a comprehensive affordability solution for homeowners, helping keep more than a million Americans in their homes. In some cases where appropriately tailored to the borrower, servicers may also choose to accept a lump-sum payment from Treasury to extinguish some or all of a second lien. A Second Lien Program to reach up to 1 to 1.5 million homeowners, and potentially reduce payments further for up to 50 percent of participants in the Home Affordable Modification Program: The Second Lien Program will be a complementary program to the first lien modification program. It is intended to reach more than a million responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. In the current economy, in which 5.1 million jobs have been lost over the past 14 months, millions of hard working families have seen their mortgage payments rise to 40 or even 50 percent of their monthly income particularly if they received subprime and exotic loans with exploding terms and hidden fees. The Second Lien Program will help create a sustainably affordable mortgage payment for millions of homeowners who qualify for a first mortgage modification, yet still face challenges in affording their monthly payments because of a second mortgage. Shared Efforts with Lenders to Reduce Second Mortgage Payments: Making Home Affordable will share the cost with lenders of reducing payments for homeowners on second mortgages. o For amortizing loans (loans with monthly payments of interest and principal), we will share the cost of reducing the interest rate on the second mortgage to 1 percent. Participating servicers will be required to follow these steps to modify amortizing second liens: Reduce the interest rate to 1 percent; Extend the term of the modified second mortgage to match the term of the modified first mortgage, by amortizing the unpaid principal balance of the second lien over a term that matches the term of the modified first mortgage; Forbear principal in the same proportion as any principal forbearance on the first lien, with the option of extinguishing principal under the Extinguishment Schedule; After five years, the interest rate on the second lien will step up to the then current interest rate on the modified first mortgage, subject to the Interest Rate Cap on the first lien, set equal to the Freddie Mac Survey Rate; The second mortgage will re-amortize over the remaining term at the higher interest rate(s); and Investors will receive an incentive payment from Treasury equal to half of the difference between (i) the interest rate on the first lien as modified and (ii) 1 percent, subject to a floor. o For interest-only loans, we will share the cost of reducing the interest rate on the second mortgage to 2 percent. Participating servicers will be required to follow these steps to modify interest-only second liens: Reduce the interest rate to 2 percent;

April 28, 2009

Forbear principal in the same proportion as any principal forbearance on the first lien, with the option of extinguishing principal under the Extinguishment Schedule; After five years, the interest rate on the second lien will step up to the then current interest rate on the modified first mortgage, subject to the Interest Rate Cap on the first lien, set equal to the Freddie Mac Survey Rate; The second lien will amortize over the longer of the remaining term of the modified first lien or the originally scheduled amortization term, with amortization to begin at the time specified in the original contract; Investors will receive an incentive payment from Treasury equal to half of the difference between (i) the lower of the contract rate on the second lien and the interest rate on the first lien as modified and (ii) 2 percent, subject to a floor. Pay-for-Success Incentives for Servicers and Borrowers: o The Second Lien Program will have a pay-for-success structure similar to the first lien modification program, aligning incentives to reduce homeowner payments in a way most cost effective for taxpayers. Servicers can be paid $500 up-front for a successful modification and then success payments of $250 per year for three years, as long as the modified first loan remains current. Borrowers can receive success payments of up to $250 per year for as many as five years. These payments will be applied to pay down principal on the first mortgage, helping to build the borrower's equity in the home. Payment Schedule to Compensate Lenders for Extinguishing a Second Mortgage: o As an alternative to modifying the second lien, lenders/investors will have the option to extinguish second liens in exchange for larger payments under a pre-set formula. This will allow second lien holders to target principal extinguishment to the borrowers where extinguishment is most appropriate. For loans that are more than 180 days past due at the time of the modification, the lender/investor will be paid three cents per dollar of UPB extinguished. Table: Extinguishment Price Schedule: Per Dollar of UPB in LTV range (Loans less than 180 days past due) o Second-Lien LTV Range < 110 0.09 0.12 110 to 140 0.06 0.09 > 140 0.04 0.06

Back-End DTI > 55 % < 55 %

Clear and Consistent Guidelines for Second Lien Modifications: As with the first lien modification program, the Second Lien Program provides clear and consistent guidelines for

April 28, 2009

modifying both amortizing and interest-only second liens. A lack of common standards has limited loan modifications of both first and second liens in the past, even when modifications are likely to both reduce the chance of foreclosure and raise the value of the securities owned by investors. Mortgage servicers, who should have an interest in instituting common-sense loan modifications, often refrain from doing so because of a lack of clear standards. Clear and consistent guidelines for modifications are a key component of foreclosure prevention. Automatic Modification of a Second Lien When a First Lien is Modified: The Second Lien Program will facilitate automatic modification of a second lien when a first lien is modified for participating servicers, to ensure a comprehensive affordability solution for borrowers. Second Lien Modification May Not Delay First Lien Modification: The Second Lien Program will be a voluntary parallel program to the first lien modification program. Modification of a second lien will not delay modification of a first lien. The modification offer for a second lien under the program will occur as soon as the second lien servicer is able to prepare the terms and contact the borrower. Cost-Effective for Taxpayers: To protect taxpayers, the MHA Second Lien Program will focus on sound modifications. All the payments are designed around the principle of pay for success. Borrowers, servicers and lenders/investors all have aligned incentives under the program to complete successful modifications at an affordable and sustainable level.

2. Support for Hope for Homeowners: An improved Hope for Homeowners program can offer an important avenue for struggling borrowers to obtain a sustainable mortgage. Hope for Homeowners can particularly benefit underwater borrowers by helping to increase the equity they own in their homes. These additional supports are designed to work in tandem and take effect with the improved and expanded program under consideration by Congress. Inclusion of Hope For Homeowners in the Making Home Affordable Program: Making Home Affordable will include Hope for Homeowners as an important element of a comprehensive program to help responsible homeowners improve affordability of their mortgages and avoid preventable foreclosure. Requirement that Servicers Seek Hope for Homeowners Refinancing in Tandem with a MHA Trial Modification: When a borrower is in a trial Home Affordable Modification, a servicer will be required to evaluate a borrower for a Hope for Homeowners refinance and to offer the refinancing opportunity to the borrower if he or she qualifies. If a servicer determines the borrower is eligible for a Hope for Homeowners refinance in the initial discussion with the borrower, the servicer is required to also offer the refinance at the same time as the trial modification offer. Pay-For-Success Incentives Similar to Other MHA Modifications: Servicers and lenders who help make mortgages more affordable for struggling homeowners through Hope for Homeowners will receive pay-for-success incentive payments similar to the incentive payments offered for Home Affordable Modifications. o Servicers can receive a $2,500 up-front incentive payment for a successful Hope for Homeowners refinancing. o Lenders who originate the new Hope for Homeowners refinanced loans are eligible for success fees of up to $1,000 per year for up to three years, so long as the refinanced loan remains current.

April 28, 2009

o These incentive payments will only be available to servicers and originators who are participants in the Making Home Affordable Program.

More Principal Writedowns to Help Underwater Borrowers: Hope for Homeowners offers homeowners mortgage refinancings that include principal writedowns. This will allow underwater borrowers to increase the amount of equity they own in their homes. Underwater borrowers are more likely to be at risk of foreclosure, so increasing equity for these homeowners through Hope for Homeowners will be an important tool for the Administration in preventing avoidable foreclosures and keeping Americans in their homes. Support for Legislation to Strengthen Hope for Homeowners: In order to ensure that many more borrowers are able to participate in Hope for Homeowners, we are working to improve the program and actively pursuing legislation so that the FHA may reduce fees paid by borrowers, increase flexibility for lenders to refinance troubled loans, permit borrowers with higher debt loads to qualify, and make further improvements to strengthen Hope for Homeowners so that it can function effectively as an integral part of the Making Home Affordable Program. Treasury Purchase of Special Ginnie Mae Pools to Provide Liquidity for Hope for Homeowners Loans: Under HERA authority, Treasury or the GSEs would purchase special Hope for Homeowners Ginnie Mae IIs wrapped by the GSEs. These purchases will increase secondary market liquidity for new Hope for Homeowners loans, supporting additional assistance to homeowners.

###

2.Cross.v.Fed.Natl.MortgageAssn,359 So.2d464(Fla.4thDCA1978).

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FloridaCaseLaw

CROSSv.FEDERALNATL.MORTGAGEASS'N,359So.2d464(Fla.App.4Dist.1978) LOUISCROSSANDDICYB.CROSS,APPELLANTS,v.FEDERALNATIONALMORTGAGE ASSOCIATION,APPELLEE. No.77130. DistrictCourtofAppealofFlorida,FourthDistrict. April25,1978.

AppealfromtheCircuitCourt,BrowardCounty,VictorO.Wehle, J. WilliamJ.Berger,ofGreenberg,Traurig,Hoffman,Lipoff, Quentel&Wright,Miami,forappellants. PatrickMcGrotty,ofBooher&McGrotty,Miami,forappellee. DOWNEY,ChiefJudge. Appellantsexecutedanoteandmortgageinfavorof SoutheasternHomeMortgageCompany.Whenappellantsdefaultedin theirpaymentsthissuitwasinstitutedtoforeclosethe mortgage.Appellee(Southeastern'sassignee)wasawardeda summaryjudgmentandappellantscontendthatwaserrorbecauseof theexistenceofgenuineissuesofmaterialfact. Themortgageinquestionwasfederallyinsuredasapartofa federalprogramspecificallydesignedtoprovidehomeownership Page465 forlowincomefamilies.Theprogramisadministeredbythe DepartmentofHousingandUrbanDevelopmentthroughtheFHAand iscommonlyreferredtoasthe235program.TheSecretaryofHUD haspromulgatedahandbookentitled"AdministrationofInsured HomeMortgages",whichcontainsproceduralguidelinesfor,among otherthings,handlingmortgagesindefault.Specifically,these guidelinesdirectthattheagencycontactamortgagorindefault andmakesubstantialeffortstotrytorectifythedefaultby assistingthemortgagorinvariousways.[fn1] Participantsinthe235programwererequiredtocomplete annualFHArecertificationpapers.Appellantsfailedtofile theirrecertificationpaperswhichwereduebyJune21,1974,and thusbecameineligibleforfurtherparticipationintheprogram. Inoppositiontoappellee'smotionforsummaryjudgment appellant,Mrs.Cross,filedanAffidavitwhichstatedthatwhen therecertificationpapersweresenttohershewasincapacitated inthehospitalandherhusband,whocannotread,failedto adviseherofreceiptofthepapers.Theaffiantfurtherstated thatappelleefailedtofollowtheHUDguidelinessetforthabove inanefforttoassistappellantswhowerealwaysqualifiedfor recertification.Appelleedeniedthesestatementsinits Affidavit. ItseemsclearnowthattheHUDguidelinesarenotmandatory proceduresconstitutingconditionsprecedenttoforeclosure. EncarnacionHernandezv.PrudentialMortgageCorporation,553F.2d241 (1stCir.1977).[fn2]However,amortgageforeclosureis anequitableactionandthusequitabledefensesaremost appropriate.Thus,itappearstous,assuggestedinFederal NationalMortgageAssociationv.Ricks,83Misc.2d814, 372N.Y.S.2d485(S.Ct.1975),thatgiventhepurposeofthisfederal Actandtherecommendedeffortstoobviatethenecessityof foreclosure,anysubstantialdeviationfromtherecommendednorm mightbeconsideredbythetrialcourtundertheheadingofan equitabledefense.Appellantsherepleadedsuchadefenseand Mrs.Cross'Affidavitindicatedevidentiarysupporttherefor.

(1stCir.1977).[fn2]However,amortgageforeclosureis anequitableactionandthusequitabledefensesaremost appropriate.Thus,itappearstous,assuggestedinFederal NationalMortgageAssociationv.Ricks,83Misc.2d814, 372N.Y.S.2d485(S.Ct.1975),thatgiventhepurposeofthisfederal Actandtherecommendedeffortstoobviatethenecessityof foreclosure,anysubstantialdeviationfromtherecommendednorm mightbeconsideredbythetrialcourtundertheheadingofan equitabledefense.Appellantsherepleadedsuchadefenseand Mrs.Cross'Affidavitindicatedevidentiarysupporttherefor. Thus,therewasagenuineissueoffactexistingwhichprecluded summaryjudgment. Accordingly,thejudgmentappealedfromisreversedandthe causeremandedforfurtherproceedingsconsistentwiththis opinion. REVERSEDANDREMANDEDwithdirections. DAUKSCHandANSTEAD,JJ.,concur. [fn1]Typicaloftheseguidelinesis:"...TheForeclosureofa mortgage...isalastresort,andthemortgageeshouldacquire apropertyonlywhenthemortgagoreithercannotorwillnotmake hismortgagepaymentasagreed.Inanysituationshortofthis, theFederalHousingAdministrationispreparedtohelpthe mortgageepreventforeclosure,andseveralspecificrelief measuresaredescribedinthischapter."

[fn2]Seealso:Robertsv.CameronBrownCo.,556F.2d356(5th Cir.1977).

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ACKNOWLEDGMENT THAT POTENTIAL CLIENT DECLINED TO HIRE ATTORNEY

The undersigned potential client (Hereinafter The Undersigned) agrees that he has declined and to retain Mr. Bonfiglio and his law firm (Hereinafter The attorney) as his attorney and will seek other counsel or other means to respond to this lawsuit, _____________. The undersigned agrees that Mr. Bonfiglio has advised the undersigned that the complaint filed against me and served on me must have a written response, with a copy served on the attorney by mail or hand delivery and the original filed with the clerk of court, within 20 calendar days that the complaint was served on me. The undersigned understands that I/we will be defaulted and automatically lose the foreclosure suit and may be forced out of my/our house within about 40 to 60 days from the date I was served unless I file and serve a written response. The undersigned further agrees that he has not left any of his original papers with the attorney and has left the office with all of the papers that the undersigned brought with him. I hereby acknowledge receipt of a copy of this acknowledgment. ____________________________ Client date Witness as to the signatures for both: _____________________________________________ Witness Date _____________________________ Client date

________________________________________ James A. Bonfiglio, Esq. date Law Offices of James A. Bonfiglio, P.A.

4.NoticeofIntenttoCancel(IrvinCase)

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Law Office of James A. Bonfiglio, P.A.

James A. Bonfiglio, Esq. e mail: tilalawyer@aol.com Web Site: Fightforeclosure.com Phillips Point - West Tower 777 South Flagler Drive Suite 800 West Palm Beach, Florida, 33401 Post Office Box 1489 Boynton Beach, Florida 33425-1489 Phone: 561-734-4503 Fax: 561-734-1872 August 22, 2005 Accredited Home Lenders, Inc. 450 Carillon Parkway Suite 150 St. Petersburg, Fl. 33716-1299 Household Finance Corp. Last Known Address: 2700 Sanders Road Law Dept, Attn: Tori Voltz Prospect Heights, IL 60070-2701 Household Mortgage Services Last Known Address: P.O. Box 11035 Orange, Cal. 92856-8135 Please reply to: Post Office Box 1489 Boynton Beach, Fl 33425-1489

Re: Irvin vs. MERS 05 CA 2605 Broward Circuit Ct. Loan Closing Date: 11/19/02 Loan Number 0211066574 Dear Sirs: Please be advised that I have been retained by Mr. William Irvin, along with Ms. Sherri Simpson, to represent Mr. Irvin in the above foreclosure, Irvin vs. MERS 05 CA 2605 Broward County Circuit Court, State of Florida. Therefore, be advised that I have been authorized by my client to rescind the home secured consumer credit transaction entered into with Mr. Irvin and Accredited Home Lenders Inc. on or about November 19, 2002, and hereby exercise that right pursuant to The Federal Truth in Lending Act, 15 U.S.C. 1635 [TIL] and 12 C.F.R. 226.23 [Reg Z.]. Mr. Irvin has the TIL right to rescind which he hereby exercises and gives notice of his intent to do so. Mr. Irvin is ready willing and able to comply with his TIL tender obligation and offers to do so. You are hereby also advised that MERS as Nominee for Household Finance Corp. brought the above suit to foreclose the mortgage against Mr. Irvin. Florida does not recognize any legal capacity for an entity to file suit as a nominee nor does Florida have an entity identified as Household Finance Corp. authorized to do business in the Florida. The Florida Dept. of State, Div. Of Corporations has 2 entities identified as Household Finance Corporation both of which are inactive. Otherwise I can find no such entity. Therefore I am directing and delivering a copy of this notice to Household Finance Corporation at the last known address with the Florida Div. Of Corporations. Mr. Irvin also received a May 23, 2003 demand for proof of flood insurance from an entity called Household Mortgage Services address: P.O. Box 11035 Orange, Cal. 92856-8135. The Florida Dept. of State, Div. Of Corporations has 1 entity identified as Household Mortgage Services, Inc. which is inactive, but shares the same Sanders Road, Prospect Heights, Ill., address as the 2 inactive Household Finance Corporation entries Otherwise I can find no such entity. Therefore, I am also directing and delivering a copy of this notice to Household Mortgage Services to the Post Office

Accredited Home Lender Household Finance Household Mortgage August 22, 2005 Page 2

Address in the demand for flood insurance. The original Notice of Right to Cancel identified Accredited Home Lenders Inc. as the creditor with an address to deliver the Notice of Intent to Cancel as: 450 Carillon Parkway St. Petersburg, Fl.. 3716-1299. The Florida Dept. of State, Div. Of Corporations has an entity identified as Accredited Home Lenders Inc. which is active at the following address: Mailing Address 15090 Ave. Of Science, San Diego CA, 92128 (Changed 02/17/2004). Therefore I am directing and delivering a copy of this notice to Accredited Home Lenders Inc. at the address in the notice and the last known address with the Florida Div. Of Corporations. I am also requesting that Accredited Home Lenders Inc. Provide me with the name and current address for all assignees and or servicing agents of the Irwin loan known to Accredited, along with proof of the assignment, or servicing rights. Please be advised that the creditors hereunder, violated TILA by failing to provide any TIL disclosures, much less an accurate TILA disclosure statement, and failed to provide any notice of right to cancel, or an accurate one. Pursuant to the Act, the creditor has twenty (20) days from the date of receipt of this notice to cancel the security interest and return all charges assessed against our client, Mr. Irwin. Please consider this a formal request that the transaction be rescinded pursuant to 15 U.S.C. 1635 and Reg. Z 226.23.

Sincerely,

James A. Bonfiglio, Esq. JAB:jb cc: S. Simpson, Esq. T. Rollins, Esq. Client

Law Office of James A. Bonfiglio, P.A. Phillips Point - West Tower 777 S. Flagler Dr. Ste 800 W. Palm Beach, Fl, 33401

5.BACvs.TryniszewskiCaseNo.:0925630AW AttorneysNoticeofAppearance,etc.

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Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

IN THE CIRCUIT COURT OF THE 15TH JUDICIAL CIRCUIT IN AND FOR PALM BEACH COUNTY, FLORIDA BAC HOME LOAN SERVICING, L.P. FKA COUNTRYWIDE HOME LOANS SERVICING, L.P. Plaintiff, vs. KAROLINA TRYNISZEWSKI, and PIOTR TRYNISZEWSKI, etc., et. ux., et al, Defendants. / NOTICE OF APPEARANCE AND UNAVAILABILITY NOW INTO COURT, comes James A. Bonfiglio, Esq., and The Law Offices of James A. Bonfiglio, P.A. and files this their Notice of Appearance for KAROLINA TRYNISZEWSKI, and PIOTR TRYNISZEWSKI (Hereinafter The Tryniszewskis), the Defendants herein, and would request that copies of all pleadings, motions and notices be furnished to undersigned counsel. Counsel is also unavailable on the dates as specified below and requests that no matters be scheduled during the periods of unavailability. 1. Please inform all attorneys and support staff at your firm to mail all documents to CASE NO.: 09-25630 AW

James A. Bonfiglio at: Law Offices of James A. Bonfiglio, P.A. or James A. Bonfiglio, and always to: P.O. Box 1489, Boynton Beach, Fla. 33480-1489. 2. Please advise all attorneys and support staff at your firm, to immediately stop and do

not mail nor deliver in any manner to 777 South Flagler Drive, Suite 800, West Palm Beach, Florida, 33401 as a mail or delivery address for Mr. Bonfiglio. Mail directed to this address is delayed by several days, and is sometimes delivered to the wrong Tower.

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BAC vs. Tryniszewski Case No.: 09-25630 AW Attys Not. Of App. Page 2

3.

Please advise all attorneys and support staff at your firm that the physical delivery

address, and only to for physical hand delivery or express delivery, please use 5616 N. Ocean Blvd., Ocean Ridge Fla. 33435. Do not use this as a mail delivery address. 4. Please advise all attorneys and support staff at your firm that they may send

documents to me via e mail in word perfect or adobe format, E-mail: Tilalawyer@aol.com. This is not an acknowledgment or agreement to substitute mail or hand delivery with e-mail delivery, nor is it a waiver of the service requirements under the Florida or Federal Rules of Civil Procedure. See: Pee v. Aaron, 719 So.2d 372 (Fla. 4th DCA 1998). You are also notified that the undersigned will not accept documents transmitted to the undersigneds facsimile number below as a substitute for mail or hand delivery service. 5. Please be advised that the Defendants have assigned any and all rights to statutory and

or contractual attorney fees and costs to the undersigned attorney. 6. Please be advised that the undersigned is unavailable for the following dates, and asks

that nothing be scheduled during these dates and times: a. b. c. d. e. August 31, 2009 through September 14, 2009, inclusive; September 17, and September 18, 2009; September 24, and 25, 2009; Nov. 19, 2009, through Nov. 30, 2009 inclusive; Dec. 18, 2009, through Jan. 4, 2010, inclusive.

I HEREBY CERTIFY that a true and accurate copy of the above has been furnished by facsimile and/or U.S. mail this 17th day of August, 2009, to: Lauren Ann Cascino, Esq., Butler and

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BAC vs. Tryniszewski Case No.: 09-25630 AW Attys Not. Of App. Page 3

Hosch PA, 3185 S Conway Rd., Suite E, Orlando, Florida 32812-7315, facsimile1-407-381-5577, E-Mail: laurenc@butlerandhosch.com; MERS Inc., Electronic Data Systems Corp., 3300 SW 34th Ave. Suite 101, Ocala, FL, 34474. LAW OFFICES OF JAMES A. BONFIGLIO, P.A. P.O. Box 1489 Boynton Beach, Fla. 33425-1489 (561) 734 - 4503 Telephone (561) 734 - 1872 Facsimile E-mail: Tilalawyer@aol.com BY:___________________________________ JAMES A. BONFIGLIO, Attorney at Law Counsel for The Tryniszewskis Florida Bar Number: 288055

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6.BACvs.Tryniszewski CaseNo.:0925630AWBACComplaint

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7.BACvs.Tryniszewski CaseNo.:0925630AW TryniszewskisMotiontoDismiss

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8.USBankvs.Carney CaseNo.:0921854AWUSBankComplaint

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9.USBankvs.Carney CaseNo.:0921854AW CarneyMotiontoDismiss

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10.Onewestvs.Carlsen CaseNo.:0919045AW OnewestComplaint

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11.Onewestvs.Carlsen CaseNo.:0919045AW CarlsenMotiontoDismiss

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12.DeutscheBankvs.Afriat CaseNo.:0915421AW AfriatMotiontoAmendAnswer

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13.DeutscheBankvs.Afriat CaseNo.:0915421AW AfriatAmendedAnswer&AffirmativeDefenses

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14.Chemtovvs.Ledis CaseNo.:0831449AW LedisAmendedAnswer&AffirmativeDefenses

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15.FCLLCvs.Hartman CaseNo.:08204747AWHartmansAmended Answer,AffirmativeDefenses&Counterclaim

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IN THE CIRCUIT COURT OF THE OF THE 15TH JUDICIAL CIRCUIT IN AND FOR PALM BEACH COUNTY, FLORIDA FOREIGN CORRESPONDENCE, LLC, Plaintiff, vs. STEPHEN ERIC MORGAN, VICTORIA HARTMAN, ALONZOR WILSON, and CITY OF WEST PALM BEACH, Defendants. / VICTORIA HARTMANS ANSWER TO COMPLAINT NOW INTO COURT, through undersigned counsel, comes VICTORIA HARTMAN, the Defendant herein (Hereafter Ms. Hartman), and files this her Answer, Affirmative Defenses, and Counterclaim to the Complaint filed by FOREIGN CORRESPONDENCE, LLC, (Hereafter, FCLLC), the Plaintiff herein, alleging as grounds therefor as follows; to wit, COUNT I - MORTGAGE FORECLOSURE 1. 2. Admitted for jurisdiction only. Ms. Hartman admits signing a mortgage and note similar to those attached to the CASE NO.: 08-20747 AW

Complaint, without knowledge as to the remaining allegations and so they are expressly, directly and explicitly denied and strict proof is demanded thereon. 3. Ms. Hartman is without knowledge as to the recording information, ownership and

holder of the mortgage and note, and so the allegations are expressly, directly and explicitly denied, and strict proof is demanded thereon. 4. Ms. Hartman is without knowledge as to ownership of the mortgage and note, and

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 2

so the allegations are expressly, directly and explicitly denied, and strict proof is demanded thereon. 5. 6. Ms. Hartman admits owning the property. Ms. Hartman expressly, directly and explicitly denies the material allegations and

strict proof is demanded thereon. 7. Ms. Hartman expressly, directly and explicitly denies the right to declare the amount

due, therefore, all material allegations are denied and strict proof is demanded thereon. 8. Ms. Hartman expressly, directly and explicitly denies the material allegations and

strict proof is demanded thereon. 9. Ms. Hartman expressly, directly and explicitly denies the material allegations and

strict proof is demanded thereon in that there has been a failure to comply with both the mortgage and 12 C.F.R. 203.500- 203.681, and or Fla. Stat. 494.00794(1). 10. Without knowledge, therefor the allegations are expressly, directly and explicitly

denied and strict proof is demanded thereon. Any allegations of the Complaint Count I not expressly addressed herein are expressly, directly and explicitly denied and strict proof is demanded thereon. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays that this Honorable Court dismiss this action in toto, ordering that FCLLC take nothing by this action; award Ms. Hartman twice the finance charge in connection with this transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) & (e) for any initial errors for each Reg Z 226.19 error, each Reg Z 226.20(a) error,

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 3

and each Reg Z 226.20(c) error, and at each rate change; award actual damages in an amount to be established at trial, for the initial disclosure errors, and at each rate change and each obligation to disclose under Reg Z 226.19, Reg Z 226.20(a) and Reg Z 226.20(c), and interest on all the amounts, and award costs and reasonable attorney fees as provided by 15 U.S.C. 1640(a)&(e), Fla. Ch 57.105, and the mortgage and note, and such other relief as this Court deems just and proper. COUNT II - PROMISSORY NOTES 11. Ms. Hartman readapts, re-alleges and reaffirms his answers to the material allegations

of Paragraphs 1 through 10 and further alleges as follows; to wit, 12. 13. Admitted for jurisdiction only. Ms. Hartman admits signing a mortgage and note similar to those attached to the

Complaint, without knowledge as to the remaining allegations and so they are expressly, directly and explicitly denied and strict proof is demanded thereon. 14. Without knowledge, and so the allegations are expressly, directly and explicitly

denied, and strict proof is demanded thereon. 15. Ms. Hartman expressly, directly and explicitly denies the material allegations and

strict proof is demanded thereon. Any allegations of the Complaint Count II not expressly addressed herein are expressly, directly, and explicitly denied and strict proof is demanded thereon. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays that this Honorable Court dismiss this action in toto,

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Law Office of James A. Bonfiglio, P.A. Phillips Point - West Tower 777 S. Flagler Dr. Ste 800 W. Palm Beach, Fl, 33401

FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 4

ordering that FCLLC take nothing by this action; award Ms. Hartman twice the finance charge in connection with this transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) & (e) for any initial errors for each Reg Z 226.19 error, each Reg Z 226.20(a) error, and each Reg Z 226.20(c) error, and at each rate change; award actual damages in an amount to be established at trial, for the initial disclosure errors, and at each rate change and each obligation to disclose under Reg Z 226.19, Reg Z 226.20(a) and Reg Z 226.20(c), and interest on all the amounts, and award costs and reasonable attorney fees as provided by 15 U.S.C. 1640(a)&(e), Fla. Ch 57.105, and the mortgage and note, and such other relief as this Court deems just and proper. AFFIRMATIVE DEFENSES TO COMPLAINT NOW INTO COURT, through undersigned counsel, comes VICTORIA HARTMAN [Ms. Hartman] and, files this her Affirmative Defenses to the Complaint filed by the Plaintiff FCLLC, alleging as follows; to wit, COMMON ALLEGATIONS 16. Ms. Hartman was first introduced to Herbert Abedon as a creditor within the meaning

of the Federal Truth in Lending Act 15 U.S.C. 1601 et. seq. (Hereafter TIL) and 12 C.F.R. 226.1 et. seq. (Hereafter Reg Z) on or before May 13, 2005, when Herbert Abedon, as a TIL creditor, extended to Ms. Hartman consumer credit pursuant to a consumer credit transaction secured by Ms. Hartmans primary residence, the same property subject to this foreclosure, and governed by TIL and Reg Z. (Hereafter The May, 2005 Transaction). Ms. Hartman attaches a copy of the May 13, 2005 mortgage recorded beginning at Book 18581 Page 1454 Palm Beach County, Fl., as Exhibit A. 17. Herbert Abedon extended $60,000.00 (Sixty Thousand Dollars and No cents) home

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Law Office of James A. Bonfiglio, P.A. Phillips Point - West Tower 777 S. Flagler Dr. Ste 800 W. Palm Beach, Fl, 33401

FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 5

secured credit to Ms. Hartman in connection with The May, 2005 Transaction., as governed by TIL and Reg Z. 18. Ms. Hartman used the $60,000.00 (Sixty Thousand Dollars and No cents) funds from

The May, 2005 Transaction extended by Herbert Abedon to satisfy preexisting debt owed to a creditor other than Herbert Abedon, and primarily for personal family or household use. 19. Whereupon, on and or prior to December, 2005, Ms. Hartman found another need for

funds, in the approximate amount of $45,000.00 (Forty Five Thousand Dollars and no cents), again primarily for personal, family or household use and entered into another consumer credit transaction with Abedon which resulted in a modification of the May, 2005 mortgage. 20. Herbert Abedon then extend a 2nd mortgage in the principal amount of approximately

$45,000.00 to Ms. Hartman, secured by Ms. Hartmans primary residence. Both the original mortgage and additional extension of credit are the transaction subject to the instant foreclosure (The December, 2005 Transaction). 21. household use. 22. Ms. Hartman has retained the undersigned to represent her and agreed to pay him a Ms. Hartman used the 2nd advance of $45,000.00 primarily for personal family or

reasonable fee for his services. FIRST AFFIRMATIVE DEFENSE - COUNTS I & II TIL VIOLATION DECEMBER, 2005 LOAN 23. Ms. Hartman readapts, re-alleges, and reaffirm the material allegations of Paragraphs

16 to 22 and further alleges as follows; to wit, 24. At all times material hereto, the December, 2005 transaction was governed by

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Law Office of James A. Bonfiglio, P.A. Phillips Point - West Tower 777 S. Flagler Dr. Ste 800 W. Palm Beach, Fl, 33401

FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 6

Federal Truth in Lending Act 15 U.S.C. Sec. 1601 et. seq. (TILA) and subject to damage claims under 1640 and the right of rescission as described by 1635 and Reg. Z 226.23. 25. Herbert Abedon engaged in the business of extending consumer credit in Palm Beach

County, Florida. 26. At all times material hereto, Herbert Abedon, in the ordinary course of business

regularly extended or offered to extend consumer credit for which a finance charge is or may be imposed by a written agreement or payable in more than four [4] installments. 27. On or about December 15, 2005, Ms. Hartman entered into a consumer credit

transaction with Herbert Abedon in which the extended consumer credit transaction was subject to a finance charge and was initially payable to Herbert Abedon. 28. Herbert Abedon attached a copy of the promissory note similar to the note evidencing

the transaction to its Complaint that Ms. Hartman incorporates herein by reference. 29. As part of the consumer credit transactions, Herbert Abedon and/or their assignor

retained a security interest in Ms. Hartmans primary residence as described in Herbert Abedons complaint. The security interest is similar to the mortgage attached to Herbert Abedons Complaint, which is incorporated herein. The above described property is used as the principal dwelling of Ms. Hartman and was so at the time of the loan and all modifications thereto. 30. FCLLC attached a copy of a mortgage similar to the mortgage referred to above, to

its Complaint which is incorporated herein by reference. 31. The consumer credit transaction was subject to Ms. Hartmans right of rescission as

described by 1635(i) and Reg. Z 226.23.

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 7

32.

In the above consumer credit transaction, Herbert Abedon and/or FCLLC violated

1635(a),(h), & (i) and Reg. Z 226.23(b)&(h) by failing to deliver to Ms. Hartman 2 copies of a notice of the right to rescind which: a. b. identified the transaction; clearly and conspicuously disclosed the security interest in Ms. Hartmans principle

dwelling; c. d. clearly and conspicuously disclosed Ms. Hartmans right to rescind the transaction; Clearly and conspicuously disclosed how to exercise the right to rescind the

transaction, with a form for that purpose, designating the address of Herbert Abedon and/or their assignor's place of business; e. f. 33. clearly and conspicuously disclosed the effects of rescission; and clearly and conspicuously disclosed the date that the rescission period expired. In the course of the consumer credit transaction, Herbert Abedon and/or FCLLC

failed to deliver all material disclosures required by TILA and Regulation Z including the following: a. Failing to clearly and accurately disclose the amount financed using that term in

violation in Reg. Z 226.18(b) and 1638(a)(2)(A). b. Failing to clearly and accurately disclose the finance charge using that term in

violation of Reg. Z 226.4, 226.18 and 1638(a)(3). c. Failing to clearly and accurately disclose the annual percentage rate [including any

variable feature disclosure] using that term in violation of Reg. Z 226.18(e) and 1638(a)(4). d. Failing to properly disclose the number, amounts, and timing of payments scheduled

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to repay the obligation, in violation of Reg. Z 226.18(g) and 1638(a)(6). e. Failing to clearly and accurately disclose the total of payments using that term in

violation of Reg. Z 226.18(h) and 1638(a)(5). f. the failure to properly and/or clearly disclose any variable feature leads to a new

transaction, a new limitation and a new claim for damages and rescission at each rate change and/or each addition of each undisclosed variable feature. 34. The failure to properly disclose prior to consummation of the transaction is an

additional TIL violation. 35. Ms. Hartman has the continuing right to rescind the loan until the third business day

after she receives both the notice described above and all material disclosures described above pursuant to 1635(a) &(i) and Reg. Z 226.23(a)(3) & (h). 36. Ms. Hartman timely rescinded the transaction by notice through her previously filed

Notice of Intent to Rescind in response to the FCLLC complaint. 37. FCLLC failed to properly or timely respond to the tender of rescission within 20 days

of receipt of the notice as follows, which failure constitutes an additional TIL violation; a. Herbert Abedon must take any action necessary or appropriate to reflect termination

of the security interest created under this transaction, including the mortgage and note as required by 1635(b), and Reg. Z 226.23(d)(2); b. FCLLC must return to Ms. Hartman any money or property given by Ms. Hartman

to anyone, including Herbert Abedon and/or his assignee FCLLC as required by 1635(b) and Reg. Z 226.23(d)(2).

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 9

38. do. 39. Hartman. 40.

Ms. Hartman is ready willing and able to perform his TIL obligations and offers to

Upon FCLLCs failure to perform, this gives rise to vesting of the principal in Ms.

As a result of the afore described violations of TIL and Reg. Z pursuant to

1635(a)&(I) and 1640(a)&(e), FCLLC as an assignee under 15 U.S.C. 1641 is liable to Ms. Hartman for the following: a. b. c. rescission of the transaction under 15 U.S.C. 1641(c); termination of any security interest in Ms. Hartmans property; Return of any money or property given by Ms. Hartman to anyone, including Herbert

Abedon and his assignee FCLLC in connection with each transaction, including interest on said sum; d. twice the finance charge in connection with this transaction but not less than $200.00

for the initial errors, for any inaccurate variable disclosure at each rate change and for any improper response to the request for rescission under 15 U.S.C. for violations which are apparent on the face of the documents assigned; e. f. the right to retain proceeds to vest in Ms. Hartman; actual damages in an amount to be determined at trial for the initial errors, any of the

variable errors at each rate change, and any improper response to rescission; and reasonable costs and attorney fees. DEMAND FOR JURY TRIAL

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 10

Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays this Court take jurisdiction of this case; rescind the transaction of December 15, 2005 , order FCLLC take all action necessary to terminate any of its security interest in Ms. Hartmans property created under the transaction, that the Court declare all such security interests void, including but not limited to the mortgage related to the transaction of May 13, 2005 order the return to Ms. Hartman any money or property given by Ms. Hartman to anyone in connection with the transaction; enjoin FCLLC during this action and permanently thereafter from instituting prosecuting or maintaining foreclosure proceedings on Ms. Hartman property, or from recording any deeds or mortgages on the property or from otherwise taking steps to defraud Ms. Hartman of ownership of that property; for the initial TIL error and the refusal to rescind, not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) & (e) and or 1641; award Ms. Hartman twice the finance charge in connection with the May 13, 2005 transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) for the initial errors for each Reg Z 226.19 error, each Reg Z 226.20(a) error, and each Reg Z 226.20(c) error, and at each rate change, order the right to retain proceeds vests in Ms. Hartman; award actual damages in an amount to be established at trial, for the initial disclosure errors, for the variable errors, and at each rate change, and at each obligation to disclose under Reg Z 226.19, Reg Z 226.20(a) and Reg Z 226.20(c), for refusal to rescind, and prejudgment interest on all damages, including the rescission amount, and award costs and attorney fees as provided by 15 U.S.C. 1640(a)&(e), 1641 Fla. Ch 57.105 and such other relief as this Court deems just and proper. SECOND AFFIRMATIVE DEFENSE - COUNTS I & II - HOEPA

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41.

Ms. Hartman readapts, re-alleges, and reaffirm the material allegations of Paragraphs

16 to 22, 24 through 40, and further alleges as follows; to wit, 42. TILs 1639(a)(1), Reg Z 226.31 & Reg Z 226.32 applied to the December, 2005

transaction because the loan meets the requirements for a 15 U.S.C. 1639 and Reg Z 226.32 transaction according to the points and fees test and or the T-Bill test of Reg Z. 226.32. 43. In addition thereto, or in the alternative, TIL treats the collected but improperly

disclosed finance charges from the December, 2005 transaction as part of the finance charge, which independently trigger the points and fees test and or T-Bill Test of Reg Z 226.32. 44. Herbert Abedon violated 1639(a)(1) in connection with the December, 2005

transaction by failing to and/ or failing to timely provide the following disclosures in conspicuous type size: a. You are not required to complete this agreement merely because you have received

these disclosures or have signed a loan application. b. If you obtain this loan, the lender will have a mortgage on your home. You could

lose your home, and any money you have put into it, if you do not meet your obligations under the loan. 45. Herbert Abedon violated 1639(a)(2) by failing to provide (A) in the case of a credit

transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or (B) in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum

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interest rate allowed pursuant to section 3606 of Title 12. 46. Herbert Abedon violated 1639(b) by failing to give the required disclosure not less

than 3 business days prior to consummation of the transaction. 47. Herbert Abedon violated 1639(c) by taking a mortgage in which the consumer must

pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due and by using a method of computing a refund of unearned scheduled interest less favorable to the consumer than the actuarial method (as that term is defined in section 1615(d) of this TIL). 48. Herbert Abedon violated 1639(e) by taking a mortgage whose terms include a term

under which the outstanding principal balance could increase at any time over the course of the loan because regular periodic payments do not cover the full amount of interest due. 49. Herbert Abedon violated 1639(f) by extending credit without regard to payment

ability of the consumer. 50. Herbert Abedon violated 1639(e) by taking a mortgage whose terms include a

payment to a contractor under a home improvement contract from amounts extended as credit. 51. As the consequence of Herbert Abedons violations, TIL deems the violations a

failure to deliver the material disclosures for the purpose of 1635 of TILA. 52. Ms. Hartman is entitled to the special rescission and damage rules under 15 U.S.C.

1639, 1635(i)[1995], 1640(a)(4), Reg Z 226.23(i)[1996], Reg Z 226.31 & Reg Z 226.32. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays this Court take jurisdiction of this case; rescind the

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transaction of December 15, 2005 ; order that FCLLC take all action necessary to terminate any security interest in Ms. Hartmans property created under the transaction, that the Court declare all such security interests void, including but not limited to the mortgage related to the transaction of May 13, 2005, order the return to Ms. Hartman of any money or property given by Ms. Hartman to anyone, including FCLLC, in connection with the transaction; enjoin FCLLC during the pendency of this action and permanently thereafter from instituting prosecuting or maintaining foreclosure proceedings on Ms. Hartmans property, or from recording any deeds or mortgages regarding the property or from otherwise taking any steps to defraud Ms. Hartman of ownership of that property; award Ms. Hartman twice the finance charge in connection with this transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) & (e); award Ms. Hartman twice the finance charge in connection with this transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) for the initial errors for each Reg Z 226.19 error, each Reg Z 226.20(a) error, and each Reg Z 226.20(c) error, and at each rate change, order that the right to retain proceeds vests in Ms. Hartman; award actual damages in an amount to be established at trial, for the initial disclosure errors, for refusal to rescind, and at each rate change and each obligation to disclose under Reg Z 226.19, Reg Z 226.20(a) and Reg Z 226.20(c), and prejudgment interest on all damages, including the rescission amount, the special rescission and damages under 15 U.S.C. 1639, 1635(i)[1995], Reg Z 226.23(i)[1996], Reg Z 226.31 & Reg Z 226.32. and award costs and reasonable attorney fees as provided by 15 U.S.C. 1640(a)&(e), Fla. Ch 57.105 and such other relief as this Court deems just and proper. THIRD AFFIRMATIVE DEFENSE - COUNTS I & II - USURY

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53.

Ms. Hartman readapts, re-alleges and reaffirms the material allegations of Paragraphs

16 to 22 and further alleges as follows; to wit, 54. Florida Statute 687.02(1) provides in relevant part: All contracts for the payment

of interest upon any loan, advance of money, line of credit, or forbearance to enforce the collection of any debt, or upon any obligation whatever, at a higher rate of interest than the equivalent of 18 percent per annum simple interest are hereby declared usurious. 55. Florida Statute 687.02 also provides that if such loan, advance of money, line of

credit, forbearance to enforce the collection of a debt, or obligation exceeds $500,000 in amount or value, then no contract to pay interest thereon is usurious unless the rate of interest exceeds the rate prescribed in 687.071, which requires that the interest rate exceed 25%. 56. Florida Statute 687.03(1) provides in relevant part: [I]t shall be usury and unlawful

for any person . . . to reserve, charge, or take for any loan, advance of money, line of credit, forbearance to enforce the collection of any sum of money, or other obligation a rate of interest greater than the equivalent of 18 percent per annum simple interest, either directly or indirectly, by way of commission for advances, discounts, or exchange, or by any contract, contrivance, or device whatever whereby the debtor is required or obligated to pay a sum of money greater than the actual principal sum received, together with interest at the rate of the equivalent of 18 percent per annum simple interest. 57. Herbert Abedon is a creditor within the meaning of and or as defined by Fla. Stat.

687.0304(1)(b). 58. Ms. Hartman is a debtor within the meaning of and or as defined by Fla. Stat.

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687.0304(1)(c), 59. The May, 2005 and December, 2005 transactions were each a written credit

agreement within the meaning of and or as defined by Fla. Stat. 687.0304(1)(a) and Fla. Stat. 687.0304(2). 60. Herbert Abedon violated Fl. Stat. 687.03(1) in both the May, 2005 transaction and

the Jan., 2006 transaction by charging, reserving or collecting in connection with the above described consumer credit transaction an annual percentage rate in excess of 25%. 61. Herbert Abedon willfully reserved, charged and collected from Ms. Hartman in the

May, 2005 Transaction more than the 18% legal rate on the above described consumer credit transaction, in violation of Fl. Stat. 687.04, which provides in relevant part: Any person . . . willfully violating the provisions of s. 687.03 shall forfeit the entire interest so charged, or contracted to be charged or reserved, and only the actual principal sum of such usurious contract can be enforced in any court in this state, either at law or in equity; and when said usurious interest is taken or reserved, or has been paid, then and in that event the person who has taken or reserved, or has been paid, either directly or indirectly, such usurious interest shall forfeit to the party from whom such usurious interest has been reserved, taken, or exacted in any way double the amount of interest so reserved, taken, or exacted. In addition and or in the alternative, Herbert Abedon included the improper usurious interest in his payoff of the May, 2005 Transaction into the December, 2005 transaction making both usurious. 62. Florida Statute 687.071(2) provides in relevant part: (2) . . . any person making an

extension of credit to any person, who shall willfully and knowingly charge, take, or receive interest

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thereon at a rate exceeding 25 percent per annum but not in excess of 45 percent per annum, or the equivalent rate for a longer or shorter period of time, whether directly or indirectly, or conspires so to do, shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. 63. Florida Statute 687.071(3) provides in relevant part: (3) . . . any person making an

extension of credit to any person, who shall willfully and knowingly charge, take, or receive interest thereon at a rate exceeding 45 percent per annum or the equivalent rate for a longer or shorter period of time, whether directly or indirectly, or conspires so to do, shall be guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 64. Herbert Abedon violated Fl. Stat. 687.071(2) by charging, reserving or collecting

in connection with the above described consumer credit transaction an annual percentage rate exceeding 25 percent per annum but not in excess of 45 percent per annum. 65. In addition to or in the alternative, Herbert Abedon violated Fl. Stat. 687.071(3) by

charging, reserving or collecting in connection with the above described consumer credit transaction an annual percentage rate exceeding 45 percent per annum. 66. Florida Statute 687.071(7) provides in relevant part: (7) No extension of credit

made in violation of any of the provisions of this section shall be an enforceable debt in the courts of this state. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays that this Honorable Court take jurisdiction of this case;

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order damages against FCLLC, equal to double the alleged interest wrongfully charged to Ms. Hartman and paid to FCLLC in connection with both the May, 2005 transaction and the December, 2005 transaction; Forfeiture of all interest owing FCLLC on both of the above described consumer credit transactions; refuse to enforce any debt that may be owed to FCLLC; prejudgment and post judgment interest on all sums awarded, costs interest and attorneys fees under the consumer credit transaction documents, and or Fla. Stat. 57.105, and such other relief as this Court deems just and proper. FOURTH AFFIRMATIVE DEFENSE - COUNTS I & II - ACCOUNTING 67. Herbert Abedon or its FCLLC failed to comply with the conditions and terms of the

mortgage and note and/or 12 U.S.C.2601, et seq (RESPA), with respect to the proper computation, collection and application of the mortgage payments and the escrow accounts and payments in connection with both the May, 2005 and December, 2005 transactions 68. Alternately, Herbert Abedon or FCLLC collected payments, but failed to properly

credited Ms. Hartman account, and or collected mortgage payments and/or escrow payments and did not properly credit or post the payments to Ms. Hartman's account in violation of the mortgage and note in connection with both the May, 2005 and December, 2005 transactions. 69. Ms. Hartman made payments to Herbert Abedon and/or FCLLC or servicer during

the term of both the May, 2005 and December, 2005 transactions that Herbert Abedon and/or FCLLC or servicer did not properly post to Ms. Hartmans account. 70. Therefore, Ms. Hartman is entitled to an accounting of all moneys Abedon and or

FCLLS have collected from Ms. Hartman and paid out on her account for the term of both the May,

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2005 and December, 2005 transactions, and all the moneys collected by Herbert Abedon or FCLLC or servicer under the mortgages and notes and all the moneys Herbert Abedon and or FCLLC paid out on Ms. Hartmans account because of Herbert Abedons and or FCLLCs non-compliance with the mortgage and the note terms. 71. As a result of the improperly collecting and posting of payments to Ms. Hartmans

accounts and improper payments of moneys that Herbert Abedon and or FCLLC collected and or paid out on Ms. Hartmans May, 2005 and December, 2005 transaction accounts, FCLLC is estopped or has waived its right to foreclose, or otherwise has unclean hands and cannot claim a default and or accelerate and or foreclose the mortgage. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman pray that this Honorable Court take jurisdiction of this case; order an accounting under the mortgage and note, restore and/or return any and all overpayments made by Ms. Hartman and or improperly paid out by Herbert Abedon and FCLLC, dismiss FCLLC's complaint with prejudice, giving Ms. Hartman an award of 1640(a) statutory damages and actual damages in an amount to be established at trial for the initial disclosure errors, interest, and award costs and reasonable attorney fees as provided by 15 U.S.C.1640(a)(3), Fla. Ch.57, the mortgage and note, and such other relief as this Court deems just and proper. FIFTH AFFIRMATIVE DEFENSE - COUNTS I & II - IMPROPER CLOSING 72. Ms. Hartman readapts, re-alleges, and reaffirms the material allegations of Paragraphs

16 to 22 and further allege as follows; to wit,

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73.

The mortgage Plaintiff seeks to foreclose is illegal under Florida and/or Federal law,

due to: improperly collecting payments from Ms. Hartman at the closing of both the May, 2005 and or the December, 2005 transaction; and or improperly collecting fees and charges from the May, 2005 transaction within the payoff for the December, 2005 transaction; and or not paying the fees and charges listed in the HUD-1 as a result of the May, 2005 and or the December, 2005 transaction; and or improperly collecting payments and disbursing payments from Ms. Hartmans account during the servicing of both the May, 2005 and December, 2005 transaction; and or the improper initial disclosures and TIL violations in connection with both transactions. Thus, FCLLC is estopped or has waived its right to foreclose, or otherwise has unclean hands and cannot foreclose. 74. In the alternative, the mortgage FCLLC seeks to foreclose is illegal under Florida

and/or Federal law due to the improper collection of payments at the closing of both the loan transactions, and or during the servicing of the 2 loan transactions, and or the improper initial disclosures and TIL violations in connection with both loan transactions. Thus, FCLLC is estopped or has waived its right to foreclose, or otherwise has unclean hands and cannot foreclose. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman pray that this Honorable Court take jurisdiction of this case; order an accounting under the mortgage and note, restore and/or return any and all overpayments made by Ms. Hartman and or improperly paid out by Herbert Abedon and FCLLC, dismiss FCLLCs complaint with prejudice, giving Ms. Hartman an award of 1640(a) statutory damages and actual damages in an amount to be established at trial for the initial disclosure errors, interest, and award

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costs and reasonable attorney fees as provided by 15 U.S.C.1640(a)(3), Fla. Ch.57, the mortgage and note, and such other relief as this Court deems just and proper. SIXTH AFFIRMATIVE DEFENSE COUNTS I & II - IMPROPER ACCELERATION 75. Ms. Hartman readapts, re-alleges and re-affirms the allegations of Paragraphs 16 to

22 and further alleges as follows; to wit, 76. FCLLC did not properly accelerate the mortgage it seeks to foreclose under Florida

and/or Federal law, including Fla. Stat. 494.00794(1) and or and or and 12 C.F.R. 203.500- 203.681. 77. FCLLC failed to properly accelerate the mortgage and note by failing to give notice

prior to bringing this action to foreclose as required by the mortgage. Thus, FCLLC failed to comply with all conditions precedent to bring the action, and is estopped or has waived its right to foreclose, or otherwise has unclean hands and cannot foreclose. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman pray that this Honorable Court take jurisdiction of this case; order an accounting under the mortgage and note, restore and/or return any and all overpayments made by Ms. Hartman and or improperly paid out by Herbert Abedon and FCLLC, dismiss FCLLCs complaint with prejudice, giving Ms. Hartman an award of 1640(a) statutory damages and actual damages in an amount to be established at trial for the initial disclosure errors, interest, and award costs and reasonable attorney fees as provided by 15 U.S.C.1640(a)(3), Fla. Ch.57, the mortgage and note, and such other relief as this Court deems just and proper.

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SEVENTH AFFIRMATIVE DEFENSE - COUNTS I & 2 RESCISSION UNDER FLA. STAT. 494.00792(2)(d) 78. Ms. Hartman readapts, re-alleges and reaffirm the allegations of Paragraphs 16 to 22

and further alleges as follows; to wit, 79. At all times material hereto, the May 2005 and December, 2005 transactions were

governed by the Florida Fair Lending Act Fla. Stat. 494.0078 - 494.00797 and subject to her defenses under Fla. Stat. 494.00796. 80. Herbert Abedon engaged in the business of extending consumer credit in Palm Beach

County, Florida. 81. At all times material hereto, Herbert Abedon, was subject to the Florida Fair Lending

Act under Fla. Stat. 494.0079. 82. On or about May 13, 2005 and December 15, 2005, Ms. Hartman entered into a

consumer credit transaction with Herbert Abedon in which the extended consumer credit transaction was subject to a finance charge and was initially payable to Herbert Abedon, and then Abedon extended additional credit to Ms. Hartman. 83. Herbert Abedon attached a copy of the promissory note similar to the note evidencing

the transaction to its Complaint that Ms. Hartman incorporates herein by reference. 84. As part of both of the consumer credit transactions, Herbert Abedon retained a

security interest in Ms. Hartmans primary residence as described in Herbert Abedons complaint. A copy of the May 13, 2005 mortgage is attached hereto as is a copy of the Dec. 15, 2005 modification. The above described property is used as the principal dwelling of Ms. Hartman and was so at the time of the loan and all modifications thereto.

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85.

Both the May 2005 and December 2005 credit transactions were subject to the

limitations as set forth in Fla. Stat. 494.00791 and requirements of Fla. Stat. 494.00792. 86. In both the May 2005 and December 2005 consumer credit transaction, Herbert

Abedon violated the limitations for covered transactions under Fla. Stat. 494.00791 and the requirements imposed under Fla. Stat. 494.00792. 87. Ms. Hartman has the continuing right to rescind both the May 2005 and December

2005 loans under Fla. Stat. 494.00792(2)(d). 88. Ms. Hartman timely rescinded the transaction by notice through her previously filed

Notice of Intent to Rescind in response to the FCLLC complaint. 89. FCLLC failed to properly or timely respond to the tender of rescission within 20 days

of receipt of the notice. 90. As a result of the afore described violations of Fla. Stat. 494.00791 and requirements

of Fla. Stat. 494.00792, FCLLC as an assignee under Fla. Stat. 494.00793 and or Fla. Stat. 494.00792(1)(c) is liable to Ms. Hartman for the following: a. Dismissal of the complaint for failure to follow the required conditions precedent

under Fla. Stat. 494.00794(1), and or 494.00794(2); b. c. d. rescission of both the transactions under Fla. Stat. 494.00792(2)(d); termination of any security interest in Ms. Hartmans property; Return of any money or property given by Ms. Hartman to anyone, including Herbert

Abedon and his assignee FCLLC in connection with each transaction, including interest on said sum;

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e.

Forfeit the entire interest charged, and only the principal sum of such home loan can

be enforced either at law or in equity under Fla. Stat. 494.00796(1); f. g. the right to retain proceeds to vest in Ms. Hartman; and, reasonable costs and attorney fees. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays this Court take jurisdiction of this case; rescind the transaction of May 13, 2005 and December 15, 2005 , order FCLLC take all action necessary to terminate any of its security interest in Ms. Hartmans property created under the transaction, that the Court declare all such security interests void, including but not limited to the mortgage related to the transaction of May 13, 2005 order the return to Ms. Hartman any money or property given by Ms. Hartman to anyone in connection with the transaction; enjoin FCLLC during this action and permanently thereafter from instituting prosecuting or maintaining foreclosure proceedings on Ms. Hartman property, or from recording any deeds or mortgages on the property or from otherwise taking steps to defraud Ms. Hartman of ownership of that property; forfeiture of the entire interest charged; award actual damages in an amount to be established at trial, and prejudgment interest on all damages, including the rescission amount, and award costs and attorney fees as provided by the mortgage and note and Fla. Stat. 57.105 and such other relief as this Court deems just and proper. COUNTERCLAIM TO FCLLCS COMPLAINT JURISDICTION 91. Jurisdiction of the court is provided Fl. R. Civ. Pro. 1.170.

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PARTIES 92. Ms. Hartman, is an adult individual over the age of 18 and residing in Palm Beach

County FL, and is sui juris. 93. 94. Ms. Hartman is a Defendant in this Court. Plaintiff FCLLC is a limited liability company doing business in the State of Florida

by holding and or servicing notes secured by mortgagees on real estate in Palm Beach County, Florida, including that mortgage and note involved herein. COUNT I - TILA 95. Ms. Hartman readapts, re-alleges, and reaffirm the material allegations of Paragraphs

16 to 22 and further alleges as follows; to wit, 96. At all times material hereto, the December, 2005 transaction was governed by

Federal Truth in Lending Act 15 U.S.C. Sec. 1601 et. seq. (TILA) and subject to damage claims under 1640 and the right of rescission as described by 1635 and Reg. Z 226.23. 97. Herbert Abedon engaged in the business of extending consumer credit in Palm Beach

County, Florida. 98. At all times material hereto, Herbert Abedon, in the ordinary course of business

regularly extended or offered to extend consumer credit for which a finance charge is or may be imposed by a written agreement or payable in more than four [4] installments. 99. On or about December 15, 2005, Ms. Hartman entered into a consumer credit

transaction with Herbert Abedon in which the extended consumer credit transaction was subject to a finance charge and was initially payable to Herbert Abedon.

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100.

Herbert Abedon attached a copy of the promissory note similar to the note evidencing

the transaction to its Complaint that Ms. Hartman incorporates herein by reference. 101. As part of the consumer credit transactions, Herbert Abedon and/or their assignor

retained a security interest in Ms. Hartmans primary residence as described in Herbert Abedons complaint. The security interest is similar to the mortgage attached to Herbert Abedons Complaint, which is incorporated herein. The above described property is used as the principal dwelling of Ms. Hartman and was so at the time of the loan and all modifications thereto. 102. FCLLC attached a copy of a mortgage similar to the mortgage referred to above, to

its Complaint which is incorporated herein by reference. 103. The consumer credit transaction was subject to Ms. Hartmans right of rescission as

described by 1635(i) and Reg. Z 226.23. 104. In the above consumer credit transaction, Herbert Abedon and/or FCLLC violated

1635(a),(h), & (i) and Reg. Z 226.23(b)&(h) by failing to deliver to Ms. Hartman 2 copies of a notice of the right to rescind which: a. b. identified the transaction; clearly and conspicuously disclosed the security interest in Ms. Hartmans principle

dwelling; c. d. clearly and conspicuously disclosed Ms. Hartmans right to rescind the transaction; Clearly and conspicuously disclosed how to exercise the right to rescind the

transaction, with a form for that purpose, designating the address of Herbert Abedon and/or their assignor's place of business;

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e. f. 105.

clearly and conspicuously disclosed the effects of rescission; and clearly and conspicuously disclosed the date that the rescission period expired. In the course of the consumer credit transaction, Herbert Abedon and/or FCLLC

failed to deliver all material disclosures required by TILA and Regulation Z including the following: a. Failing to clearly and accurately disclose the amount financed using that term in

violation in Reg. Z 226.18(b) and 1638(a)(2)(A). b. Failing to clearly and accurately disclose the finance charge using that term in

violation of Reg. Z 226.4, 226.18 and 1638(a)(3). c. Failing to clearly and accurately disclose the annual percentage rate [including any

variable feature disclosure] using that term in violation of Reg. Z 226.18(e) and 1638(a)(4). d. Failing to properly disclose the number, amounts, and timing of payments scheduled

to repay the obligation, in violation of Reg. Z 226.18(g) and 1638(a)(6). e. Failing to clearly and accurately disclose the total of payments using that term in

violation of Reg. Z 226.18(h) and 1638(a)(5). f. the failure to properly and/or clearly disclose any variable feature leads to a new

transaction, a new limitation and a new claim for damages and rescission at each rate change and/or each addition of each undisclosed variable feature. 106. The failure to properly disclose prior to consummation of the transaction is an

additional TIL violation. 107. Ms. Hartman has the continuing right to rescind the loan until the third business day

after she receives both the notice described above and all material disclosures described above

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pursuant to 1635(a) &(i) and Reg. Z 226.23(a)(3) & (h). 108. Ms. Hartman timely rescinded the transaction by notice through her previously filed

Notice of Intent to Rescind in response to the FCLLC complaint. 109. FCLLC failed to properly or timely respond to the tender of rescission within 20 days

of receipt of the notice as follows, which failure constitutes an additional TIL violation; a. Herbert Abedon must take any action necessary or appropriate to reflect termination

of the security interest created under this transaction, including the mortgage and note as required by 1635(b), and Reg. Z 226.23(d)(2); b. FCLLC must return to Ms. Hartman any money or property given by Ms. Hartman

to anyone, including Herbert Abedon and/or his assignee FCLLC as required by 1635(b) and Reg. Z 226.23(d)(2). 110. do. 111. Hartman. 112. As a result of the afore described violations of TIL and Reg. Z pursuant to Upon FCLLCs failure to perform, this gives rise to vesting of the principal in Ms. Ms. Hartman is ready willing and able to perform his TIL obligations and offers to

1635(a)&(I) and 1640(a)&(e), FCLLC as an assignee under 15 U.S.C. 1641 is liable to Ms. Hartman for the following: a. b. c. rescission of the transaction under 15 U.S.C. 1641(c); termination of any security interest in Ms. Hartmans property; Return of any money or property given by Ms. Hartman to anyone, including Herbert

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Abedon and his assignee FCLLC in connection with each transaction, including interest on said sum; d. twice the finance charge in connection with this transaction but not less than $200.00

for the initial errors, for any inaccurate variable disclosure at each rate change and for any improper response to the request for rescission under 15 U.S.C. for violations which are apparent on the face of the documents assigned; e. f. the right to retain proceeds to vest in Ms. Hartman; actual damages in an amount to be determined at trial for the initial errors, any of the

variable errors at each rate change, and any improper response to rescission; and reasonable costs and attorney fees. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays this Court take jurisdiction of this case; rescind the transaction of December 15, 2005 , order FCLLC take all action necessary to terminate any of its security interest in Ms. Hartmans property created under the transaction, that the Court declare all such security interests void, including but not limited to the mortgage related to the transaction of May 13, 2005 order the return to Ms. Hartman any money or property given by Ms. Hartman to anyone in connection with the transaction; enjoin FCLLC during this action and permanently thereafter from instituting prosecuting or maintaining foreclosure proceedings on Ms. Hartman property, or from recording any deeds or mortgages on the property or from otherwise taking steps to defraud Ms. Hartman of ownership of that property; for the initial TIL error and the refusal to

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 29

rescind, not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) & (e) and or 1641; award Ms. Hartman twice the finance charge in connection with the May 13, 2005 transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) for the initial errors for each Reg Z 226.19 error, each Reg Z 226.20(a) error, and each Reg Z 226.20(c) error, and at each rate change, order the right to retain proceeds vests in Ms. Hartman; award actual damages in an amount to be established at trial, for the initial disclosure errors, for the variable errors, and at each rate change, and at each obligation to disclose under Reg Z 226.19, Reg Z 226.20(a) and Reg Z 226.20(c), for refusal to rescind, and prejudgment interest on all damages, including the rescission amount, and award costs and attorney fees as provided by 15 U.S.C. 1640(a)&(e), 1641 Fla. Ch 57.105 and such other relief as this Court deems just and proper. COUNT II - HOEPA 113. Ms. Hartman readapts, re-alleges, and reaffirm the material allegations of Paragraphs

16 to 22, 24 through 40, and further alleges as follows; to wit, 114. TILs 1639(a)(1), Reg Z 226.31 & Reg Z 226.32 applied to the December, 2005

transaction because the loan meets the requirements for a 15 U.S.C. 1639 and Reg Z 226.32 transaction according to the points and fees test and or the T-Bill test of Reg Z. 226.32. 115. In addition thereto, or in the alternative, TIL treats the collected but improperly

disclosed finance charges from the December, 2005 transaction as part of the finance charge, which independently trigger the points and fees test and or T-Bill Test of Reg Z 226.32. 116. Herbert Abedon violated 1639(a)(1) in connection with the December, 2005

transaction by failing to and/ or failing to timely provide the following disclosures in conspicuous

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 30

type size: a. You are not required to complete this agreement merely because you have received

these disclosures or have signed a loan application. b. If you obtain this loan, the lender will have a mortgage on your home. You could

lose your home, and any money you have put into it, if you do not meet your obligations under the loan. 117. Herbert Abedon violated 1639(a)(2) by failing to provide (A) in the case of a credit

transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or (B) in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to section 3606 of Title 12. 118. Herbert Abedon violated 1639(b) by failing to give the required disclosure not less

than 3 business days prior to consummation of the transaction. 119. Herbert Abedon violated 1639(c) by taking a mortgage in which the consumer must

pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due and by using a method of computing a refund of unearned scheduled interest less favorable to the consumer than the actuarial method (as that term is defined in section 1615(d) of this TIL). 120. Herbert Abedon violated 1639(e) by taking a mortgage whose terms include a term

under which the outstanding principal balance could increase at any time over the course of the loan because regular periodic payments do not cover the full amount of interest due.

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 31

121.

Herbert Abedon violated 1639(f) by extending credit without regard to payment

ability of the consumer. 122. Herbert Abedon violated 1639(e) by taking a mortgage whose terms include a

payment to a contractor under a home improvement contract from amounts extended as credit. 123. As the consequence of Herbert Abedons violations, TIL deems the violations a

failure to deliver the material disclosures for the purpose of 1635 of TILA. 124. Ms. Hartman is entitled to the special rescission and damage rules under 15 U.S.C.

1639, 1635(i)[1995], 1640(a)(4), Reg Z 226.23(i)[1996], Reg Z 226.31 & Reg Z 226.32. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays this Court take jurisdiction of this case; rescind the transaction of December 15, 2005 ; order that FCLLC take all action necessary to terminate any security interest in Ms. Hartmans property created under the transaction, that the Court declare all such security interests void, including but not limited to the mortgage related to the transaction of May 13, 2005, order the return to Ms. Hartman of any money or property given by Ms. Hartman to anyone, including FCLLC, in connection with the transaction; enjoin FCLLC during the pendency of this action and permanently thereafter from instituting prosecuting or maintaining foreclosure proceedings on Ms. Hartmans property, or from recording any deeds or mortgages regarding the property or from otherwise taking any steps to defraud Ms. Hartman of ownership of that property; award Ms. Hartman twice the finance charge in connection with this transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) & (e); award Ms. Hartman twice

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 32

the finance charge in connection with this transaction, but not less than $200 nor more than $2,000, as provided under 15 U.S.C. 1640(a) for the initial errors for each Reg Z 226.19 error, each Reg Z 226.20(a) error, and each Reg Z 226.20(c) error, and at each rate change, order that the right to retain proceeds vests in Ms. Hartman; award actual damages in an amount to be established at trial, for the initial disclosure errors, for refusal to rescind, and at each rate change and each obligation to disclose under Reg Z 226.19, Reg Z 226.20(a) and Reg Z 226.20(c), and prejudgment interest on all damages, including the rescission amount, the special rescission and damages under 15 U.S.C. 1639, 1635(i)[1995], Reg Z 226.23(i)[1996], Reg Z 226.31 & Reg Z 226.32. and award costs and reasonable attorney fees as provided by 15 U.S.C. 1640(a)&(e), Fla. Ch 57.105 and such other relief as this Court deems just and proper. COUNT III - USURY 125. Ms. Hartman readapts, re-alleges and reaffirms the material allegations of Paragraphs

16 to 22 and further alleges as follows; to wit, 126. Florida Statute 687.02(1) provides in relevant part: All contracts for the payment

of interest upon any loan, advance of money, line of credit, or forbearance to enforce the collection of any debt, or upon any obligation whatever, at a higher rate of interest than the equivalent of 18 percent per annum simple interest are hereby declared usurious. 127. Florida Statute 687.02 also provides that if such loan, advance of money, line of

credit, forbearance to enforce the collection of a debt, or obligation exceeds $500,000 in amount or value, then no contract to pay interest thereon is usurious unless the rate of interest exceeds the rate prescribed in 687.071, which requires that the interest rate exceed 25%.

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128.

Florida Statute 687.03(1) provides in relevant part: [I]t shall be usury and unlawful

for any person . . . to reserve, charge, or take for any loan, advance of money, line of credit, forbearance to enforce the collection of any sum of money, or other obligation a rate of interest greater than the equivalent of 18 percent per annum simple interest, either directly or indirectly, by way of commission for advances, discounts, or exchange, or by any contract, contrivance, or device whatever whereby the debtor is required or obligated to pay a sum of money greater than the actual principal sum received, together with interest at the rate of the equivalent of 18 percent per annum simple interest. 129. Herbert Abedon is a creditor within the meaning of and or as defined by Fla. Stat.

687.0304(1)(b). 130. Ms. Hartman is a debtor within the meaning of and or as defined by Fla. Stat.

687.0304(1)(c), 131. The May, 2005 and December, 2005 transactions were each a written credit

agreement within the meaning of and or as defined by Fla. Stat. 687.0304(1)(a) and Fla. Stat. 687.0304(2). 132. Herbert Abedon violated Fl. Stat. 687.03(1) in both the May, 2005 transaction and

the Jan., 2006 transaction by charging, reserving or collecting in connection with the above described consumer credit transaction an annual percentage rate in excess of 25%. 133. Herbert Abedon willfully reserved, charged and collected from Ms. Hartman in the

May, 2005 Transaction more than the 18% legal rate on the above described consumer credit transaction, in violation of Fl. Stat. 687.04, which provides in relevant part: Any person . . .

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 34

willfully violating the provisions of s. 687.03 shall forfeit the entire interest so charged, or contracted to be charged or reserved, and only the actual principal sum of such usurious contract can be enforced in any court in this state, either at law or in equity; and when said usurious interest is taken or reserved, or has been paid, then and in that event the person who has taken or reserved, or has been paid, either directly or indirectly, such usurious interest shall forfeit to the party from whom such usurious interest has been reserved, taken, or exacted in any way double the amount of interest so reserved, taken, or exacted. In addition and or in the alternative, Herbert Abedon included the improper usurious interest in his payoff of the May, 2005 Transaction into the December, 2005 transaction making both usurious. 134. Florida Statute 687.071(2) provides in relevant part: (2) . . . any person making an

extension of credit to any person, who shall willfully and knowingly charge, take, or receive interest thereon at a rate exceeding 25 percent per annum but not in excess of 45 percent per annum, or the equivalent rate for a longer or shorter period of time, whether directly or indirectly, or conspires so to do, shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. 135. Florida Statute 687.071(3) provides in relevant part: (3) . . . any person making an

extension of credit to any person, who shall willfully and knowingly charge, take, or receive interest thereon at a rate exceeding 45 percent per annum or the equivalent rate for a longer or shorter period of time, whether directly or indirectly, or conspires so to do, shall be guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 136. Herbert Abedon violated Fl. Stat. 687.071(2) by charging, reserving or collecting

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 35

in connection with the above described consumer credit transaction an annual percentage rate exceeding 25 percent per annum but not in excess of 45 percent per annum. 137. In addition to or in the alternative, Herbert Abedon violated Fl. Stat. 687.071(3) by

charging, reserving or collecting in connection with the above described consumer credit transaction an annual percentage rate exceeding 45 percent per annum. 138. Florida Statute 687.071(7) provides in relevant part: (7) No extension of credit

made in violation of any of the provisions of this section shall be an enforceable debt in the courts of this state. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays that this Honorable Court take jurisdiction of this case; order damages against FCLLC, equal to double the alleged interest wrongfully charged to Ms. Hartman and paid to FCLLC in connection with both the May, 2005 transaction and the December, 2005 transaction; Forfeiture of all interest owing FCLLC on both of the above described consumer credit transactions; refuse to enforce any debt that may be owed to FCLLC; prejudgment and post judgment interest on all sums awarded, costs interest and attorneys fees under the consumer credit transaction documents, and or Fla. Stat. 57.105, and such other relief as this Court deems just and proper. COUNT IV - ACCOUNTING 139. Ms. Hartman readapts, re-alleges and reaffirms the material allegations of Paragraphs

16 to 22 and further alleges as follows; to wit,

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 36

140.

Herbert Abedon or its FCLLC failed to comply with the conditions and terms of the

mortgage and note and/or 12 U.S.C.2601, et seq (RESPA), with respect to the proper computation, collection and application of the mortgage payments and the escrow accounts and payments in connection with both the May, 2005 and December, 2005 transactions 141. Alternately, Herbert Abedon or FCLLC collected payments, but failed to properly

credited Ms. Hartman account, and or collected mortgage payments and/or escrow payments and did not properly credit or post the payments to Ms. Hartman's account in violation of the mortgage and note in connection with both the May, 2005 and December, 2005 transactions. 142. Ms. Hartman made payments to Herbert Abedon and/or FCLLC or servicer during

the term of both the May, 2005 and December, 2005 transactions that Herbert Abedon and/or FCLLC or servicer did not properly post to Ms. Hartmans account. 143. Therefore, Ms. Hartman is entitled to an accounting of all moneys Abedon and or

FCLLS have collected from Ms. Hartman and paid out on her account for the term of both the May, 2005 and December, 2005 transactions, and all the moneys collected by Herbert Abedon or FCLLC or servicer under the mortgages and notes and all the moneys Herbert Abedon and or FCLLC paid out on Ms. Hartmans account because of Herbert Abedons and or FCLLCs non-compliance with the mortgage and the note terms. 144. As a result of the improperly collecting and posting of payments to Ms. Hartmans

accounts and improper payments of moneys that Herbert Abedon and or FCLLC collected and or paid out on Ms. Hartmans May, 2005 and December, 2005 transaction accounts Ms. Hartman is entitled to an accounting of all those moneys.

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 37

DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman pray that this Honorable Court take jurisdiction of this case; order an accounting under the mortgage and note, restore and/or return any and all overpayments made by Ms. Hartman and or improperly paid out by Herbert Abedon and their assignors, dismiss FCLLCs complaint with prejudice, giving Ms. Hartman an award of 1640(a) statutory damages and actual damages in an amount to be established at trial for the initial disclosure errors, interest, and award costs and reasonable attorney fees as provided by 15 U.S.C.1640(a)(3), Fla. Ch.57, the mortgage and note, and such other relief as this Court deems just and proper. COUNT V - RESCISSION UNDER FLA. STAT. 494.00792(2)(d) 145. Ms. Hartman readapts, re-alleges and reaffirm the allegations of Paragraphs 16 to 22

and further alleges as follows; to wit, 146. At all times material hereto, the May 2005 and December, 2005 transactions were

governed by the Florida Fair Lending Act Fla. Stat. 494.0078 - 494.00797 and subject to her defenses under Fla. Stat. 494.00796. 147. Herbert Abedon engaged in the business of extending consumer credit in Palm Beach

County, Florida. 148. At all times material hereto, Herbert Abedon, was subject to the Florida Fair Lending

Act under Fla. Stat. 494.0079. 149. On or about May 13, 2005 and December 15, 2005, Ms. Hartman entered into a

consumer credit transaction with Herbert Abedon in which the extended consumer credit transaction

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Law Office of James A. Bonfiglio, P.A. Phillips Point - West Tower 777 S. Flagler Dr. Ste 800 W. Palm Beach, Fl, 33401

FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 38

was subject to a finance charge and was initially payable to Herbert Abedon, and then Abedon extended additional credit to Ms. Hartman. 150. Herbert Abedon attached a copy of the promissory note similar to the note evidencing

the transaction to its Complaint that Ms. Hartman incorporates herein by reference. 151. As part of both of the consumer credit transactions, Herbert Abedon retained a

security interest in Ms. Hartmans primary residence as described in Herbert Abedons complaint. A copy of the May 13, 2005 mortgage is attached hereto as is a copy of the Dec. 15, 2005 modification. The above described property is used as the principal dwelling of Ms. Hartman and was so at the time of the loan and all modifications thereto. 152. Both the May 2005 and December 2005 credit transactions were subject to the

limitations as set forth in Fla. Stat. 494.00791 and requirements of Fla. Stat. 494.00792. 153. In both the May 2005 and December 2005 consumer credit transaction, Herbert

Abedon violated the limitations for covered transactions under Fla. Stat. 494.00791 and the requirements imposed under Fla. Stat. 494.00792. 154. Ms. Hartman has the continuing right to rescind both the May 2005 and December

2005 loans under Fla. Stat. 494.00792(2)(d). 155. Ms. Hartman timely rescinded the transaction by notice through her previously filed

Notice of Intent to Rescind in response to the FCLLC complaint. 156. FCLLC failed to properly or timely respond to the tender of rescission within 20 days

of receipt of the notice. 157. As a result of the afore described violations of Fla. Stat. 494.00791 and requirements

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 39

of Fla. Stat. 494.00792, FCLLC as an assignee under Fla. Stat. 494.00793 and or Fla. Stat. 494.00792(1)(c) is liable to Ms. Hartman for the following: a. Dismissal of the complaint for failure to follow the required conditions precedent

under Fla. Stat. 494.00794(1), and or 494.00794(2); b. c. d. rescission of both the transactions under Fla. Stat. 494.00792(2)(d); termination of any security interest in Ms. Hartmans property; Return of any money or property given by Ms. Hartman to anyone, including Herbert

Abedon and his assignee FCLLC in connection with each transaction, including interest on said sum; e. Forfeit the entire interest charged, and only the principal sum of such home loan can

be enforced either at law or in equity under Fla. Stat. 494.00796(1); f. g. the right to retain proceeds to vest in Ms. Hartman; and, reasonable costs and attorney fees. DEMAND FOR JURY TRIAL Ms. Hartman hereby demands trial by jury as to all issues so triable thereof. WHEREFORE, Ms. Hartman prays this Court take jurisdiction of this case; rescind the transaction of May 13, 2005 and December 15, 2005 , order FCLLC take all action necessary to terminate any of its security interest in Ms. Hartmans property created under the transaction, that the Court declare all such security interests void, including but not limited to the mortgage related to the transaction of May 13, 2005 order the return to Ms. Hartman any money or property given by Ms. Hartman to anyone in connection with the transaction; enjoin FCLLC during this action and

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FCLLC vs. Hartman 00-20747 AW Ms. Hartman Ans, etc., to Comp. Page 40

permanently thereafter from instituting prosecuting or maintaining foreclosure proceedings on Ms. Hartman property, or from recording any deeds or mortgages on the property or from otherwise taking steps to defraud Ms. Hartman of ownership of that property; forfeiture of the entire interest charged; award actual damages in an amount to be established at trial, and prejudgment interest on all damages, including the rescission amount, and award costs and attorney fees as provided by the mortgage and note and Fla. Stat. 57.105 and such other relief as this Court deems just and proper. I HEREBY CERTIFY that a true and accurate copy of the above has been furnished by facsimile and/or U.S. mail this 15th day of December, 2006, to: Joseph M. Considine, P.A. 5201 Village Blvd., Suite C, West Palm Beach, FL. 33407; Ralph Mabee, Jr., Esq., Vernis & Bowling, PA 884 US Highway One, North Palm Beach, FL., 33408; Kimberly L. Rothenburg, Esq., City of West Palm Beach, P.O. Box 3366 West Palm Beach, FL., 33402-3366; Stephen E. Morgan, 3803 Brushcreek Dr. Lawrence, Kansas, 66047. LAW OFFICES OF JAMES A. BONFIGLIO, P.A. P.O. Box 1489 Boynton Beach, Fla. 33425-1489 (561) 734 - 4503 Telephone (561) 734 - 1872 Facsimile E-mail: Tilalawyer@aol.com BY:___________________________________ JAMES A. BONFIGLIO, Attorney at Law Counsel for Ms. Hartman Florida Bar Number: 288055

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Law Office of James A. Bonfiglio, P.A. Phillips Point - West Tower 777 S. Flagler Dr. Ste 800 W. Palm Beach, Fl, 33401

16.BACvs.Tryniszewski CaseNo.:0925630AW TryniszewskisRequesttoProduce

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17.BACvs.Tryniszewski CaseNo.:0925630AW TryniszewskisInterrogatories

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18.BACvs.Tryniszewski CaseNo.:0925630AW TryniszewskisNoticeofTaking DepositionDucesTecum

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19.Chemtovvs.Ledis CaseNo.:0831449AW LedisResponsetoMotiontoStrike

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20.USBNAvs.Saperstone CaseNo.:0919713AW USBNAs(Sneaky)RequesttoProduceRequest forAdmissionsandInterrogatories,and SaperstonesResponses

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20a.Saperstone: InterrogatorieswithAnswers

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20b.Saperstone: AnswerstoInterrogatories

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20c.Saperstone: NoticeofServingAnswerstoInterrogatories

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21.Residentialvs.Abraham CaseNo.:0721396AW ResidentialsMotionforSummaryJudgment andAbrahamsResponsetoMotionfor SummaryJudgmentand MotiontoStrikeAffidavit

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21a.AbrahamResponseto SummaryJudgment,etc

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22.LandmarkNationalBankv.Kesler,2009 Kan.LEXIS834Kan.Sup.Ct.
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23.IrvinResponseinOpposition toSummaryJudgment
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IN THE CIRCUIT COURT OF THE SEVENTEENTH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR HOUSEHOLD FINANCE CORP., Plaintiff, vs. CASE NO.: 05 CA 2605 WILLIAM T. IRVIN, etc., et. ux., et. al., Defendants. __________________________________/ WILLIAM IRVINS RESPONSE IN OPPOSITION TO HFC IIIS MOTION FOR SUMMARY JUDGMENT AND CROSS MOTION FOR SUMMARY JUDGMENT IN HIS FAVOR NOW INTO COURT, through undersigned counsel, comes WILLIAM T. IRVIN, (Hereafter Mr. Irvin) and files this his Response to the Motion for Summary Judgment filed by the Plaintiff, HOUSEHOLD FINANCE CORPORATION III (Hereinafter HFC III) 1 and files this his Cross Motion for Summary Judgment against HFC III, alleging as grounds therefor as follows; to wit, 2 SUMMARY OF MR. IRVINS ARGUMENTS I. HFC III DID NOT MEET ITS SUMMARY JUDGMENT BURDEN ON ITS COMPLAINT GENERAL JURISDICTION DIVISION

Mortgage Electronic Registration Systems, Inc., initially filed this 2 count lawsuit as Nominee for Household Finance Corp. Corp. was abbreviated and the name had no III. During the lawsuit MERS as nominee for Household Finance Corporation III assigned to Household Finance Corporation III who then substituted for MERS as nominee for Household Finance Corp. by agreed order that preserved Mr. Irvins objections to the initial plaintiffs standing to sue as the real party in interest. Mr. Irvin will not engage in ad hominem attacks directed to either HFC III or its attorneys in his opposition to HFC IIIs summary judgment motion, and limit this memorandum to the legal and factual issues presented by the pleadings and the facts of the case.
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1.

HFC III is not entitled to Summary Judgment because it has failed to conclusively

show the complete absence of any genuine issue of material fact from the record and the movant is entitled to judgment as a matter of law as to the 2 counts of its complaint to reestablish the lost promissory note and then foreclose the mortgage. HFC III has also failed to conclusively show the non-existence of any countervailing facts or inferences from those facts, and failed to conclusively refute Mr. Irvins affirmative defenses and counterclaim. Morever, the Court is empowered to grant summary judgment in favor of the non moving party at HFC IIIs hearing. See: R & L Const., Inc. v. Cullen, 557 So.2d 931 (Fla. 5th DCA 1990), (Trial court correctly granted summary judgment to the non movant when the record establishes no genuine issue of any material fact and that the non-moving party is entitled to a judgment as a matter of law, citing to Carpineta v. Shields, 70 So.2d 573 (Fla. 1954), Prince v. McLaughlin, 431 So.2d 276 (Fla. 5th DCA 1983), Trawick Florida Practice and Procedure, 25-6, Summary Judgment Procedure, n. 8 (1989), Annotation, Summary Judgment Against Movant, 48 A.L.R.2d 1188 (1956); Comment, Procedure: Summary Judgment for Nonmoving Party, 7 U.Fla.L.Rev. 335 (1954). 2. MERS, and now HFCs Complaint Count I seeks to reestablish the lost negotiable

instrument under Fla. Stat. 71.011. A party can only reestablish and enforce a negotiable instrument under Fla. Stat. 673.3091. See: Mason v. Rubin, 727 So.2d 283 (Fla. 4th DCA 1999); State Street Bank v. Lord, 851 So.2d 790 (Fla. 4th DCA 2003). The Court should grant summary judgment on this basis in favor of Mr. Irvin. 3 The court must recall that while we commonly refer to the mortgage and note as a mortgage it actually consists of 2 contracts; to wit, the promissory note which is a negotiable instrument, governed by Floridas Uniform Commercial Code and is the written evidence of the debt owed, and the mortgage which is not a negotiable instrument but merely evidence of the security for repayment of the debt. See: Laing v. Gainey Builders, Inc., 184 So.2d 897, p. 899 (Fla. 1st DCA 1966) (In the case of a payment of a mortgage securing a negotiable Instrument...). However, when the mortgage
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3.

MERS/HFC III failed to produce any written notice of acceleration as required by the

mortgage Para. 22, much less a notice with the Para. 22 required information, which is a condition precedent to foreclose. See: New Eng. M.l. Ins. v. Luxury Home, 311 So.2d 160 (Fla.3rd DCA 1975). The Court should grant summary judgment on this basis in favor of Mr. Irvin. 4 4. MERS as nominee for Household Finance Corp. had no standing to bring either a

foreclosure or reestablishment action when it filed suit, nor did Household Finance Corp. The midsuit assignment from MERS as nominee for Household Finance Corporation III to Household Finance Corporation III did not cure the problem. See: Jeff-Ray Corp. v. Jacobson, 566 So.2d 885, 886 (Fla. 4th DCA 1990); Progressive Exp. v. McGrath Chiro., 913 So.2d 1281 (Fla. 2nd DCA 2005); State Street Bank v. Lord, supra. The Court should grant summary judgment on this basis in favor of Mr. Irvin. 5. HFC IIIs summary judgment affiant, Ms. St. Claire-Houghams Dec. 19, 2008

deposition indicates the original note was not lost when MERS filed its Feb. 2005 suit. 5 Ms. St. Claire-Hougham believed that HFC forwarded the original note to its then attorneys, the Marshall Watson firm, in Oct. 2005, 8 months after MERS filed the Feb. 2005 suit. 6 If the note was lost

secures a negotiable instrument, the mortgage can carry holder in due course defenses. Lassiter v. Resolution Trust Corp., 610 So.2d 531, fn 2 (Fla. 5th DCA 1992). Mr. Irvins Answer specifically denied the complaints Para. 14 allegation that it complied with all conditions precedent and raised this issue as an affirmative defense. See: Irvins Answer Para. 14, and Fifth Affirmative Defense, Para. 50-52. Counsel ordered the deposition for delivery no later than Jan. 2, 2009, so that it will be available for the summary judgment hearing and is reciting these facts from his deposition notes and memory. Despite the fact that the lost note issue has been joined by the pleadings for over 3 years and the Notice of Taking Deposition duces tecum asked for a person with this knowledge and listed several items directed to the lost note issue, Ms. St. Clair-Hougham was not prepared to testify about the lost note and testified she would find out the sequence of events leading to the lost note.
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before filing suit, MERS had no standing to bring the action. If the note was lost after filing suit, a party cannot create a cause of action in itself to reestablish the lost note when it actually was not lost, then lose it 8 months after it filed the reestablishment suit. Jeff-Ray, supra; Progressive Exp., supra. The Court should grant summary judgment on this basis in favor of Mr. Irvin. 6. There has been no specific assignment of the reestablishment cause of action to any

party in this case. See: Ginsberg v. Lennar Florida Holdings, Inc., 645 So.2d 490 Fla. 3d DCA 1994). The Court should grant summary judgment on this basis in favor of Mr. Irvin. 7. In the recent Dec. 19, 2008 deposition of HFC IIIs summary judgment affiant, Ms.

St. Claire-Hougham testified that MERS never held i.e. had physical possession of the promissory note 7 nor that MERS ever had any financial interest whatsoever in the note. She testified that in this case MERS acted only as a clearing house to record transfers of the mortgage and alleviate the need to record mortgage assignments with each transfer of the mortgage. This contradicts the original summary judgment affidavit that MERS filed in which the affiant swore MERS owned and held the mortgage and note as the nominee for Household Finance Corp. See: Mortgage Elec. v. Azize, 965 So.2d 151 (Fla. 2nd DCA 2007); Mortgage Elect. v. Revoredo, 955 So.2d 33 (Fla. 3rd DCA 2007). The Court should grant summary judgment on this basis in favor of Mr. Irvin because the proof conclusively establishes that MERS never had possession of nor an interest in the note and a party cannot file 2 conflicting affidavits in support of its summary judgment motion. 8.
7

In the recent Dec. 19, 2008 deposition of HFC IIIs summary judgment affiant, Ms.

Holder is a term defined by the UCC. The holder is a required party who receives issuance of an instrument, or a subsequent delivery of an instrument as part of the negotiation process of a note, which makes the note a negotiable instrument under Fla. Stat. 673.1041. Fla. Stat. 671.201(21) defines a Holder as follows: with respect to a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession...
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St. Claire-Hougham identified several documents that exist and are in the Plaintiffs possession which Mr. Irvin asked to produce in his June 28, 2005 Request to Produce and Nov. 21, 2008 Notice of Taking Deposition duces tecum, and which Plaintiff has not produced. For example Mr. Irvin requested documents which relate to the payment for the mortgage and note. See: Request to Produce #40, #41; RTP DT #40, #41; documents which relate to Mr. Irvins account, including acceleration notices. See: Request to Produce #4, #5; RTP DT #4, #5; A Motion for Summary Judgment cannot be granted when the summary judgment movant has failed to respond to discovery requests. Sica v. Sam Caliendo Design, Inc., 623 So.2d 859 (Fla. 4th DCA 1993); A & B Pipe and Supply Co. v. Turnberry Towers Corp., 500 So.2d 261 (Fla. 3d DCA 1986); Danna v. Bay Steel Corp., 445 So.2d 704 (Fla. 4th DCA 1984). 8 II. HFC III Failed to Meet its Summary Judgment Burden on Mr. Irvins Affirmative Defenses Assuming the Court gets past HFC IIIs failure to conclusively show the complete absence of any genuine issue of material fact from the record and the movant is entitled to judgment as a matter of law as to the 2 counts of its complaint, HFC III has failed to conclusively refute negate or deny by affidavit or other sworn evidence Mr. Irvins Affirmative Defenses. 9. The First Affirmative Defense alleges that Mr. Irvin is entitled to rescind the

transaction under the Federal Truth in Lending Act. Mr. Irvins Affidavit in Opposition to Summary Judgment filed April 4, 2005, Para. 16 (Hereinafter Irvin Affidavit Para. __) states that Mr. Irvin did not receive the required 2 copies of the Notice of Right to Cancel form which violates 15 U.S.C. 1635(a),(h), & (i) and Reg. Z 226.23(b)&(h), and extends his right to rescind, creating an issue of fact for trial. Cintron v. Bankers Trust Company, 682 So.2d 616 (Fla. 2nd DCA 1996); Yslas v. D.K. Mr. Irvin is simultaneously filing a Motion to Compel and setting same on the Courts Uniform Motion Calendar.
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Guenther Builders, Inc., 342 So.2d 859 (Fla. 2nd DCA 1977). The Court should grant summary judgment on this basis in favor of Mr. Irvin. 10. M. Irvins Affidavit Para. 21-26 refutes that the fees and charges imposed on Mr.

Irvin incident to or as a condition of the extension of credit were bona fide or reasonable, and therefor create an issue of fact for trial as to whether the initial creditor Accredited overstated the TIL required material disclosure of the Amount Financed and understated the TIL required material disclosure of the Finance Charges by more than $35.00, thereby extending Mr. Irvins Right to Rescind defensively under 15 U.S.C. 1635(i) and Reg Z 226.23(h). 11. The Second Affirmative Defense alleges that Mr. Irvin is entitled to an accounting

because MERS and/or its assignor failed to comply with the mortgage and note and/or RESPA with respect to the proper computation, collection and application of Mr. Irvins mortgage payments and the escrow accounts. Despite Mr. Irvins June 28, 2005 Request to Produce, HFC only produced a computer printout of the Irvin Account in response to the Nov. 21, 2008 Notice of Taking Deposition duces tecum at her Dec. 19, 2008 deposition. Counsel has not had enough time to examine same to determine the areas of dispute, and HFC produced the printout within the 20 day limit for its summary judgment motion. 12. It appears that Mr. Irvins Affirmative Defense have 2 numbered Third Affirmative

Defense. The first Third Affirmative Defense Para 41-43 alleged in the alternative that waiver estoppel or unclean hands doctrine should prevent foreclosure based on the improper collection of payments from Mr. Irvin in violation of the note 4 and 6, and the mortgage 1 through 10. As pointed out above, despite Mr. Irvins Request to Produce, HFC did not produce a computer printout of his account until the St. Clair-Hougham Dec. 19, 2008 deposition. Counsel has not had enough

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time to examine same to determine the areas of dispute, and HFC produced the printout within the 20 day limit for its summary judgment motion. 14. Mr. Irvins 2nd numbered Third Affirmative Defense Para. 41-46 alleges non

compliance with the mortgages Para. 22 required written acceleration notice, which is a condition precedent to foreclose. See: New Eng. M.l. Ins. v. Luxury Home, 311 So.2d 160 (Fla.3rd DCA 1975). The Court should grant summary judgment on this basis in favor of Mr. Irvin. 15. Mr. Irvins Fourth Affirmative Defense alleges the Plaintiff is the improper party to

foreclose, and alternately has failed to properly plead a claim for relief to enforce the mortgage and note that it seeks to reestablish under Florida and/or Federal law. 16. Mr. Irvins Fifth Affirmative Defense repeats his 2nd numbered Third Affirmative

Defense which is non compliance with the Para. 22 required written notice of acceleration. The Court should grant summary judgment on this basis in favor of Mr. Irvin. 17. Mr. Irvins Sixth Affirmative Defense alleges that Plaintiff does not properly hold

the mortgage it seeks to foreclose under Florida and/or Federal law, and is therefor the improper party to foreclose. The Court should grant summary judgment on this basis in favor of Mr. Irvin. 9 18. Mr. Irvins Seventh Affirmative Defense alleged that waiver, estoppel, or the doctrine

of unclean hands prevent foreclosure based on improperly posting payments to Mr. Irvins account. As pointed out above, despite Mr. Irvins Request to Produce, HFC did not produce a computer printout of his account until the St. Clair-Hougham Dec. 19, 2008 deposition. Counsel has not had enough time to examine same to determine the areas of dispute, and HFC produced the printout within the 20 day limit for its summary judgment motion.

See footnote #7, Fla. Stat. 671.201(21), which is the UCC definition of a Holder. 7

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19.

Mr. Irvins Eighth Affirmative Defense alleged that Plaintiff cannot foreclose because

it has failed to state a claim upon which relief can be granted in both counts of his complaint. The Court should grant summary judgment on this basis in favor of Mr. Irvin. III. STANDARDS FOR GRANTING SUMMARY JUDGMENT Courts sparingly grant summary judgment to avoid infringing on the constitutional right to trial. If fact issues exist and the slightest doubt remains, the Court must resolve the doubt in favor of the non-movant and deny summary judgment. Manning v Clark, 71 So.2d 507 (Fla.1954), Williams v. City of Lake City, 62 So.2d 732 (Fla.1953). Courts hold the movant to a strict standard and must resolve all facts in evidence and reasonable inferences against the movant. Majeske v. Palm Beach Kennel Club, 177 So.2d 531 (Fla.4 DCA 1965). If facts are undisputed but conflicting issues arise over the inferences, a Court must deny summary judgment. Distribution Company v. Sav-A-Stop, Inc., 124 So.2d 753 (Fla. 1 DCA 1960). As a result, all doubts and inferences must be resolved against the moving party, and if there is the slightest doubt or conflict in the evidence, then summary judgment is not available. See Albelo v. S. Bell, 682 So.2d 1126, 1129 (Fla. 4th DCA 1996). Bernstein v. New Beginnings Trustee, LLC, Nos. 4D07-4007 and 4D07-4969 (4th DCA July 16, 2007) informs the Court that: [T]he burden is upon the party moving for summary judgment to show conclusively the complete absence of any genuine issue of material fact. Fini, 936 So. 2d at 54 (quoting Albelo v. S. Bell, 682 So. 2d 1126, 1129 (Fla. 4th DCA 1996)). A trial court may enter summary judgment only when there are no genuine issues of material fact conclusively shown from the record and the movant is entitled to judgment as a matter of law. See Albelo, p.1129. For HFC III to prevail on its summary judgment motion it must conclusively establish each

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allegation of its foreclosure complaint, which is that its mid-suit assignor, MERS, as nominee for Household Finance Corp., not Household Finance Corporation III, is the person who owned and held the mortgage and note with the right reestablish the lost note then enforce it at the time of filing the Feb. 5, 2005 suit, at which time it had complied with all conditions precedent. F.E. Booker v. Sarasota, Inc, 707 So.2d 886 (Fla. 1st DCA 1998), Troupe v. Redner, 652 So.2d 394,395-396 (Fla. 2nd DCA 1995), Laing v. Gainey Builder's Inc., 184 So.2d 897,900 (Fla. 1st DCA 1966), Hughes v. Home Savings of America, 675 So.2d 649 (Fla. 2nd DCA 1996). HFC III must then submit sufficient facts to show it is entitled to summary judgment and conclusively show the non-existence of any countervailing facts or inferences from those facts as to Mr. Irvins affirmative defenses. HFC III meets its burden as to Mr. Irvins affirmative defenses by affidavit or other sworn evidence that negate those defenses. Johnson & Kirby, Inc. v. Citizens Natl Bank of Fort Lauderdale, 338 So.2d 905, 906 (Fla. 3d DCA 1976); see also Fasano v. Hicks, 667 So.2d 1033, 1034 (Fla. 2d DCA 1996) (finding that in absence of some proof contradicting or opposing affirmative defense, entry of summary judgment is improper). Only then does the burden shift to Mr. Irvin as the non-movant to disprove HFC IIIs entitlement to summary judgment. Step v. State Farm Fire & Cas. Co., 656 So.2d 494,496 (Fla. 1 DCA 1995). The Court must examine the facts in a light most favorable to the non-movant, Mr. Irvin. See: Bernstein, supra; Gast v. Mak Enter. Of Gainesville, 944 So.2d 1119 (Fla. 5th DCA 2006). Dotter v. Texas Commerce Bank Nat., 679 So.2d 1215 (Fla. 4th DCA 1996) establishes HFC IIIs summary judgment burden in a TIL case. In order to prevail on Mr. Irvins TIL defenses, HFC III must demonstrate that it has disproved Mr. Irvins affirmative defenses, demonstrate the TIL defenses are legally insufficient, or agree to rescind and then liquidate the amount of statutory or

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actual damages that would offset any the debt owed to HFC III. See also Johnson v. Claims Prevention & Management Services, Inc., 673 So.2d 558 (Fla. 1st DCA 1996). IV. STATEMENT OF THE FACTS AND CASE 10 Mr. Irvin owned and had title to his primary residence located at 2280 SW 81st Ave. Davie, FL, 33324-5527 from 1989, about 13 years before the Nov. 19, 2002, refinance that is the subject of this suit. See: Irvin Loan Application, MERS/HFC Resp to Irvins Request to Produce HH/Irvin Bates No.: 97-104 (Hereafter HH/Irvin #___). An Oct. 30, 2002 appraisal on the property shows a $124,000.00 value. HH/Irvin #131-140. It is likely worth less than that as of todays date. Sometime before 11/19/02, Mr. Irvin learned about Accredited Home Lenders as a lender who could procure a mortgage loan on his home. See: Irvins Affidavit Para. 2. The 10/25/02 in person loan application, taken by a broker for Florida Mortgage Funding, shows that Mr. Irvin applied for a $124,000.00 mortgage loan to refinance another mortgage to a different creditor, with a principal balance of around $98,162.00. See: Irvins Affidavit Para. 2; HH/Irvin # 97-104. The stated purpose of the mortgage was to consolidate debt and cash out primarily for personal family or household use. The Original Lender, Accredited Home Lenders Inc. eventually approved Mr. Irvin for a $124,000.00 7.375% 30 year note and mortgage, 100% loan to value ratio, which is the mortgage and note subject of this suit. HH/Irvin #109. The $124,000.00 note, signed by Mr. Irvin, was made payable to Accredited Home Lenders Inc. However, the mortgage, first page introductory paragraph (C) states:

Mr. Irvin is relying on his Affidavit in Opposition to Summary Judgment, MERS/HFCs Answers to Mr. Irvins Interrogatories, MERS/HFCs Responses to Mr. Irvins Request to Produce, MERS/HFCs 2 affidavits in Support of Summary Judgment, and Ms. St. Clair-Houghams deposition and attachments thereto for the factual recitation. He is simultaneously serving a Notice of his Reliance under Rule 1.510(c).
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(C) MERS is Mortgage Electronic Registration Systems Inc. MERS is a separate corporation that is acting solely as a nominee for the lender and lenders successors and assigns. MERS is the mortgagee under this security instrument. MERS is organized and existing under the laws of Delaware, and has an address and telephone number of P.O. Box 2026, Flint MI 48501 tel (888) 679-MERS. (Emphasis in original The mortgage, first page introductory paragraph (D) states: (D) Lender is Accredited Home Lenders, Inc. The mortgage, pg. 3 of 16 in an unnumbered paragraph below Transfer of Rights in the Property states: This Security Instrument secures Lender [Identified in (D) as Accredited Home Lenders, Inc.]: (i) the repayment of the loan, and all renewals, extensions and modifications of the note; and (ii) the performance of borrowers covenants and agreements under this security agreement and the Note. For this purpose, Borrower does hereby mortgage, grant, and convey to MERS (Solely as nominee for Lender and Lenders successors and assigns) and to the successors and assigns of MERS the following described property ...... Below this clause and on the same page, the following language appears: Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument. The Note Para. 1 identifies Accredited Home Lenders Inc as the payee: In return for the loan I have received, I promise to pay US $124,000.00 (this amount is called principal) plus interest, to the order of the Lender. The lender is Accredited Home Lenders Inc., a California Corporation. On Dec. 20, 2008, the day after Ms. St. Clair-Houghams deposition, HFC III produced a copy of what purports to be an undated allonge to the Irvin/Accredited promissory note in which Accredited Home Lenders, Inc. endorsed the note in blank. 11 However, the note which the present Assuming this allonge was properly attached and affixed to the promissory note within the meaning of the Florida UCC, this would make the note bearer paper and make it more imperative
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plaintiff, HFC III attached to its Motion for Summary Judgement and Ms. St. Clair-Houghams affidavit, and identified in her Dec. 19, 2008 deposition as the operative note that HFC III seeks to reestablish and foreclose, does not include the undated allonge, thereby raising the issue as to why Ms. St. Clair-Hougham swore in her summary judgment affidavit and her deposition testimony that the copy of the note without the allonge was the operative promissory note HFC sought to reestablish and enforce, whether this allonge actually relates to this note, and if so, whether Accredited indorsed the allonge before or after filing suit. Accredited charged Mr. Irvin the closing fees which are reflected in the HUD-1 Settlement Statement attached to his Affidavit as Exh. C which closing fees Accredited imposed on Mr. Irvin as a condition of the loan. See: Irvin Affidavit Para. 15. Mr. Irvin stated that he did not receive a copy of the HUD-1 and had to request a copy from the title company the week before he executed his Affidavit. See: Irvin Affidavit Para. 15. Mr. Irvin also swore he did not receive the required two copies of the TIL Notice of Right To Cancel form. See: Irvin Affidavit Para. 16. A. Mr. Irvin was also provided a copy of the Lenders Affiliated Business Arrangement Disclosure, which he attached to his affidavit as Exhibit F. According to the Truth in Lending Itemization of Amount Financed, attached to the Irvin Affidavit as Exhibit E Accredited included the HUD-1 prepaid fees charged and collected from Mr. Irvin as a condition of the loan, as shown by the Irvin Affidavit Exhibit C Settlement Statement Line 1108, $710.00 for a $124,000.00 mortgagee title policy. Accredited Home Lenders also charged and collected from Mr. Irvin the HUD-1 Settlement Statement Line 1112 sum of

that the correct Plaintiff sues to reestablish and enforce the lost note, because anyone who holds the original bearer paper as a holder in due course can enforce it, thereby making Mr. Irvin pay twice on this lost instrument.
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$105.00 for three (3) endorsement premiums to the title insurance, numbers 8.1,6 and 5; and the HUD-1 Settlement Statement Line 1202 the sum of $248.00 for City/county tax/stamps when, in fact, this was a state intangible tax which the lender was required to pay as the holder of the note. Accredited computed the Irvin Amount Financed by taking the $124,000.00 face amount of the Irvin note and deducting the $7,510.28 prepaid finance charges disclosed on the Irvin Itemization of Amount Financed and shown in the Itemization and listed in the HUD-1, which Mr. Irvin paid directly or indirectly as a condition of or incident to the credit. These TIL disclosures are interrelated. If one multiplies the monthly payment amounts by the number of payments, and adds the sums, this equals the total of payments. Adding the finance charge to the amount financed equals the total of payments. The annual percentage rate is the percent of these figures, based on 360 monthly payments, using either the American or actuarial method. See: TIL 1638(a)(2)(A)(i) through (iii); Reg Z 226.18(b), 226.18(c) The TIL Disclosure Statement that HFC III contends complies with TIL contains the following material information: Annual Percentage Finance Charge Rate the amount of your the dollar amount the credit as a yearly rate credit will cost you 8.341% PAYMENT SCHEDULE: Number of Payments 36 323 1 Amount of Payments $856.44 $892.55 $881.65 When Payments Are Due Monthly beginning 01/01/2003 01/01/2006 12/01/2032 $203,514.19 Amount Financed Total of Payments

the amount of credit the amount you will provided to you or on have paid after you your behalf have made all payments as

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At the bottom 1/3 of the TIL Disclosure Statement, Accredited disclosed the filing/recording fees in blank: FILING/RECORDING FEES: $ [The TIL DS left the space blank]

Therefor it is undisputed that the Accredited TIL disclosure statement Amount Financed included the Exhibit C Settlement Statement lines 808-812 $1194.00 fees paid to an affiliated third party agent, Accredited Home Lenders, and Exhibit C Settlement Statement lines 1101-1103 and 1111 totaling $580.00 in fees paid to an affiliated third party closing agent, Accelerated Title Co, which Accredited required Mr. Irvin to use, and the $248.00 for Florida Intangible Tax charge. See: Irvin Affidavit Para. 21 a. - n., 22, 23. This also means that Accredited excluded these fees from the TIL disclosure statement Finance Charge. During the term of the loan, HFC wrote to Mr. Irvin claiming that Mr. Irvin did not have insurance and demanded that Mr. Irvin provide proof or pay for force placed insurance. Mr. Irvin disputed the claim because his town home association maintenance and assessments fees included his homeowners insurance. See: Irvin Affidavit Para. 3. Mr. Irvin paid the fees and demanded that HFC credit his account with the overpayment. See: St. Clair Hougham deposition attachment. There has been no evidence of any credit to Mr. Irvins account. On Feb. 10, 2005 Mortgage Electronic Registration Systems, Inc., as Nominee for Household Finance Corp. sued Mr. Irvin in a 2 count complaint. The Complaint Count 1 Para. 1 alleges the right to reestablish the lost note under Fla. Stat. 71.011. Count 1 Para. 2 alleges the Plaintiff (MERS as Nominee for Household Finance Corp.) is the owner of the note. Count 1 Para. 5 alleges that the Plaintiff was in possession of the promissory note and was entitled to enforce it when loss of possession occurred. Count 2 Para. 11 alleges that the Plaintiff (MERS as Nominee for Household

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Finance Corp.) owns and holds the mortgage and note. 12 Mr. Irvin filed his Answer specifically denying the complaint, along with his Affirmative Defenses and Counterclaim on June 27, 2005. Meanwhile Counsel for Mr. Irvin investigated the various Household Finance corporate names because sometime after the loan closed with Accredited, Mr. Irvin was directed to make payments to a different lender, Household Finance Corp. See: Irvin Affidavit Para. 6. Mr. Irvin also received a May 23, 2003 demand for proof of flood insurance from an entity called Household Mortgage Services address: P.O. Box 11035 Orange, Cal. 92856-8135. The Florida Dept. of State, Div. Of Corporations did not have an entity identified as Household Finance Corp. authorized to do business in Florida. The Florida Dept. of State, Div. Of Corporations had 2 entities identified as Household Finance Corporation both of which are inactive. See: Irvin Notice of Intent to Rescind attached to Ms. St. Clair Hougham deposition. There is 1 entity identified as Household Mortgage Services, Inc. which is inactive, but shares the same Sanders Road, Prospect Heights, Ill., address as the 2 inactive Household Finance Corporation entries. Otherwise there exists no such entity. Mr. Irvin sent his notice of intent to rescind to the following entities at the last known address with the Florida Div. Of Corporations on August 22, 2005 to: Accredited Home Lenders, Inc. 450 Carillon Parkway Suite 150
12

Household Finance Corp. Last Known Address:

Household Mortgage Services Last Known Address:

It is impossible to be both a holder and entitled to re-establish a lost instrument. Fla. Stat. 671.201(21) defines a Holder as follows: with respect to a negotiable instrument, means the person in possession if the instrument is payable to bearer or, in the case of an instrument payable to an identified person, if the identified person is in possession... While Fla. Stat. 673.3011 defines the term person entitled to enforce an instrument as either: (1) The holder of the instrument which is defined by Fla. Stat. 671.201(21) as the party in possession, or (2) A nonholder in possession of the instrument who has the rights of a holder; or (3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to s. 673.3091 or s. 673.4181(4). i.e. a person who does not have possession
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St. Petersburg, Fl. 33716-1299

2700 Sanders Road Law Dept, Attn: Tori Voltz Prospect Heights, IL 60070-2701

P.O. Box 11035 Orange, Cal. 92856-8135

Accredited responded with an Oct. 6, 2005 letter and computer printout. Accrediteds letter stated, inter alia, that Accredited sold the loan to Household Financial Services, not Household Finance Corp., nor Household Finance Corporation III, on the same day that it had closed the loan. Accrediteds supporting computer printout showed that Accredited sold the loan to an entity called HSBC Mortgage Services as both servicer and creditor, not Household Finance Corp., nor Household Finance Corporation III See: Response to Irvin Notice of Intent to Rescind attached to Ms. St. Clair Hougham deposition. Mr. Irvins discovery requested MERS/HFC produce proof that the named Plaintiff had the authority to bring the suit, MERS as Nominee for Household Finance Corp., i.e. assignments, checks showing proof of payment for the debt, but they have produced none. The only assignment produced is an assignment from MERS as nominee for Household Finance Corporation III to Household Finance Corporation III. And, as pointed out above there is no endorsement or allonge on the note that is attached to the Affidavit in support of HFC IIIs Motion for Summary Judgment. Mr. Irvin has specifically denied the allegations of ownership alleged as a defense that this Plaintiff did not have standing to bring the action to foreclose and reestablish the mortgage and note. The only assignment that they have produced did not assign the right to reestablish the lost note. See: Copy of Mortgage and Note, HFC III Affidavit; Mr. Irvins Interrogatory Answer #16. On Sept. 18, 2008, HFC III served a Motion for Summary Judgment (Hereafter SJ Motion) with the supporting affidavit of Ms. St. Clair-Hougham. The SJ motion made no reference to the MERS/HFC Count I to reestablish the lost note and made one reference to the proper plaintiff and
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ownership issue. The SJ Motion Para. 3 pg. 2 states: After a series of transfers, and pursuant to a certain most recent assignment from Mortgage Electronic Registration Systems, Inc. as Nominee for Household Finance Corporation III its successors and assigns, to HFC III, dated May 2, 2006. HFC III is now the owner and holder of the note, mortgage, and associated loan documents. The SJ Motion likewise does not address Mr. Irvins 2nd numbered Third Affirmative Defense Para. 41-46, non compliance with the mortgage Para. 22 by failing to send a required written acceleration notice, which is a condition precedent to foreclosure; Mr. Irvins Fourth Affirmative Defense which alleges the Plaintiff is the improper party to reestablish and or foreclose; Mr. Irvins Fifth Affirmative Defense which repeated his 2nd numbered Third Affirmative Defense (non compliance with the notice of acceleration requirement); Mr. Irvins Sixth Affirmative Defense that alleges the Plaintiff does not properly hold the mortgage and is therefor the improper party to foreclose, and Mr. Irvins Seventh Affirmative Defense which alleged that waiver, estoppel, or the doctrine of unclean hands based on the improper posting of payments to Mr. Irvins account. On Dec. 19, 2008, Mr. Irvin deposed Ms. St. Clair-Hougham, who is the affiant in support of HFC IIIs summary judgment motion. She testified that she was employed by an entity called HSBC Mortgage Services, even though her affidavit Para. 1 identifies her as a conflict resolution analyst and work on behalf of and provide services to HFC III. See St. Clair-Hougham affidavit Para. 1. She testified that MERS has never held the note, and instead acted as a clearing house for mortgages so as to end the need to file and record assignments. She agreed that there has never been an assignment of any rights from the original payee of the note, Accredited to any entity. Her affidavit and deposition identified the note and mortgage that MERS and now HFC III seek to

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enforce without any allonge. 13 Mr. Irvin respectfully submits that the Court must deny the Motion because the record neither conclusively establishes that the Plaintiff was the owner and holder of the mortgage and note and entitled to reestablish and enforce them at the time Plaintiff filed the Feb. 5, 2005 lawsuit, nor does the motion or record evidence conclusively negate Mr. Irvins affirmative defenses, taking all the record evidence and reasonable inferences therefrom in a light most favorable to Mr. Irvin. Morever, Mr. Irvin submits that the Court is empowered to grant summary judgment in his favor as the non moving party under R & L Const., Inc., Carpineta v. Shields, 70 So.2d 573 (Fla. 1954), Prince v. McLaughlin. See also: See also: Phillippi Creek Homes, Inc. v. Arnold, 174 So.2d 552 (Fla. 2nd DCA 1965); Nat Harrison Associates, Inc. v. Florida Power & Light Company, 162 So.2d 298 (Fla. 3rd DCA 1964); King v. L & L Investors, Inc., 133 So.2d 744 (Fla. 3rd DCA 1961); Castner v. Ziemer, 113 So.2d 263 (Fla. 2nd DCA 1959); First Union Nat. Bank v. Maurer, 597 So.2d 429, p. (Fla. 2nd DCA 1992), citing to City of Pinellas Park v. Cross-State Utilities Co., 176 So.2d 384 (Fla. 2d DCA), cert. denied, 183 So.2d 214 (Fla. 1965). V. ARGUMENT HFC III, as the summary judgment movant, must conclusively establish that its predecessor MERS as nominee for Household Finance Corp. owned and held the mortgage and note and had the right to reestablish and enforce the lost note on Feb. 5, 2005 when it filed suit. If not, a new lawsuit must be filed. See Jeff-Ray Corp. v. Jacobson, 566 So.2d 885, 886 (Fla. 4th DCA 1990) (holding that the assignee of a mortgage could not maintain the mortgage foreclosure action because the assignment was dated four months after the action was filed; if the plaintiff wished to proceed on
13

Mr. Irvin will briefly discus her testimony here rather than rely on his potentially faulty notes and memory on her testimony and expand on the testimony problems when he has the deposition.
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the assignment, it must file a new complaint). This is because Florida does not permit a party to establish the right to maintain an action retroactively by acquiring standing to file a lawsuit after the fact. See: Progressive Exp. v. McGrath Chiro., 913 So.2d 1281 (Fla. 2nd DCA 2005). HFC III must also conclusively establish the amount of the debt due to him and not another person or party. See: F.E. Booker v. Sarasota, Inc, 707 So.2d 886 (Fla. 1st DCA 1998), Troupe v. Redner, 652 So.2d 394,395-396 (Fla. 2nd DCA 1995), Laing v. Gainey Builder's Inc., 184 So.2d 897,900 (Fla. 1st DCA 1966), Hughes v. Home Savings of America, 675 So.2d 649 (Fla. 2nd DCA 1996). The reasons are simple. A mortgage secures repayment of a debt evidenced by a negotiable instrument. Therefore, it is imperative for res judicata purposes and to prevent another suit by an alleged holder that the Plaintiff establish that he owns and holds the mortgage and note. Dollar Systems v. Delta, 688 So.2d 470 (Fla. 3 DCA 1997), F.E. Booker. HFC III must also conclusively establish the debt due. Mr. Irvin owns title to his home and gave a mortgage to secure repayment of the alleged debt. If Mr. Irvin does not repay the debt, the holder can force a sale of Mr. Irvins home to collect the debt. Mr. Irvin has the right to redeem the home for the debt due, which inures to all mortgagors. The court cannot extinguish the right to redeem the property except by due process of law. Sundie v. Harden 253 So.2d 857 (Fla. 1971), American Banker Life Assur. Co. v. Williams Saloman Kanner & Damian, 399 So.2d 365, 367 (Fla.3 DCA 1981), Cain & Bultman Inc. v. Miss Sam Inc., 409 So.2d 114, 118 (Fla. 5 DCA 1982). The amount of the debt due as found in the final judgement establishes the amount needed for Mr. Irvin to exercise the right of redemption and save his home from a sale. A judgment establishes the amount needed for a clerk to publish the sale, prompting buyers to attend in order to bid on the property, and establishes the debt for a potential deficiency. John Stepp Inc. v. First Federal Sav. and

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Loan Assoc., 379 So.2d 384 (Fla.3 DCA 1980). Therefore, HFC III must conclusively establish the amount of the debt and the party to whom it must be paid in order to extinguish Mr. Irvins right to redeem the property by a foreclosure sale. Dotter v. Texas Commerce Bank Nat., 679 So.2d 1215 (Fla. 4th DCA 1996) establishes HFC IIIs summary judgment burden in a TIL case. In order to prevail on the Mr. Irvins TIL defenses, HFC III must demonstrate that it has disproved Mr. Irvins affirmative defenses, demonstrate the TIL defenses legal insufficiency, or liquidate the amount of statutory or actual damages that would have partially offset the debt owed HFC III. See also Johnson v. Claims Prevention & Management Services, Inc., 673 So.2d 558 (Fla. 1st DCA 1996). A. HFC III FAILED TO CONCLUSIVELY PROVE ALL THE MATERIAL ALLEGATIONS OF ITS COMPLAINT 1. MERS AS NOMINEE FOR HOUSEHOLD FINANCE CORP. SUED TO REESTABLISH THE LOST NOTE UNDER THE WRONG STATUTE

MERS, and now HFC IIIs Complaint Count I seeks to reestablish the lost negotiable instrument under Fla. Stat. 71.011. A party can only reestablish and enforce a negotiable instrument under Fla. Stat. 673.3091. See: Mason v. Rubin, 727 So.2d 283 (Fla. 4th DCA 1999); State Street Bank v. Lord, 851 So.2d 790 (Fla. 4th DCA 2003). Ms. St. Clair Hougham, while unsure on this point, testified that she thought that the note was not lost when the suit was filed. She thought that HFC III or her employer HSBC Mortgage Services had sent the original note to its former attorneys, the Marshall Watson firm, in Oct. 2005. Regardless of when the note was lost, it must be reestablished under Fla. Stat. 673.3091. Accordingly the Court must deny HFC IIIs SJ Motion and grant summary judgment on this basis in favor of Mr. Irvin. 2. MERS AS NOMINEE FOR HOUSEHOLD FINANCE CORP. FAILED TO PROPERLY ACCELERATE THE FUTURE PAYMENTS DUE ON THE 20

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NOTE Like all installment notes since lending began, MERS or HFC III could not demand the future installment payments from Mr. Irvin that were not due unless the note had a clause that accelerated the future payments upon the happening of an event like a default. See, for example: Miller v. Balcanoff, 566 So.2d 1340, p. 1342 (Fla. 1st DCA 1990) (it is well established that a makers obligation under an installment note may not be accelerated in the absence of an acceleration provision.). 14 The Irvin installment note has an optional acceleration clause at 7(C). However, Irvin gave a mortgage to secure repayment of the note, so the Court must also examine the mortgage to determine the terms under which acceleration occurs. See: Miller, p. 1342 (writings executed between the parties as a part of the same transaction can be used to construe and supplement the terms of a promissory note, Section 673.119, Florida Statutes (1989)). Policastro v. Rudt, 180 So.2d 472, p. 473 (Fla. 2nd DCA 1965) (where a note and a mortgage to secure its payment are executed simultaneously as part of the same transaction and the note refers to the mortgage, the two instruments must be construed together, so that a provision in one instrument limiting, explaining or otherwise affecting the provisions in the other instrument will be given effect). The mortgage 22 p. 14 of 16 entitled Acceleration; Remedies states in bold print: Lender shall give notice to Borrower prior to acceleration following the Borrowers breach of any covenant or agreement in this Security Instrument (but not prior to acceleration under Section 18 [the due on sale clause] unless applicable law provides otherwise). The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this
14

Therefor, absent acceleration, MERS/HFC had 2 ways to enforce collection of the installment note: 1) MERS/HFC could sue Irvin for $856.44 every month for 30 years; or, 2) MERS/HFC could wait 30 years until 2032 and sue Mr. Irvin for the entire balance on the $124,200.00 note plus 7.375% interest. See: Miller, p. 1342; Reed v. Lincoln, 731 So.2d 104, p. 106 (Fla. 5th DCA 1999).
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Security Instrument, foreclosed by judicial proceeding and sale of the property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default or any other defense of Borrower to acceleration and foreclosure. There was no acceleration notice provided to Mr. Irvin, much less one in conformity with this mortgage provision. Since MERS and now HFC III have failed to produce evidence of a written notice of acceleration as required by the mortgage Para. 22, which is a condition precedent to foreclosure, the Court cannot allow MERS to accelerate and foreclose. See: New Eng. M.l. Ins. v. Luxury Home, 311 So.2d 160 (Fla.3rd DCA 1975). Accordingly the Court must deny HFC IIIs SJ Motion and grant summary judgment on this basis in favor of Mr. Irvin. 3. MERS AS NOMINEE FOR HOUSEHOLD FINANCE CORP. HAD NO STANDING TO EITHER REESTABLISH OR FORECLOSE THE MORTGAGE AND NOTE

Mortgage Electronic Registration Systems, Inc., initially filed this 2 count suit on Feb. 5, 2005 as Nominee for Household Finance Corp. Corp. was abbreviated and there was no III designation. During the lawsuit MERS as nominee for Household Finance Corporation III signed an assignment to Household Finance Corporation III who then substituted for MERS as nominee for Household Finance Corp. by agreed order that preserved Mr. Irvins objections to the initial plaintiffs standing to sue as the real party in interest. According to the Fl. Dept of State, Div of Corporations, there has never been a Household Finance Corp. authorized in Florida. There are 2 inactive corporations named Household Finance Corporation and 1 active corporation named Household Finance Corporation III. While Azize, p. 154 points out that one corporation can serve as the agent for another corporation, citing to 2 Fla. Jur. 2d Agency and Employment 3 (2005), no agent or agency can act or exist when the principal is either a non-existent or an inactive corporation. This record has no evidence that MERS was the nominee for an existing bona fide
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nominor i.e. principal. MERS therefor lacked standing to sue to either reestablish or enforce the note on Feb. 5, 2005 when it filed suit. The mid-suit assignment from MERS as nominee for Household Finance Corporation III to Household Finance Corporation III did not cure the problem. Naming the correct Plaintiff to file suit is obviously critical to its ability to win its case. See: Walter E. Heller v. Pointe Sanibel, 392 So.2d 306 (Fla. 3rd DCA 1980). Likewise, MERS as Nominee for Household Finance Corporation III must have had the right to assign its interests in the mortgage and note on May 2, 2006 as of the date of the assignment. See: Rose v. Teitler, 736 So.2d 122 (Fla. App. 4 Dist. 1999): assignees receive all interests and rights accrued to the assignor at the time of assignment... [emphasis added]. See also Department of Rev. v. Bank of America, 752 So.2d 637, 642 (Fla. 1st DCA 2000): We are cognizant of the policy favoring assignability of contract and statutory rights. Nevertheless, we agree with the Department that the dealer cannot assign a right to receive a sales tax refund which the dealer does not possess at the time of the assignment. While there is some language in the mortgage that may allow MERS to assign the security, assuming the mortgage language defeats Floridas decades old security follows the debt doctrine (See: Arren, et ux., v. Seminole Bond & Mortgage Co., 127 Fla. 107, 172 So. 696 (Fla. 1937)), nothing in the Irvin mortgage, nor any other document of record gave MERS the right to assign any interest in the Irvin to Accredited promissory note. This record shows that Mr. Irvin gave the original note to Accredited as Lender. The mortgage first page introductory paragraph (C) identifies MERS as a separate corporation acting solely as a nominee for the Lender, identified as Accredited in the mortgage, first page introductory paragraph (D). The mortgage, pg. 3 of 16 in an unnumbered paragraph below recognizes that the Security Instrument secured the Lender, Identified in (D) as Accredited, for (i) the repayment of the

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loan, and (ii) the performance of borrowers covenants. It was solely for this purpose that the borrower gave the security to MERS, solely as nominee for Lender and Lenders successors and assigns. Nothing in any of the MERS mortgage clauses conferred on MERS the authority to do anything with respect to the Irvin promissory note, whether to enforce it or reestablish it. Accrediteds response to the Notice of Intent to Rescind on Oct. 6, 2005 with computer printout, stated, inter alia, that Accredited sold the loan to Household Financial Services, not Household Finance Corp., nor Household Finance Corporation III, on the same day that it had closed the loan. Accrediteds supporting computer printout showed that Accredited sold the loan to an entity called HSBC Mortgage Services as both servicer and creditor, not Household Finance Corp., nor Household Finance Corporation III See: Response to Irvin Notice of Intent to Rescind attached to Ms. St. Clair Hougham deposition. Here is a time line with the chain of delivery, and presumably ownership, of the Irvin/MERS mortgage (the security interest) according to this record, assuming one can abrogate the Florida lien follows the debt doctrine with mortgage clauses: 15 Irvin, as maker, MERS as Nominee for Lender Accredited on Nov. 19, 2002 ????? Feb. 5, 2005 suit to reestablish and foreclose Household Finance Corporation III by May 2, 2006 written assignment from MERS as Nominee for Household Finance Corporation III, 15 months after MERS as Nominee for Household Finance Corp., an inactive Florida Corporation, filed this suit to foreclose. Nothing in this record alleges, explains or establishes how delivery and or ownership of the Irvin mortgage, without the promissory note, went from MERS as Nominee for Accredited to the Revoredo, fn 2 suggests that the doctrine still exists for MERS because the lien followed the note into MERS possession, giving MERS the requisite standing to reestablish and foreclose at the pleading stage of the case; that is, as long as MERS pled that it held the note in its capacity as agent for a viable active corporate principal, which was not controverted by an answer or affirmative defense, or contrary proof, MERS had standing to proceed with the reestablishment/foreclosure suit.
15

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Plaintiff MERS as Nominee for Household Finance Corp., a non-existent Florida Corporation as of Feb 5, 2005 the date MERS as Nominee for Household Finance Corp., filed suit. Nor does this record allege, explain or establish how delivery and presumably ownership of the mortgage, without the promissory note, went from MERS as Nominee for Household Finance Corp., an inactive Florida Corporation, to MERS as Nominee for Household Finance Corporation III, as of May 2, 2006, the date the only assignment in this case was signed. Here is a time line and chain of delivery, and presumably ownership of the Irvin/ Accredited promissory note according to this record, again assuming one can abrogate the Florida lien follows the debt doctrine with mortgage clauses: Irvin, as maker, Accredited on Nov. 19, 2002 ????? Feb. 5, 2005 suit to reestablish and foreclose [The attorneys who originally filed this suit]. The original note was never endorsed or delivered to Household Finance Corporation III with the May 2, 2006 assignment because it was then and is still lost. According to this record, the ?????s could be one of 2 inactive corporations named Household Finance Corporation. They could be Household Financial Services. They could be HSBC Mortgage Services. However, none of the potential ?????s are Household Finance Corp., the non-existent former nominor (principal) for its nominee (agent) MERS, as of Feb 5, 2005 the date MERS as Nominee for Household Finance Corp., filed suit. Nor are the ?????s Household Finance Corporation III, the present May 2, 2006 assignee from MERS as nominee for Household Finance Corporation III, which is the name in the May 2, 2006 assignment. The ????s could not be Household Finance Corporation III because the note was lost 15 months earlier and is still lost. This record has no pleading or evidence that the Plaintiff MERS as Nominee for Household Finance Corp., a non-existent corporation had standing to sue to reestablish and foreclose the Irvin mortgage and note as of Feb 5, 2005. Moreover, the record has no pleading or evidence that MERS
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as nominee for Household Finance Corporation III, had the power or authority to execute the May 2, 2006 assignment of any cause of action in this suit. The Court should deny HFC IIIs SJ Motion and grant summary judgment on this basis in favor of Mr. Irvin under Jeff-Ray Corp., and State Street Bank v. Lord, supra. 4. IF THE NOTE WAS LOST AFTER MERS AS NOMINEE FOR HOUSEHOLD FINANCE CORP. SUED, THE COURT MUST DENY THE SJ MOTION

Ms. St. Claire-Hougham testified in her recent Dec. 19, 2008 deposition that the original note does not appear to have been lost when MERS filed its Feb. 2005 suit. Ms. St. Claire-Hougham believed that the original note was forwarded to its then attorneys, the Marshall Watson firm, in Oct. 2005, 8 months after MERS filed the Feb. 2005 suit to reestablish and foreclose. If the note was lost after filing suit, a party cannot create a cause of action in itself to reestablish the lost note when it actually was not lost, then lose it 8 months after it filed the reestablishment suit. Jeff-Ray, supra; Progressive Exp., supra. HFC III failed to conclusively establish that it was entitled to reestablish the lost note when it filed suit and must deny the SJ judgment motion. The Court should grant summary judgment on this basis in favor of Mr. Irvin. 5. THE RECORD CONTAINS NO ASSIGNMENT OF THE RIGHT TO REESTABLISH THE LOST NOTE

There has been no specific assignment of the reestablishment cause of action to any party in this case. Florida requires that the original mortgagee and each assignee specifically assign any and all independent causes of action in order for a subsequent assignee to allege a cause of action against the maker other than a default under the mortgage and note. The leading case is Ginsberg v. Lennar Florida Holdings, 645 So.2d 490 (Fla. 3rd DCA 1994) which informs the Court that Accredited and or Household Finance Corp. had to assign the reestablishment cause of action. The failure to include 26

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any rights to reestablish the lost note is fatal to the right of MERS or Household Finance Corp., or Household Finance Corporation III to sue Mr. Irvin to reestablish the lost note. The Ginsberg, facts show that the mortgagor, Mr. Ginsberg, signed 2 mortgages as general partner for the partnerships and gave the 2 mortgages to Amerifirst on 2 different properties. The RTC acquired both mortgages from Amerifirst and sued to foreclose, getting a judgment of foreclosure. However, the Ginsberg mortgagor obtained a stay by filing a bankruptcy before the scheduled foreclosure sale. The RTC then assigned Ginsbergs mortgages to Lennar, who then sued Ginsberg and the partnership in a separate suit to enforce the 2 mortgages assignments of rents clauses. Lennar alleged five specific counts regarding the assignments of rents clauses: Count I alleged Conversion of the rents against Ginsberg and MLG Properties, Inc.; Count II alleged waste against MLG Properties, Inc.; Count III alleged Civil Theft of the rents against Ginsberg and MLG Properties, Inc.; Count IV alleged a violation of the Florida RICO Act claim against Ginsberg and MLG Properties, Inc. for the rents; and, Count V alleged a violation of Fla. Stat 772.103(4) against Ginsberg and MLG Properties, Inc. Ginsberg did not answer, leading to a default. The trial court denied Ginsbergs Motion to Vacate Default. Ginsberg then appealed. While the 3rd DCA declined to reverse the default based on excusable neglect, the Court found that the trial court had to dismiss Lennars Complaint because the complaint did not state a cause of action, in part because the RTC assignment to Lennar did not assign any rights to sue Ginsberg, or anyone else, for an independent tort in connection with the execution and delivery of the mortgage: The Assignment of Mortgage is, as it states, an assignment of all of the RTCs rights and interests in the mortgage and related collateral. The Assignment of Mortgage makes no mention of, or attempt to, assign to Lennar any cause of action held by the RTC. In order for Lennar to pursue an action based on a cause of action held by the 27

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RTC Lennar must allege a valid assignment of that cause of action from the RTC. Lennar has failed to allege, and the exhibits attached to the amended complaint do not demonstrate, that the assignment from the RTC, gave Lennar any right to prosecute any cause of action previously held by the RTC. Since Lennar did not, and cannot, allege a valid assignment the amended complaint fails to allege a cause of action upon which relief may be granted. Id, p. 496. [emph. added] The MERS to Household Finance Corporation III assignment suffers the same infirmity as Ginsbergs assignment. The MERS assignment only assigns the mortgage and note and makes no mention whatsoever of assigning an independent tort, or any other cause of action arising from the making of the mortgage and note. HFC III has failed to conclusively establish that it was entitled to reestablish the lost note when it filed suit and must deny the SJ judgment motion. The Court should grant summary judgment on this basis in favor of Mr. Irvin. 6. HFC IIIS SUMMARY JUDGMENT AFFIANT TESTIFIED THAT MERS NEVER HELD OR HAD AN OWNERSHIP INTEREST IN THE IRVIN PROMISSORY NOTE

In the Dec. 19, 2008 deposition of HFC IIIs summary judgment affiant, Ms. St. ClaireHougham denied that MERS ever held i.e. had physical possession of the promissory note 16 and denied that MERS ever had any financial interest whatsoever in the note. She testified that in this case MERS acted only as a clearing house to record transfers of the mortgages, the security interest, and alleviate the need to record mortgage assignments with each transfer of the mortgage. This contradicts the original summary judgment affidavit that MERS filed in which the affiant swore MERS owned and held the mortgage and note as the nominee for Household Finance Corp. The 2 MERS cases, Azize, and Revoredo, are informative but not controlling here because of their different procedural postures, and the proof from Ms. St. Clair that MERS never held or had an interest in the Irvin note. In these 2 MERS cases, there was no pleading to dispute the allegation
16

See footnote #7, Fla. Stat. 671.201(21), which is the UCC definition of a Holder. 28

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that MERS held the mortgage and note, or had the right to reestablish the lost note, when suit was filed, and no evidence that MERS did not have possession of the promissory note. Here, Mr. Irvin disputed MERS standing as real party in interest by Answer and Affirmative Defenses, and the record has evidence from Ms. St. Clair-Hougham that MERS never had possession of the promissory note and no financial interest in the note. In Azize, the lower court consolidated 20 MERS foreclosure cases for hearing on whether MERS had standing to even file a lawsuit before any answers had been filed in the cases. See: Azize, fn 1. The undersigned was one of the few attorneys representing clients in these consolidated cases. The lower court ruled that MERS did not have standing to sue and dismissed all the pending cases with prejudice. MERS appealed the dismissal of all the cases then voluntarily dismissed the appeal as to the defendants with attorneys, including the undersigneds client, leaving only unrepresented mortgagors as appellees. The unrepresented appellee Azize did not file a brief. The 2nd DCA allowed 5 mortgage industry representatives to file amicus briefs, but had only one amicus brief filed for any consumer agency; to wit, Ms. Charney, for Jacksonville Area Legal Aid, Inc. The Azize, facts show MERS sued alleging it was the owner and holder of the mortgage and note and therefore entitled to reestablish and foreclose. The Azize, mortgage is identical to the Irvin mortgage and the complaint appears identical to the Irvin complaint. Azize, identified the plaintiff as Mortgage Electronic Registration Systems, Inc. as nominee for Aegis Lending Corporation. while the Irvin complaint identified the Plaintiff as Mortgage Electronic Registration Systems, Inc. as nominee for Household Finance Corp. The Azize, Count 1 of the 2 count complaint, alleged that MERS owned the note and that the note had been lost or destroyed after MERS acquired it. Specifically, MERS alleged that because the note was in its possession when it was lost, MERS was

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entitled to enforce the note. The complaint also explained that the loss of the note was not due to a transfer by MERS or a lawful seizure. The complaint did not allege the circumstances by which MERS came into possession of the note, specifying only that MERS was the owner and holder of the note. MERS asked the trial court to reestablish the lost note. Count II sought to foreclose. Here is where Azize, and Irvin diverge. The Azize, court had no answer filed while Mr. Irvin filed an Answer with Affirmative Defenses denying that: 1) MERS owned the mortgage and note; 2) that the note had been lost or destroyed after MERS acquired it; and, 3) that MERS was not entitled to enforce the note because it lacked standing and was not the proper party Plaintiff. Azize, pg. 153 recognized the limited scope of its review and limited its opinion accordingly: Although many issues were discussed at the hearing and in the general order, this court need not address all of those issues as the case sub judice is limited to the issues presented by the pleadings and addressed by the trial court, which present the question of whether MERS is the owner of the note. The Azize, p. 153-154, record showed that MERS attorney explained to the trial judge that, in these transactions, the notes are frequently transferred to MERS to foreclose without MERS actually obtaining any beneficial interest in the note. Although the complaint does not allege how or why MERS came to be the owner and holder of the note, the Azize, courts dismissal was not based on this deficit. Here, Mr. Irvins pleadings contest how or why MERS came to be the owner and holder of the Irvin promissory note, and Ms. St. Clair-Hougham testified that MERS never owned or held the Irvin note, and that it was merely a depository to keep track of the mortgages. The portion of Azize, significant here is at pg. 154: MERS alleged that it is the owner and holder of the note and mortgage, and that allegation has not been contested by responsive pleading. Assuming that the complaint properly states a cause of action to reestablish the note and that MERS can show prima facie proof of such allegations, MERS would have standing as the owner and holder of the note and mortgage to proceed with the foreclosure .... Although the trial judge was particularly concerned about 30

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MERS's status as nominee of Aegis, in light of the allegations of the complaint, the language contained in the note and mortgage, and Azize's failure to contest the allegations, the issue of MERS's ownership and holding of the note and mortgage was not properly before the trial court for resolution at this stage of the proceedings. 17 Here, Mr. Irvin contested MERS allegation that it was the owner and holder of the note and mortgage by his Answer and Affirmative Defenses. MERS complaint against Mr. Irvin improperly alleges the reestablishment count under Fla. Stat. 71.011 not 673.3091, and neither MERS initial affidavit nor Ms. St. Clair-Houghams affidavit present any, much less prima facie proof of the reestablishment allegations. She also testified that MERS never had an ownership interest in the promissory note and never had physical possession of the note. MERS simply acted as a clearing house to ease, facilitate and expedite transfers of the mortgages for Household. 18 The common thread running through Azize and Revoredo, is that the MERS complaints alleged MERS owned and held the promissory note and had the right to enforce it, as nominee for the true owner. There was neither a pleading nor evidence to disprove these allegations when the complaints were dismissed. On the other hand, this record conclusively establishes that Mr. Irvin properly disputed these MERS allegations and the record evidence establishes that MERS never held, had possession of, or owned the Irvin promissory note. Accordingly, Azize, and Revoredo, do not control, and in fact support Mr. Irvins argument that MERS lacked standing and was not the proper party to bring an action to reestablish and enforce the Irvin promissory note, regardless of whether MERS was a nominee for Household Finance Corp., or Household Finance Corporation,

A recent Kansas decision, while not addressing the issue directly, discusses some of the issues raised by MERS acting as nominee for Mortgagees. Landmark National Bank v. Kesler, 98,489 (Kan.App. 9-12-2008). Revoredo, in an identical posture as Azize, adopted Azize. Footnote 2 states that MERS did not lack standing to foreclose because the facts of the case clearly showed that MERS was only the holder of the note by delivery of the note, and the security follows the debt.
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or Household Finance Corporation III. The Court should deny the SJ Motion and enter summary judgment on this basis in favor of Mr. Irvin. 7. HFC III FAILED TO COMPLY WITH ITS DISCOVERY OBLIGATIONS

In the recent Dec. 19, 2008 deposition of HFC IIIs summary judgment affiant, Ms. St. Claire-Hougham identified several documents that exist and are in the Plaintiffs possession which Mr. Irvin asked to produce in his June 28, 2005 Request to Produce and Nov. 21, 2008 Notice of Taking Deposition duces tecum, and which Plaintiff has not produced. For example Mr. Irvin requested documents which relate to the payment for the mortgage and note. See: Request to Produce #40, #41; RTP DT #40, #41; documents which relate to Mr. Irvins account, including acceleration notices. See: Request to Produce #4, #5; RTP DT #4, #5; A Motion for Summary Judgment cannot be granted when the summary judgment movant has failed to respond to discovery requests. Sica v. Sam Caliendo Design, Inc., 623 So.2d 859 (Fla. 4th DCA 1993); A & B Pipe and Supply Co. v. Turnberry Towers Corp., 500 So.2d 261 (Fla. 3d DCA 1986); Danna v. Bay Steel Corp., 445 So.2d 704 (Fla. 4th DCA 1984). The Court should deny the SJ Motion. B. HFC III FAILED TO CONCLUSIVELY DISPROVE ALL OF MR. IRVINS AFFIRMATIVE DEFENSES 1. MR. IRVIN DID NOT RECEIVE 2 COPIES OF THE NOTICE OF RIGHT TO CANCEL FORM BEFORE CONSUMMATION

Mr. Irvins First Affirmative Defense alleges that Accredited violated the Federal Truth in Leding Act, which leads to his claim for 1640(a) actual and statutory damages and his 1635 extended right to rescind, which he properly and timely exercised. Each consumer with the right to rescind must receive one [1] copy of the correct TIL Disclosure Statement and two [2] copies of a correct Notice of Right to Cancel form. If not, the consumer can rescind for up to 3 years after

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closing. See: Reg Z 226.23(a)(3), fn 48; Beach v. Ocwen, 118 S.Ct.1408 (1998), affg Beach v. Great Western Bank, 692 So.2d 146,148-149 (Fla.1997), affg Beach v. Great Western Bank, 670 So.2d 986 (Fla. 4th DCA 1996); Rodash v. AIB Mortgage, 16 F.3d 1142 (11th Cr.1994); Steele v Ford Motor Credit, 783 F.2d 1016 (11th Cir.1986), all binding here under Kasket v. Chase Manhattan Mtge. Corp., 759 So.2d 726 (Fla. 4th DCA 2000) (11th Circuit cases on federal TIL issues are binding on Florida courts). Reg Z 226.23(a)(3) provides: The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures,[fn]48 whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation.... The term material disclosures means the required disclosures of the annual percentage rate, the finance charge, the amount financed, the total payments, the payment schedule, and the disclosures and limitations referred to in sections 226.32(c) and (d). The record does have a TIL disclosure statement and notice of right to cancel form. Both have a signed acknowledgment that Mr. Irvin received each at the date of closing. Under TIL 15 U.S.C. 1635(c), the signed acknowledgment only creates a rebuttable presumption of receipt: Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof. Florida agrees that Mr. Irvins affidavit disputing receipt rebuts the presumption of receipt in the acknowledgment. When the consumer rebuts the presumption, the creditor must then present some evidence of receipt other than the acknowledgment. When the creditor presents other evidence of receipt, this presents a question of fact for trial. See Cintron v. Bankers Trust Company, 682 So.2d 616 (Fla. 2nd DCA 1996). In Cintron, Bankers Trust contended the Cintrons signed a written 33

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acknowledgment that they received their 2 rescission notice copies at closing. The trial court found that the acknowledgment conclusively proved that the Cintrons received two copies each. However, the 2nd DCA reversed, instructing the Court: The [TIL] provides that written acknowledgment of receipt of any disclosures required under this subchapter . . . does no more than create a rebuttable presumption of delivery thereof 15 U.S.C. 1635(c). In their filed affidavits, the Cintrons sufficiently rebutted this presumption. Because this created a disputed issue of material fact, the trial court erred in granting summary judgment. See, e.g., Stone v. Mehlberg, 728 F. Supp. 1341 (W. D. Mich. 1989); Award Lumber & Constr. Co., Inc. v. Humphries, 110 Ill. App.3d 119, 65 Ill. Dec. 676, 441 N.E.2d 1190 (1982). Accordingly, we reverse the summary judgment granted on the issue of rescission notices. This court is bound to follow Cintron, and Yale, which Citron, p. 616-617 cites, and the presumption of receipt analysis Citron adopted from Stone v. Mehlberg, 728 F. Supp. 1341, 1353-1354 (W.D.Mich. 1989). 19 In Stone, the Court granted the Stones summary judgment on the issue of whether the consumer received the required notices of right to cancel and held: The Notice of Right to Cancel unearthed by the Mehlbergs contains, directly above the Stones' signatures, the statement . . . we received from the creditor two copies of the above notice. . . . [This language does not present probative evidence that each received 2 copies of the form].... Moreover, even if the Notice of Right to Cancel did refer to receipt of two copies by both Kenneth and Delores Stone, the document does not suffice to raise a jury question whether the Stones in fact received the required papers. Under 15 U.S.C. 1635 (c), the Stones signatures after the acknowledgment of receipt merely created a rebuttable presumption of delivery to them of two copies of the Notice of Right to Cancel. The Stones' affidavit testimony rebutted this presumption. [emphasis added] Powers v. Sims and Levin Realtors, 396 F.Supp. 12, 22-23 (E.D.Va. 1975), aff'd in part and rev'd in part, 542 F.2d 1216 (4th Cir. 1976). Following this rebuttal, it is incumbent upon the Mehlbergs, who stand in the creditor's shoes, to produce some positive evidence that delivery of the Notice of Right to Cancel copies to the Stones actually did occur. [emphasis added]. In re Pinder, 83 B.R. 905, 912-14 (Bankr. E. D. Pa. 1988). The Mehlbergs have not produced any delivery evidence. Consequently, the Stones have established the absence of a genuine factual issue and are entitled to judgment as a matter of law. Stone, p. 1353-1354, (emphasis All Florida trial courts are bound to follow 2nd DCA opinions, absent a controlling case from their District Court. Angrand v. Key, 657 So.2d 1146, p. 1148 (Fla. 1995). Absent a controlling case from the Florida Supreme Court or a District Court on TIL, the trial court is bound to follow 11th Circuit cases on TIL. Kasket v. Chase Manhattan Mtg., 759 So.2d 726 (Fla. 4th DCA 2000).
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added.). 20 In other words, Cintron, by adopting Stone, only requires Mr. Irvin to present some evidence of non-receipt to rebut the 1635(c) presumption, similar to the summary judgment standard. Mr. Irvins affidavit is sufficient to support a finding by the trier of fact that the closing agent did not give Mr. Irvin 2 copies of the Notice of Right to Cancel form at the Nov. 19, 2002 closing and is some evidence of non-receipt. Thus, Mr. Irvin met the 1635(c) some evidence standard to rebut, and burst the presumption bubble. This now compels HFC III under Cintron, adopting Stone, to present some other independent evidence that Accredited delivered 2 copies of the Notice of Right to Cancel to Mr. Irvin. 21 Once Mr. Irvin presented some evidence of nonreceipt, the 1635(c) presumption vanishes. HFC III must now present evidence independent of the acknowledgment that Accredited delivered the disclosure statement and notices of right to cancel. Absent that, the Court must find that Mr. Irvin did not receive 2 copies of a Notice of Right to Cancel, thus extending Mr. Irvins 1635 and Reg Z 226.23 Right to rescind, and the Court must order a TIL rescission. See: Pignato, p.1013; Beach, cases; Rodash; Steele, p. 1017; Semar, p. 699, 701-702. Therefor, at a minimum, under Cintron, HFC III has failed to conclusively disprove Mr. Irvins TIL Affirmative Defense. Mr. Irvin also submits HFC IIIs failure to present other evidence of receipt requires summary judgment in his favor. 2. ACCREDITED OVER-STATED THE AMOUNT FINANCED AND UNDERSTATED THE CORRESPONDING FINANCE CHARGE BY MORE THAN $35.00 THUS VIOLATING 1635(I)

The 1635(c) rebuttable presumption standard announced in Stone and adopted in Cintron is sometimes called the bursting bubble presumption. Proof of a negative independent of Mr. Irvins testimony that he did not receive the TIL documents would be virtually impossible.
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The record establishes an under-disclosed finance charge by more than $35.00. 15 U.S.C. 1635(i) and Reg Z 226.23(h) require the Court to deny HFC IIIs summary judgment and order a TIL rescission because the record establishes the original creditor under-disclosed the finance charge by more than $35.00. At a minimum, a question of fact exists as to whether several of Mr. Irvins HUD-1 fees are prepaid finance charges. a. THE $710.00 TITLE INSURANCE CHARGE AND $105.00 CHARGE FOR ENDORSEMENTS ARE PREPAID FINANCE CHARGES

While Floridas Administrative Code 4-186.003(4)(a) authorizes that the lender to collect $695.00 of the $710.00 as the risk premium for the $124,000.00 loan, and $105.00 for endorsements, the code requires the $695.00 portion of the fee to be disclosed as the risk premium for the mortgagee policy and endorsements. Charging and collecting $710.00 for a mortgagee title policy and $105.00 for endorsements without disclosing that $695.00 was the approved risk premium violates Fla. Adm. Code 4-186.003, and makes the entire $710.00 mortgagee title insurance premium and $105.00 for endorsements neither bona fide nor reasonable, and a prepaid finance charge. Florida Administrative Code 4-186.003 Title Insurance Rates Subsection (4) Mortgage title insurance Rates provides at (a): The risk premium for mortgage title insurance shall be: Per Thousand From $0 to $100,000 of liability written $ 5.75 From $100,000 to $1 million of liability written, add $ 5.00 Over $1 million and up to $10 million.... The loan is $124,000 so the approved rate for the note [the risk premium] is $5.75 X 100 = $575 plus $5.00 X 24 = $120. The approved risk premium is not $710, it is $695. However, the Settlement statement never identifies that $695.00 of the $710 and the $105 as the risk premium. The term risk premium does not even appear in the HUD-1. The failure to disclose the risk premium violates Fla. Ad. Code 4-186.003(13)(b):

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Unlawful Rebates or Abatement of Charges: (b) Charges for related title services (title search, examination, and closing) shall be shown separately on the closing statement, and shall, at a minimum, show title search charges, examination fees, and closing charges. The risk premium as defined by section 627.7711(2), Florida Statutes, and as provided in section 627.780(1), Florida Statutes, shall be shown separately on the closing statement. Accredited charged and collected $105.00 for three (3) endorsement premiums to the title insurance, numbers 8.1,6 and 5. Floridas Administrative Code 690-186.005(7)(d) requires that [a]ll issued endorsements shall be itemized on the closing statement furnished to the insured with costs for each endorsement shown. (Emphasis added). Charging and collecting for title insurance endorsements without disclosing the breakdown for each of the endorsements violates Floridas Administrative Code 690-186.005(7)(d) and makes the entire $105.00 title insurance endorsement premiums neither bona fide nor reasonable and is a prepaid finance charge. The $710.00 fee and $105.00 fee listed in the settlement statement was charged and collected in violation of Fla. Ad. Code 4-186.003(13)(b) and so is neither bona fide or reasonable and must be included in the Finance Charge under Reg Z 226.4(c)(7) (i): (c) Charges excluded from the finance charge. The following charges are not finance charges: (7) Real-estate related fees. The following fees in a transaction secured by real property or in a residential mortgage transaction, if the fees are bona fide and reasonable in amount: (i) Fees for title examination, abstract of title, title insurance, property survey, and similar purposes. The $710.00 and $105.00 errors far exceeds the $35.00 error tolerance for a defensive TIL rescission under 15 U.S.C. 1635(i)(2) and Reg Z 226.23(h)(2)(i) and extends Mr. Irvin's right to rescind past the 3 days for up to 3 years. Mr. Irvin respectfully submits that the Court must deny HFC

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IIIs summary judgment motion on the basis of the title insurance/risk premium fee alone. However, the analysis does not end here. The Settlement Statement lines 808-812 contain a total of $1194.00 fees paid to an affiliated third party agent, Accredited Home Lenders, for which Accredited received a benefit as party with a financial interest in the affiliated agents. See: Irvin Affidavit, Para. 18, Exh. F: I was provided a copy of the Lenders Affiliated Business Arrangement Disclosure, which is attached hereto as Exhibit F. The HUD-1 Settlement Statement lines 1101-1103 and 1111 contain a total of $580.00 in fees paid to an affiliated third party closing agent, Accelerated Title Co. Accredited required Mr. Irvin to use the services of its affiliated third party agents. TILA does not authorize the lender to exclude the fees for an affiliated third party closing agent from the prepaid finance charges. The FRB has issued a regulation and commentary which specifically include this fee in the prepaid finance charge category. Reg Z 226.4(a)(2) states: Fees charged by a third party that conducts the loan closing (such as a settlement agent, attorney, or escrow or title company) are finance charges only if the creditor: (i) requires the particular services for which the consumer is charged; (ii) requires the imposition of the charge; or (iii) retains a portion of the third-party charge, to the extent of the portion retained. The FRB staff comments expand on this at O.S.C. 226.4(a)(2)-2: 2. Required closing agent. If the creditor requires the use of a closing agent, fees charged by the closing agent are included in the finance charge only if the creditor requires the particular service, requires the imposition of the charge, or retains a portion of the charge. Fees charged by a third-party closing agent may be otherwise excluded from the finance charge under section 226.4. For example, a fee that would be paid in a comparable cash transaction may be excluded under section 226.4(a). A charge for conducting or attending a closing is a finance charge and may be excluded only if the charge is included in and is incidental to a lump-sum closing fee excluded under section 226.4(c)(7). Accordingly in addition to the risk premium violation, the fees are finance charges because of the Accrediteds financial affiliation with and benefit from its business relationship with the 3rd 38

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party closing agents. Mr. Irvin respectfully submit that the Court must deny HFC IIIs summary judgment motion on the basis of the Accredited affiliation with the 3rd party closing agent. b. TIL TREATS THE $248.00 CHARGE FOR FLORIDAS INTANGIBLE TAX AS A PREPAID FINANCE CHARGE WHEN NOT PROPERLY ITEMIZED AND DISCLOSED

Accredited charged and collected the sum of $248.00 for City/county tax/stamps as shown on the HUD-1 Settlement Statement Line 1202 when, in fact, this was a state intangible tax which Florida imposes on Accredited as the holder of the note. The TIL Disclosure Statement disclosed in the bottom 1/3 of the form the filing/recording fees in blank: FILING/RECORDING FEES: $ [The TIL DS left the space blank]

This is not a proper itemization and disclosure of the public official fees in violation of Reg. Z 226.4(e)(1) and 226.4(e)(3), which makes the intangible tax a prepaid finance charge. Reg. Z 226.4(e)(1) and (e)(3) state: e) Certain security interest charges. If itemized and disclosed, the following charges may be excluded from the finance charge: (1) Taxes and fees prescribed by law that actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest. (3) Taxes on security instruments. Any tax levied on security instruments or on documents evidencing indebtedness if the payment of such taxes is a requirement for recording the instrument securing the evidence of indebtedness. (Emphasis added). The HUD-1 line 1202 charged Mr. Irvin $248.00 for City/County tax/stamps. The TIL disclosure statement left the public official fee blank. TIL prohibits the HUD-1 actually charging $248.00 and misidentifying the fee 22, while the TIL disclosed nothing for the fee. Accredited cannot

Floridas intangible tax is neither a city nor county tax or stamp. It is the Fla. Const. Art. VII, Sect. 2, 2 mil tax imposed on the lender for holding the intangible asset of the note secured by the mortgage, and implemented at Fl. Ch. 199.
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tell the consumer in the TIL disclosure that Accredited passed on nothing to Mr. Irvin for public official fees while actually charging Mr. Irvin $248.00 for Floridas Intangible Tax and misdescribing the fees in the HUD-1. See: Pignato, p. 1016: We therefore also apply the revised Commentary to Reg. Z and hold that the intangible tax is excludable from the finance charge under TILA if the creditor itemizes and discloses the intangible tax to the customer. Reg. Z, 12 C.F.R. 226.4(e); Home Sav. Of America v. Goldstein, 672 So.2d 883, 884 (Fla.4th DCA 1996), citing to Pignato,: the Florida intangible tax is excludable from the finance charge under TILA so long as the creditor itemizes and discloses the intangible tax to the customer... [emphasis added]. See also: Great Western Bank v. Shoemaker, 695 So.2d 805 (Fla. 2 DCA 1997); Smith v. Chapman, 614 F.2d 968, 971 (5th Cir. 1980): We reiterate that the purpose of TILA is to assure a meaningful disclosure of credit terms, 15 U.S.C.A. 1601, and that Regulation Z, 226.6(a), requires that disclosures be made clearly, conspicuously and in meaningful sequence. To place the tax figure in the wrong space when another space is specifically provided is not a clear disclosure in a meaningful sequence. And when the form states the sales tax is included in the figure stated, but in fact it is not, it is, furthermore, misleading. A misleading disclosure is as much a violation of TILA as a failure to disclose at all. [citations omitted. See also: Green v. Levis Motors, Inc., 179 F.3d 286 (5th Cir. 1999) [improper itemization and disclosure of $40.00 public official fee when actually charged $22.00, hidden in IAF, held a TIL violation]; Reg Z 226.23(a)(7): if any of the following items is itemized and disclosed in accordance with the regulations of the Board in connection with any transaction, then the creditor need not include that item in the computation of the finance charge with respect to that transaction: (1) Fees and charges prescribed by law which actually are or will be paid to public officials for determining the existence of or for perfecting or releasing or satisfying any security related to the credit transaction. Accrediteds HUD-1 line 1202 misidentified both the payee and the type of tax imposed on 40

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Mr. Irvin and left the TIL disclosure blank violating O.S.C 226.4(e)(2) because One Stop failed to correctly itemize the specific fees and taxes imposed on Mr. Irvin. Mr. Irvin respectfully submits that the Court deny HFC IIIs Summary Judgment Motion for the reasons set forth above. 3. HFC III FAILED TO CONCLUSIVELY DISPROVE THE REMAINING AFFIRMATIVE DEFENSES

Mr. Irvin addressed HFC IIIs failure to disprove his remaining Second through Eighth Affirmative Defense in his Section V A. arguments. Moreover, HFC IIIs motion only addresses the TIL issues and none of the remaining issues. Mr. Irvins Second Affirmative Defense alleges entitlement to an accounting, and argues that HFC only produced a computer printout of the Irvin Account in response to the Nov. 21, 2008 Notice of Taking Deposition duces tecum at her Dec. 19, 2008 deposition. Counsel has not had enough time to examine same, and HFC produced the printout within the 20 day summary judgment rule. Mr. Irvins 1st Third Affirmative Defensealleged in the alternative that waiver estoppel or unclean hands doctrine should prevent foreclosure based on the improper collection of payments from Mr. Irvin. His 2nd numbered Third Affirmative Defense Para. 41-46 alleges non compliance with the mortgage Para. 22 required written acceleration notice. Mr. Irvin already presented this argument. Mr. Irvins Fourth Affirmative Defense alleges the Plaintiff is the improper party to foreclose, and alternately has failed to properly plead a claim for relief. Mr. Irvin already presented this argument. Mr. Irvins Fifth Affirmative Defense repeats his 2nd numbered Third Affirmative Defense. Mr. Irvins Sixth Affirmative Defense alleges that the Plaintiff does not hold the mortgage and note it seeks to foreclose and is therefor the improper party to foreclose. Mr. Irvin already presented this argument. Mr. Irvins Seventh Affirmative Defense alleged that waiver, estoppel, or the doctrine of unclean hands should prevent foreclosure based on the improper posting of payments to Mr. Irvins account. Mr. Irvins Eighth Affirmative Defense 41

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alleged that Plaintiff cannot foreclose because it has failed to state a claim upon which relief can be granted in both counts of his complaint. Mr. Irvin already presented these arguments. WHEREFORE, Mr. Irvin prays that this Honorable Court deny the Motion for Summary Judgment filed by HFC III and grant his Cross Motion for Summary Judgment. I HEREBY CERTIFY that a true and accurate copy of the above has been furnished by U.S. Mail this 22nd day of December, 2008, to: Jason D. Joffe, Esq., Traci Rollins, Esq. Steel Hector & Davis LLP 777 South Flagler Drive 1900 Phillips Point West Palm Beach, Florida; Sherri B. Simpson, Esq., 33 NE 2nd Street Suite 208, Fort Lauderdale, Florida, 33301-1036 LAW OFFICES OF JAMES A. BONFIGLIO, P.A. P.O. Box 1489 Boynton Beach, Fla. 33425-1489 (561) 734 - 4503 Telephone (561) 734 - 1872 Facsimile BY:___________________________________ JAMES A. BONFIGLIO, Attorney at Law Co-Counsel for Mr. Irvin Florida Bar Number: 288055

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24.LectureOutlineEthicsbyMikeFlynn a.DepositionEthicsandProfessionalism andtheObstructionistLawyer.

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Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

DEPOSITION ETHICS AND PROFESSIONALISM AND THE OBSTRUCTIONIST LAWYER By Michael Flynn, Professor of Law Nova Southeastern University Law Center I. THE OBSTRUCTIONIST LAWYER THE STORY

Pete is the lawyer for the deponent. Pete is not confident and neither is the deponent about the ability of the deponent to accurately and effectively present testimony at the deposition. This deponent is one of Petes most valued paying clients. The litigation is very important to the client and is worth a substantial amount of money. The client made known to Pete that the client/deponent is relying on Pete to make sure this litigation produces a favorable outcome. Right from the outset, the deposition is going badly for the deponent. The deposing lawyer is well prepared, respectful but skillful and relentless in asking questions. When the questioning begins to focus on what Pete considers to be the most crucial factual and legal issue in the litigation, Pete slows the deposition down by injecting repeated objections to the form of the questions. Some of the questions are objectionable, some are not. Pete becomes more intrusive by not only objecting to questions but also by commenting on the substance of questions so that he suggests to the deponent what the answer to the question should be. At one point, Pete requests a break in the deposition while a particularly important question is pending without an answer. The deponent seconds the request for a break. Upon returning from the break, the deponent spins the question and answer expertly. It is important to note that the deposing lawyer, first, just ignored Petes objections and continued to politely press the deponent for answers to questions. Second, the deposing lawyer advised Pete, on the record, that Pete should refrain from misbehaving during the deposition and particularly notes that Pete and the deponent took a break while a question was pending. Third, the deposing lawyer advised Pete that the deposing

lawyer was prepared to call up a judge and have a telephone hearing on Petes misbehavior unless it stopped. After several minutes of misbehavior, the deposing lawyer focuses the questions on the most damaging substantive problems with the deponents position in the lawsuit. Pete injects an objection each time a question of his type is propounded and instructs the deponent not to answer claiming privilege. The deposing lawyer makes sure the record is clear as to Petes instructions not to answer and then recesses the deposition to contact the judge. The judge, who is in the courthouse but on a break from other proceedings, schedules a hearing on the matter for the next morning. At the hearing the next morning, the judge chastises Pete for his misbehavior and sanctions Pete. The judges sanctions include payment of the cost of the deposition and the deposing lawyers attorney fees which amounts to over $1,000. The judge also orders that Pete pay for the cost of a videotape deposition of his client and that the deposition reconvene in five days. The judge also orders that Pete not misbehave in the reconvened deposition or be subject to a contempt of court sanction. Pete informs his client of the judges order and the monetary sanction. The client thanks Pete for the great job he did in protecting his interests during the deposition and tells Pete to just add the amount of the sanction to his bill. The client also agrees to meet with Pete over the next three days to adequately prepare for the reconvened deposition. The reconvened deposition does not go well for the deposing lawyer. The deponent is so well prepared that despite skillful questions by the deposing lawyer and his persistence in probing what the deponent knows, the deponent handles the questions flawlessly. From the deposing lawyers perspective, the deposition, in which Pete does not misbehave, is not very useful. II. DEPOSITION ETHICS AND PROFESSIONALISM

Federal Rule of Civil Procedure 30(c)(2) states in part that any objection during the examination of deponent during as deposition must be noted

on the record, but the examination still proceeds; the testimony is taken subject to any objection. An objection must be stated concisely in a nonargumentative and non-suggestive manner. A person may instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation ordered by the court, or to present a motion under rule 30(d)(3) [a motion for a protective order]. Further, Federal Rule of Civil Procedure 30(c)3)(A) provides in part that during a deposition the deponent or a party may move to terminate or limit it [the deposition] on the ground that it is being conducted in bad faith or in a manner that unreasonably annoys, embarrasses, or oppresses the deponent or partyIf the objecting deponent or party so demands, the deposition must be suspended for the time necessary to obtain an order. The Federal District Court for the Southern District of Florida local rules, similar to local rules adopted in many courts, prohibit the following specific kinds of behavior during a deposition in local rule 30.1: 1. Objections or statements which have the effect of coaching the witness, instructing the witness concerning the way in which he or she should frame a response, or suggesting an answer to the witness. 2. Interrupting examination for an off-the-record conference between counsel and the witness, except for the purpose of determining whether to assert a privilege. 3. Instructing a deponent not to answer a question except when to preserve a privilege, to enforce a limitation on evidence directed by the Court, or to present a motion [for a protective order].

The Florida Rule of Civil Procedure 1.310(d), not unlike the rules in many states, is identical to the portion of the Federal Rule of Civil Procedure 30(c)(2) which admonishes a defending lawyer to not propound argumentative or suggestive objections. The American Bar Association (ABA) Rules of Professional Conduct also address the behavior of lawyer during a deposition. Paragraph 2 of the

Preamble to these rules states that a lawyer should zealously advocate a clients position. Therefore, the boundary of a lawyers zealous representation of a client is set by the ABA rules. With this Preamble in mind, the ABA rules go on in Paragraph 9 of the Preamble to note: Virtually all difficult ethical problems arise from conflict between a lawyers responsibilities to clients, to the legal system and to the lawyers own interest in remaining an ethical person while earning a satisfactory living. The Rules of Professional Conduct often prescribe terms for resolving such conflicts. Within the framework of these Rules, however, many difficult issues of professional discretion can arise. Such issues must be resolved through the exercise of sensitive professional and moral judgment guided by the basic principles underlying the Rules. These principles include the lawyers obligation zealously to protect and pursue a clients legitimate interests, within the bounds of the law, while maintaining a professional, courteous and civil attitude toward all persons involved in the legal system. The ABA Rules go on to offer some guidance to Pete. ABA Rule 3.1, Meritorious Claims and Contentions, prohibits a lawyer from asserting a frivolous claim or defense. Comment 1 to this rule goes on to explain that a lawyer has a duty to use legal procedure for the fullest benefit of a clients cause but also has a duty not to abuse legal procedure. This Comment concludes that even though the law is not always clear and never static, procedural law establishes the limits within which an advocating lawyer may proceed. When applied to lawyer Petes behavior during the deposition, Petes speaking objections and frivolous objections and instructions not to answer fall within the broad prohibitions of this ABA Rule. ABA Rule 3.2, Expediting Litigation, requires a lawyer to expedite litigation consistent with the interests of his or her client. The Comments to this rule speak to Lawyer Petes tactics in the deposition. Comment 1, although recognizing that postponements and other delays may be appropriate, states that delay or other tactics employed for the purpose of frustrating an

opposing parts attempt to rightfully pursue a cause is not justified. The Comment goes on to say that Realizing financial or other benefit from otherwise improper delay in litigation is not a legitimate interest of the client. ABA Rule 3.4, Fairness To Opposing Party And Counsel, provides in part that: A lawyer shall not: (a) unlawfully obstruct another partys access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act; (c) knowingly disobey an obligation under the rules of a tribunal

(d) in pretrial procedure, make a frivolous discovery request or fail to make reasonably diligent effort to comply with a legally proper discovery request by an opposing party Comment 1 to this ABA Rule specifically remarks that this Rule prohibits concealment of evidence, improperly influencing witnesses and obstructive tactics in discovery procedure. Lawyer Petes conduct during the deposition arguably fits each one of these prohibitions. This Comment goes on to note that fair competition in the adversary system of justice is founded on these prohibitions. Therefore, Petes misconduct can be viewed as an attempt to corrupt the legal system. ABA Rule 8.4, Misconduct, declares that it is professional misconduct for a lawyer to violate the ABA Rules and to: (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) justice. engage in conduct that is prejudicial to the administration of

Comment 1 to this rule states that this Rule prohibits a lawyer to knowingly assist or induce another to violate the ABA Rules or to violate the ABA Rules through the acts of another person. The American College of Trial Lawyers adopted a Code of Pretrial Conduct. This Code of Pretrial Conduct addresses the conduct of lawyers in a deposition. Specifically, Section 5(e) titled Depositions in sub-section (5) declares that during a deposition Objections should not be used to obstruct questioning, to improperly communicate with the witness, or to disrupt the search for facts or evidence germane to the case. The Handbook of Discovery Practice developed by the Joint Committee of the Trial Lawyers Section of The Florida Bar and the Conference of Circuit and County Court Judge condemns in Chapter 4 titled Speaking Objections and Inflammatory Statements At A Deposition condemns speaking objections and provides citation to the civil procedure rule and case law which support this position. Further, Chapter 5 of the Handbook titled Instructing A Witness Not To Answer Questions At A Deposition, citing civil procedure rules and case law, explains that an instruction not to answer is only appropriate to claim a privilege or to enforce a court ordered limitation in discovery. II. THE CONCLUSION

There is no question that in recent years local, state and federal bar associations as well as other lawyer groups and committees and conferences of judges have intensified their efforts to raise the standard of professionalism among lawyers. Deposition proceedings have been one of their targets. Yet as the vignette demonstrates lawyers continue to manipulate deposition proceedings to obstruct the appropriate gathering of information. One judge, when commenting about the prohibition of unfair trade practices, remarked that there is no limit to human inventiveness. This statement seems to apply to lawyers designed to obstruct a deposition proceeding. In this vignette, the deposing lawyer did try to salvage the original deposition and still make a record and the court did impose sanctions. Yet it is deposing attorneys opportunity loss that cannot be undone. Pete, the obstructionist lawyer in the vignette, was successful in disrupting the deposition. He profited from his misbehavior by delaying the

deposition until his client could be properly prepared. Ultimately, it is the deposing lawyer who is penalized because of the loss of the opportunity to question the un-coached deponent. This kind of result sends the wrong message to lawyers, clients and witnesses and undermines the integrity of the deposition process. Is there a solution? If you believe the previously referenced remarks of the judge, there just may not be a lasting solution to lawyer misconduct. However, that is not a good reason to decline to try to find a solution. First, all of the efforts of local, state and federal bar associations to publicly denounce lawyer misconduct and to continue to fashion guidelines for the professional practice of law should be commended and enhanced. State bar association disciplinary boards when given the chance should act to convey a zero tolerance policy towards lawyer misconduct in a deposition proceeding by sanctioning misbehaving lawyers not only monetarily but with mandatory re-education programs during license suspension or revocation. Yet for these organizations to be effective, aggrieved lawyers must not hesitate to step forward and report such behavior to the bar associations. If an offended lawyer files a grievance it will force the misbehaving lawyer to respond and permit the bar associations to act. A grievance procedure is not a pleasant experience for a misbehaving lawyer. In addition, it will send a message to the misbehaving lawyer that the deposing lawyer is to not be trifled with in the future. This kind of action can have a deterrent effect. Second, trial court and appellate court judges, collectively and individually, should act to effectively sanction lawyers who misbehave during a deposition. State and federal rules of civil procedure provide an ample array of case dispositive sanctions that can be imposed. Although judges are traditionally hesitant to impose harsh sanctions on lawyers for misconduct because such sanctions harm clients, judges must find the will to impose such sanctions and let the misbehaving lawyer bear the responsibility for the clients harm. In modern civil litigation, because of the increasing infrequency of trial proceedings, deposition proceedings take on an increasingly important role in the resolution of lawsuits. Consequently, judicial control over the conduct of misbehaving lawyers is required to be consistent with ethics rules and local and state bar

association professionalism efforts and essential to the integrity of the adversary system of justice. Bad behavior is not only an embarrassment to the misbehaving lawyer but also to the profession. Little wonder the publics perception of lawyers is often disgust. Finally, perhaps the only truly long term solution to the problem of lawyer misconduct, whether it occur in deposition setting or otherwise, rests with the commitment by both deposing and defending lawyers in a deposition to not misuse the process. In essence, this commitment requires lawyers to act in good faith with respect for the deposition process. This may not be a very comforting or satisfying response.

24.LectureOutlineEthicsbyMikeFlynn b.TheEthicsofSolicitationofClientsunder FloridaLaw

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Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

THE ETHICS OF SOLICITATION OF CLIENTS UNDER FLORIDA LAW by Michael Flynn Professor of Law Nova Southeastern University

I. SHAPERO V. KENTUCKY BAR ASSOCIATION, 486 U.S. 466, 108 S.Ct. 1916 (1988). Any Discussion of the ethics of client politicization begins and may just end with a discussion of the Shapero case. Shapero wanted to send the following letter to targeted potential clients: I t ha s com e to m y att entio n th at you r hom e is being foreclosed on. If this is true, you m ay be about to lose your home. Federal law m ay allow you to keep your hom e by ORDERI NG your creditor to STOP an d giv e you m ore tim e to pay them . You m ay call my office anytim e from 8:30 am , to 5:00 p.m . for FREE infor m ation on ho w you can keep your hom e. Call NOW, dont w ait. It m ay surprise you w hat I m ay be able to do for you. Just call and tell m e that you got this letter. R em em ber it is FR EE. There is N O charge for calling. The Kentucky Bar Association refused to approve this letter using ABA 47.3/Florida Rule 4-7.4 as the basis for this refusal. The Supreme Court reversed the decision of the Kentucky Bar Association and the Kentucky Supreme Court. The Court reasoned that this kind of written targeted solicitation by a lawyer of a potential client is protected commercial speech. The Court went on further to say that the Kentucky Bar Association can regulate this kind of unsolicited written communication designed for a lawyer to obtain new clients but only to the extent that any regulation is not an outright ban on such solicitations and is most narrowly drawn so to accomplish a legitimate state interest, primarily to insure that any solicitation is not false or deceptive. The Court commented that the

evils of overreaching by a lawyer to a client that is in distress is not so present in a written solicitation as it is in an in-person solicitation, which the Court seems to say is properly banned. The Court approves as a reasonable regulation that lawyers file any proposed written solicitation with the bar association to monitor and penalize abuses. The Court also said that type size and speculation as to the benefit received by a client does not disqualify this kind of solicitation as long as it is not false or deceptive. The Court uses as an example, capitalizing trivial or other uninformative material or overblown assurances of results can be misleading like emphasizing that a lawyer is member of the Bar of The Supreme Court or that the client will recover money. The purpose of this outline is to go through the Florida Rules Of Professional Conduct, specifically 4-7 Information About Legal Services and see how The Florida Bar performed in crafting rules that accord the decision in Shapero.

RULES OF PROFESSIONAL CONDUCT 4-7 INFORMATION ABOUT LEGAL SERVICES

II.

RULE 4-7.1 GENERAL (a) Permissible Forms of Advertising. Subject to all the requirements set forth in this subchapter 4-7, including the filing requirements of rule 4-7.7, a lawyer may advertise services through public media, including but not limited to: print media, such as a telephone directory, legal directory, newspaper or other periodical; outdoor advertising, such as billboards and other signs; radio, television, and computer-accessed communications; recorded messages the public may access by dialing a telephone number; and written communication in accordance with rule 4-7.4. (b) Advertisements Disseminated in Florida. Subchapter 4-7 shall apply to lawyers admitted to practice law in Florida who solicit or advertise for legal employment in Florida or who target solicitations or advertisements for legal employment at Florida residents.

(c) Advertisements by Out-of-State Lawyers. Subchapter 4-7 shall apply to lawyers admitted to practice law in jurisdictions other than Florida: (1) who have established a regular and/or permanent presence in Florida for the practice of law as authorized by other law; and (2) who solicit or advertise for legal employment in Florida or who target solicitations or advertisements for legal employment at Florida residents. (d) Advertisements Not Disseminated in Florida. Subchapter 4-7 shall not apply to any advertisement broadcast or disseminated in another jurisdiction in which the advertising lawyer is admitted if such advertisement complies with the rules governing lawyer advertising in that jurisdiction and is not intended for broadcast or dissemination in the State of Florida (e) Communications With Family Members. Subchapter 4-7 shall not apply to communications between a lawyer and that lawyers own family members. (f) Communications at a Prospective Clients Request. Subchapter 4-7 shall not apply to communications between a lawyer and a prospective client if made at the request of that prospective client. (g) Application of General Misconduct Rule. The general rule prohibiting a lawyer from engaging in conduct involving dishonesty, deceit, or misrepresentation applies to all communications by a lawyer, whether or not subchapter 4-7 applies to that communication.

The intent of this Rule is to balance the publics need to have information about and access to legal services while at the same time provide protect the public from false or misleading advertisements and solicitations.

RULE 4-7.2 COMMUNICATIONS CONCERNING A LAWYERS SERVICES

The following shall apply to any communication conveying information about a lawyers or a law firms services except as provided in subdivisions (e) and (f) of rule 4-7.1: (a) Required Content of Advertisements and Unsolicited Written Communications. (1) Name of Lawyer or Lawyer Referral Service. All advertisements and written communications pursuant to these rules shall include the name of at least 1 lawyer or the lawyer referral service responsible for their content. (2) Location of Practice. All advertisements and written communications provided for under these rules shall disclose, by city or town, 1 or more bona fide office locations of the lawyer or lawyers who will actually perform the services advertised. If the office location is outside a city or town, the county in which the office is located must be disclosed. A lawyer referral service shall disclose the geographic area in which the lawyer practices when a referral is made. For the purposes of this rule, a bona fide office is defined as a physical location maintained by the lawyer or law firm where the lawyer or law firm reasonably expects to furnish legal services in a substantial way on a regular and continuing basis. (b) Permissible Content of Advertisements and Unsolicited Written Communications. If the content of an advertisement in any public media or unsolicited written communication is limited to the following information, the advertisement or unsolicited written communication is exempt from the filing and review requirement and, if true, shall be presumed not to be misleading or deceptive. (1) Lawyers and Law Firms. A lawyer or law firm may include the following information in advertisements and unsolicited written communications: (A) the name of the lawyer or law firm subject to the requirements of this rule and rule 4-7.9, a listing of lawyers associated with the firm, office locations and parking arrangements, disability accommodations, telephone numbers, website addresses, and electronic mail addresses, office and

telephone service hours, and a designation such as attorney or law firm; (B) date of admission to The Florida Bar and any other bars, current membership or positions held in The Florida Bar or its sections or committees, former membership or positions held in The Florida Bar or its sections or committees with dates of membership, former positions of employment held in the legal profession with dates the positions were held, years of experience practicing law, number of lawyers in the advertising law firm, and a listing of federal courts and jurisdictions other than Florida where the lawyer is licensed to practice; (C) technical and professional licenses granted by the state or other recognized licensing authorities and educational degrees received, including dates and institutions; (D) military service, including branch and dates of service; (E) foreign language ability; (F) fields of law in which the lawyer practices, including official certification logos, subject to the requirements of subdivision (c)(6) of this rule regarding use of terms such as certified, specialist, and expert; (G) prepaid or group legal service plans in which the lawyer participates; (H) acceptance of credit cards; (I) fee for initial consultation and fee schedule, subject to the requirements of subdivisions (c)(7) and (c)(8) of this rule regarding cost disclosures and honoring advertised fees; (J) common salutary language such as best wishes, good luck, happy holidays, or pleased to announce; (K) punctuation marks and common typographical marks; (L) an illustration of the scales of justice not deceptively similar

to official certification logos or The Florida Bar logo, a gavel, traditional renditions of Lady Justice, the Statue of Liberty, the American flag, the American eagle, the State of Florida flag, an unadorned set of law books, the inside or outside of a courthouse, column(s), diploma(s), or a photograph of the lawyer or lawyers who are members of or employed by the firm against a plain background consisting of a single solid color or a plain unadorned set of law books. (2) Lawyer Referral Services. A lawyer referral service may advertise its name, location, telephone number, the referral fee charged, its hours of operation, the process by which referrals are made, the areas of law in which referrals are offered, the geographic area in which the lawyers practice to whom those responding to the advertisement will be referred, and, if applicable, its nonprofit status, its status as a lawyer referral service approved by The Florida Bar, and the logo of its sponsoring bar association. (3) Public Service Announcements. A lawyer or law firm may be listed as a sponsor of a public service announcement or charitable, civic, or community program or event as long as the information about the lawyer or law firm is limited to the permissible content set forth in subdivision (b)(1) of this rule. (c) Prohibitions and General Regulations Governing Content of Advertisements and Unsolicited Written Communications. (1) Statements About Legal Services. A lawyer shall not make or permit to be made a false, misleading, or deceptive communication about the lawyer or the lawyers services. A communication violates this rule if it: (A) contains a material misrepresentation of fact or law; (B) is false or misleading; (C) fails to disclose material information necessary to prevent the information supplied from being false or misleading; (D) is unsubstantiated in fact;

(E) is deceptive; (F) contains any reference to past successes or results obtained; (G) promises results; (H) states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; (I) compares the lawyers services with other lawyers services, unless the comparison can be factually substantiated; or (J) contains a testimonial. (2) Descriptive Statements. A lawyer shall not make statements describing or characterizing the quality of the lawyers services in advertisements and unsolicited written communications. (3) Prohibited Visual and Verbal Portrayals and Illustrations. A lawyer shall not include in any advertisement or unsolicited written communication any visual or verbal descriptions, depictions, illustrations, or portrayals of persons, things, or events that are deceptive, misleading, manipulative, or likely to confuse the viewer. (4) Advertising Areas of Practice. A lawyer or law firm shall not advertise for legal employment in an area of practice in which the advertising lawyer or law firm does not currently practice law. (5) Stating or Implying Florida Bar Approval. A lawyer or law firm shall not make any statement that directly or impliedly indicates that the communication has received any kind of approval from The Florida Bar. (6) Communication of Fields of Practice. A lawyer may communicate the fact that the lawyer does or does not practice in particular fields of law. A lawyer shall not state or imply that the lawyer is "certified," "board certified," a "specialist," or an "expert" except as follows:

(A) Florida Bar Certified Lawyers. A lawyer who complies with the Florida certification plan as set forth in chapter 6, Rules Regulating The Florida Bar, may inform the public and other lawyers of the lawyers certified areas of legal practice. Such communications should identify The Florida Bar as the certifying organization and may state that the lawyer is "certified," "board certified," a "specialist in (area of certification)," or an "expert in (area of certification)." (B) Lawyers Certified by Organizations Other Than The Florida Bar or Another State Bar. A lawyer certified by an organization other than The Florida Bar or another state bar may inform the public and other lawyers of the lawyers certified area(s) of legal practice by stating that the lawyer is "certified," "board certified," a "specialist in (area of certification)," or an "expert in (area of certification)" if: (i) the organizations program has been accredited by The Florida Bar as provided elsewhere in these Rules Regulating The Florida Bar; and, (ii) the member includes the full name of the organization in all communications pertaining to such certification. (C) Certification by Other State Bars. A lawyer certified by another state bar may inform the public and other lawyers of the lawyers certified area(s) of legal practice and may state in communications to the public that the lawyer is "certified," "board certified," a "specialist in (area of certification)," or an "expert in (area of certification)" if: (i) the state bar program grants certification on the basis of standards reasonably comparable to the standards of the Florida certification plan and, (ii) the member includes the name of the state bar in all communications pertaining to such certification. (7) Disclosure of Liability For Expenses Other Than Fees. Every advertisement and unsolicited written communication that contains information about the lawyers fee, including those that indicate no

fee will be charged in the absence of a recovery, shall disclose whether the client will be liable for any expenses in addition to the fee. (8) Period for Which Advertised Fee Must Be Honored. A lawyer who advertises a specific fee or range of fees for a particular service shall honor the advertised fee or range of fees for at least 90 days unless the advertisement specifies a shorter period; provided that, for advertisements in the yellow pages of telephone directories or other media not published more frequently than annually, the advertised fee or range of fees shall be honored for no less than 1 year following publication. (9) Firm Name. A lawyer shall not advertise services under a name that violates the provisions of rule 4-7.9. (10) Language of Required Statements. Any words or statements required by this subchapter to appear in an advertisement or direct mail communication must appear in the same language in which the advertisement appears. If more than 1 language is used in an advertisement or direct mail communication, any words or statements required by this subchapter must appear in each language used in the advertisement or direct mail communication. (11) Appearance of Required Statements. Any words or statements required by this subchapter to appear in an advertisement or direct mail communication must be clearly legible if written or intelligible if spoken aloud. (12) Payment by Nonadvertising Lawyer. No lawyer shall, directly or indirectly, pay all or a part of the cost of an advertisement by a lawyer not in the same firm. Rule 4-1.5(f)(4)(D) (regarding the division of contingency fees) is not affected by this provision even though the lawyer covered by rule 4-1.5(f)(4)(D)(ii) advertises. (13) Referrals to Another Lawyer. If the case or matter will be referred to another lawyer or law firm, the communication shall include a statement so advising the prospective client.

(14) Payment for Recommendations; Lawyer Referral Service Fees. A lawyer shall not give anything of value to a person for recommending the lawyers services, except that a lawyer may pay the reasonable cost of advertising or written or recorded communication permitted by these rules, may pay the usual charges of a lawyer referral service or other legal service organization, and may purchase a law practice in accordance with rule 41.17. Part of the purpose of this Rule can be summarized by the Comment accompanying the Rule which states that an otherwise truthful statement that implies falsely that the lawyer possesses a qualification not common to virtually all lawyers practicing in Florida is prohibited. Further, the prohibition in subdivision (c)(1)(F) precludes advertisements about results obtained on behalf of a client, such as the amount of a damage award or the lawyers record in obtaining favorable verdicts. Such information may create the unjustified expectation that similar results can be obtained for others without reference to the specific factual and legal circumstances. The prohibition in subdivision (c)(1)(I) of comparisons that cannot be factually substantiated would preclude a lawyer from representing that the lawyer or the lawyers law firm is "the best," "one of the best," or "one of the most experienced" in a field of law. The prohibition in subdivision (c)(1)(J) precludes endorsements or testimonials, whether from clients or anyone else, because they are inherently misleading to a person untrained in the law. Potential clients are likely to infer from the testimonial that the lawyer will reach similar results in future cases. Because the lawyer cannot directly make this assertion, the lawyer is not permitted to indirectly make that assertion through the use of testimonials. Subdivision (c)(3) prohibits visual or verbal descriptions, depictions, portrayals, or illustrations in any advertisement which create suspense, or contain exaggerations or appeals to the emotions, call for legal services, or create consumer problems through characterization and dialogue ending with the lawyer solving the problem However, informational illustrations are permitted as long as they are not misleading. For example, a drawing of a fist, to suggest the lawyers ability to achieve results, would be barred. Examples of permissible illustrations

would include a graphic rendering of the scales of justice to indicate that the advertising attorney practices law, a picture of the lawyer, or a map of the office location. This rule permits a lawyer or law firm to indicate areas of practice in communications about the lawyers or law firms services, such as in a telephone directory or other advertising, provided the advertising lawyer or law firm actually practices in those areas of law at the time the advertisement is disseminated. If a lawyer practices only in certain fields, or will not accept matters except in such fields, the lawyer is permitted so to indicate. However, no lawyer who is not certified by The Florida Bar, by another state bar with comparable standards, or an organization accredited by The Florida Bar may be described to the public as a "specialist" or as "specializing," "certified," "board certified," being an "expert" or having "expertise in," or any variation of similar import. A lawyer may indicate that the lawyer concentrates in, focuses on, or limits the lawyer's practice to particular areas of practice as long as the statements are true. Under this Rule a lawyer is allowed to pay for advertising permitted by this rule but is not permitted to pay or provide other tangible benefits to another person for procuring professional work. However, a legal aid agency or prepaid legal services plan may pay to advertise legal services provided under its auspices. Likewise, a lawyer may participate in lawyer referral programs and pay the usual fees charged by such programs. This rule does not prohibit paying regular compensation to an assistant, such as a secretary or advertising consultant, to prepare communications permitted by this rule. As to the required disclosures, such disclosures would be ineffective if they appeared in an advertisement so briefly or minutely as to be overlooked or ignored. Thus, required information must be legible if written or intelligible if spoken aloud to ensure that the recipient receives the information.

RULE 4-7.4 DIRECT CONTACT WITH PROSPECTIVE CLIENTS

(a) Solicitation. Except as provided in subdivision (b) of this rule, a lawyer shall not solicit professional employment from a prospective client with whom the lawyer has no family or prior professional relationship, in person or otherwise, when a significant motive for the lawyers doing so is the lawyers

pecuniary gain. A lawyer shall not permit employees or agents of the lawyer to solicit in the lawyers behalf. A lawyer shall not enter into an agreement for, charge, or collect a fee for professional employment obtained in violation of this rule. The term "solicit" includes contact in person, by telephone, telegraph, or facsimile, or by other communication directed to a specific recipient and includes (i) any written form of communication directed to a specific recipient and not meeting the requirements of subdivision (b) of this rule, and (ii) any electronic mail communication directed to a specific recipient and not meeting the requirements of subdivision (c) of rule 4-7.6. This part of the Rule appears to conflict directly with Shapero and in fact mirrors the rule in that case that the Supreme Court struck down as to unsolicited written communications.

(b)

Written Communication Sent on an Unsolicited Basis. (1) A lawyer shall not send, or knowingly permit to be sent, on the lawyers behalf or on behalf of the lawyers firm or partner, an associate, or any other lawyer affiliated with the lawyer or the lawyers firm, an unsolicited written communication directly or indirectly to a prospective client for the purpose of obtaining professional employment if: (A) the written communication concerns an action for personal injury or wrongful death or otherwise relates to an accident or disaster involving the person to whom the communication is addressed or a relative of that person, unless the accident or disaster occurred more than 30 days prior to the mailing of the communication; (B) the written communication concerns a specific matter and the lawyer knows or reasonably should know that the person to whom the communication is directed is represented by a lawyer in the matter; (C) it has been made known to the lawyer that the person

does not want to receive such communications from the lawyer; (D) the communication involves coercion, duress, fraud, overreaching, harassment, intimidation, or undue influence; (E) the communication contains a false, fraudulent, misleading, or deceptive statement; or (F) the lawyer knows or reasonably should know that the physical, emotional, or mental state of the person makes it unlikely that the person would exercise reasonable judgment in employing a lawyer. (2) Written communications to prospective clients for the purpose of obtaining professional employment are subject to the following requirements: (A) Written communications to a prospective client are subject to the requirements of rule 4-7.2. (B) The first page of such written communications shall be plainly marked "advertisement" in red ink, and the lower left corner of the face of the envelope containing a written communication likewise shall carry a prominent, red "advertisement" mark. If the written communication is in the form of a self-mailing brochure or pamphlet, the "advertisement" mark in red ink shall appear on the address panel of the brochure or pamphlet and on the inside of the brochure or pamphlet. Brochures solicited by clients or prospective clients need not contain the "advertisement" mark. (C) Written communications mailed to prospective clients shall be sent only by regular U.S. mail, not by registered mail or other forms of restricted delivery. (D) Every written communication shall be accompanied by a written statement detailing the background, training and experience of the lawyer or law firm. This statement must include information about the specific experience of the

advertising lawyer or law firm in the area or areas of law for which professional employment is sought. Every written communication disseminated by a lawyer referral service shall be accompanied by a written statement detailing the background, training, and experience of each lawyer to whom the recipient may be referred. (E) If a contract for representation is mailed with the written communication, the top of each page of the contract shall be marked "SAMPLE" in red ink in a type size 1 size larger than the largest type used in the contract and the words "DO NOT SIGN" shall appear on the client signature line. (F) The first sentence of any written communication prompted by a specific occurrence involving or affecting the intended recipient of the communication or a family member shall be: "If you have already retained a lawyer for this matter, please disregard this letter." (G) Written communications shall not be made to resemble legal pleadings or other legal documents. This provision does not preclude the mailing of brochures and pamphlets. (H) If a lawyer other than the lawyer whose name or signature appears on the communication will actually handle the case or matter, any written communication concerning a specific matter shall include a statement so advising the client. (I) Any written communication prompted by a specific occurrence involving or affecting the intended recipient of the communication or a family member shall disclose how the lawyer obtained the information prompting the communication. The disclosure required by this rule shall be specific enough to help the recipient understand the extent of the lawyers knowledge regarding the recipients particular situation. (J) A written communication seeking employment by a

specific prospective client in a specific matter shall not reveal on the envelope, or on the outside of a self-mailing brochure or pamphlet, the nature of the clients legal problem. Using the Shapero as a guide, the question becomes whether the foregoing rules are so narrowly drawn so as to not unduly restrict commercial speech by a lawyer and at the same time carry forward a legitimate public interest in preventing false and deceptive communications. The Comment to this Rule states: Direct written communications seeking employment by specific prospective clients generally present less potential for abuse or overreaching than in-person solicitation and are therefore not prohibited for most types of legal matters, but are subject to reasonable restrictions, as set forth in this rule, designed to minimize or preclude abuse and overreaching and to ensure lawyer accountability if such should occur. This rule allows targeted mail solicitation of potential plaintiffs or claimants in personal injury and wrongful death causes of action or other causes of action that relate to an accident, disaster, death, or injury, but only if mailed at least 30 days after the incident. This restriction is reasonably required by the sensitized state of the potential clients, who may be either injured or grieving over the loss of a family member, and the abuses that experience has shown exist in this type of solicitation.
RULE 4-7.6 COMPUTER-ACCESSED COMMUNICATIONS

(a) Definition. For purposes of this subchapter, computer-accessed communications are defined as information regarding a lawyers or law firms services that is read, viewed, or heard directly through the use of a computer. Computer-accessed communications include, but are not limited to, Internet presences such as home pages or World Wide Web sites, unsolicited electronic mail communications, and information concerning a lawyers or law firms services that appears on World Wide Web search engine screens and elsewhere. (b) Internet Presence. All World Wide Web sites and home pages accessed via the Internet that are controlled or sponsored by a lawyer or law firm and that contain information concerning the lawyers or law firms services:

(1) shall disclose all jurisdictions in which the lawyer or members of the law firm are licensed to practice law; (2) shall disclose 1 or more bona fide office locations of the lawyer or law firm, in accordance with subdivision (a)(2) of rule 4-7.2; and (3) are considered to be information provided upon request. (c) Electronic Mail Communications. A lawyer shall not send, or knowingly permit to be sent, on the lawyers behalf or on behalf of the lawyers firm or partner, an associate, or any other lawyer affiliated with the lawyer or the lawyers firm, an unsolicited electronic mail communication directly or indirectly to a prospective client for the purpose of obtaining professional employment unless: (1) the requirements of subdivisions (b)(1), (b)(2)(A), (b)(2)(E), (b)(2)(F), (b)(2)(G), (b)(2)(I), and (b)(2)(J) of rule 4-7.4 are met; (2) the communication discloses 1 or more bona fide office locations of the lawyer or lawyers who will actually perform the services advertised, in accordance with subdivision (a)(2) of rule 4-7.2; and (3) the subject line of the communication states legal advertisement. (d) Advertisements. All computer-accessed communications concerning a lawyers or law firms services, other than those subject to subdivisions (b) and (c) of this rule, are subject to the requirements of rule 4-7.2. This Rule applies some of the restrictions applicable to unsolicited direct mail solicitation of potential clients to unsolicited e-mail communications and the like. The broad design of this Rule is the same -prevent false and misleading communications. The Comment to this Rule states: unsolicited electronic mail messages from lawyers to prospective clients are functionally comparable to direct mail communications and thus are governed by similar rules. Additionally, communications advertising or promoting a lawyers services that are posted on search engine screens or elsewhere by the lawyer, or at the lawyers behest, with the hope that they will be seen by prospective clients are simply a form of lawyer advertising and are treated as

such by the rules. RULE 4-7.7 EVALUATION OF ADVERTISEMENTS (a) Filing and Advisory Opinion. Subject to the exemptions stated in rule 4-7.8, any lawyer who advertises services through any public media or through written communications sent on an unsolicited basis to prospective clients shall file a copy of each such advertisement with The Florida Bar at its headquarters address in Tallahassee for evaluation of compliance with these rules. The first part of this Rule deals with television and radio advertising. The following part deals with unsolicited written communications

(2) Other Advertisements: (A) Filing and Review. All other advertisements required to be filed for review must be filed either prior to or concurrently with the lawyers first dissemination of the advertisement or written communication. (B) Voluntary Prior Filing. A lawyer may obtain an advisory opinion concerning the compliance of a contemplated advertisement or written communication that is not required to be filed prior to its first use in advance of disseminating the advertisement or communication by submitting the material and fee specified in subdivision (b) of this rule to The Florida Bar at least 15 days prior to such dissemination. If The Florida Bar finds that the advertisement complies with these rules, the lawyers voluntary submission shall be deemed to satisfy the filing requirement set forth in this rule. (C) Evaluation of Advertisements. The Florida Bar shall evaluate all advertisements and written communications filed with it pursuant to this subdivision for compliance with the applicable rules set forth in this subchapter 4-7. The Florida Bar shall complete its evaluation within 15 days of receipt of a complete filing unless The Florida Bar determines that there is

reasonable doubt that the advertisement or written communication is in compliance with the rules and that further examination is warranted but cannot be completed within the 15-day period, and so advises the filer within the 15-day period. In the latter event, The Florida Bar shall complete its review as promptly as the circumstances reasonably allow. If The Florida Bar does not send any communication to the filer within 15 days of receipt of a complete filing, the advertisement will be deemed approved. The 15-day evaluation period shall not apply to advertisements that are exempt from the filing requirement as set forth in rule 4-7.8, but The Florida Bar shall complete its review as promptly as the circumstances reasonably allow. A lawyer may not obtain an advisory opinion concerning communications that are not subject to subchapter 4-7 as listed in rule 4-7.1(d) through (f). (D) Substantiating Information. If requested to do so by The Florida Bar, the filing lawyer shall submit information to substantiate representations made or implied in that lawyers advertisement or written communication. (E) Notice of Noncompliance. When The Florida Bar determines that an advertisement or written communication is not in compliance with the applicable rules, The Florida Bar shall advise the lawyer that dissemination or continued dissemination of the advertisement or written communication may result in professional discipline. (F) Reliance on Notice of Compliance. A finding of compliance by The Florida Bar shall be binding in a grievance proceeding, unless the advertisement contains a misrepresentation that is not apparent from the face of the advertisement. (b) Contents of Filing. A filing with The Florida Bar as required or permitted by subdivision (a) shall consist of: (1) a copy of the advertisement or communication in the form or forms in which it is to be disseminated and is readily capable of duplication by The Florida Bar (e.g., videotapes, audiotapes, print media, photographs of outdoor advertising);

(2) a transcript, if the advertisement or communication is on videotape or audiotape; (3) a printed copy of all text used in the advertisement; (4) an accurate English translation, if the advertisement appears in a language other than English; (5) a sample envelope in which the written communication will be enclosed, if the communication is to be mailed; (6) a statement listing all media in which the advertisement or communication will appear, the anticipated frequency of use of the advertisement or communication in each medium in which it will appear, and the anticipated time period during which the advertisement or communication will be used; and (7) a fee paid to The Florida Bar, in an amount of $150 for submissions timely filed as provided in subdivision (a), or $250 for submissions not timely filed. This fee shall be used to offset the cost of evaluation and review of advertisements submitted under these rules and the cost of enforcing these rules. (c) Change of Circumstances; Refiling Requirement. If a change of circumstances occurring subsequent to The Florida Bar's evaluation of an advertisement or written communication raises a substantial possibility that the advertisement or communication has become false or misleading as a result of the change in circumstances, the lawyer shall promptly refile the advertisement or a modified advertisement with The Florida Bar at its headquarters address in Tallahassee along with an explanation of the change in circumstances and an additional fee set by the board of governors but not exceeding $100. (d) Maintaining Copies of Advertisements. A copy or recording of an advertisement or written or recorded communication shall be submitted to The Florida Bar in accordance with the requirements of rule 4-7.7, and the lawyer shall retain a copy or recording for 3 years after its last dissemination along with a record of when and where it was used. If identical written communications are sent to 2 or more

prospective clients, the lawyer may comply with this requirement by filing 1 of the identical written communications and retaining for 3 years a single copy together with a list of the names and addresses of persons to whom the written communication was sent. This Rule is in line with the suggestion made in the Shapero case. According to the Comment to this Rule: This rule has a dual purpose: to enhance the courts and the bars ability to monitor advertising practices for the protection of the public and to assist members of the bar to conform their advertisements to the requirements of these rules. It is important to note that as to unsolicited written communications which may voluntarily be submitted or television and radio advertisements which must be submitted for a prior review, the opinion will be binding on The Florida Bar, including any grievance or disciplinary proceeding, unless the written communication or the advertisement contain a misrepresentation that is not apparent from the face of the advertisement.

RULE 4-7.8 EXEMPTIONS FROM THE FILING AND REVIEW REQUIREMENT

The following are exempt from the filing requirements of rule 4-7.7: (a) any advertisement in any of the public media, including the yellow pages of telephone directories, that contains neither illustrations nor information other than permissible content of advertisements listed in rule 4-7.2(b). (b) a brief announcement in any of the public media that identifies a lawyer or law firm as a contributor to a specified charity or as a sponsor of a public service announcement or a specified charitable, community, or public interest program, activity, or event, provided that the announcement contains no information about the lawyer or law firm other than permissible content of advertisements listed in rule 4-7.2(b) and the fact of the sponsorship or contribution. In determining whether an announcement is a public service

announcement for purposes of this rule and the rule setting forth permissible content of advertisements, the following are criteria that may be considered: (1) whether the content of the announcement appears to serve the particular interests of the lawyer or law firm as much as or more than the interests of the public; (2) whether the announcement contains information concerning the lawyer's or law firm's area of practice, legal background, or experience; (3) whether the announcement contains the address or telephone number of the lawyer or law firm; (4) whether the announcement concerns a legal subject; (5) whether the announcement contains legal advice; and (6) whether the lawyer or law firm paid to have the announcement published. (c) a listing or entry in a law list or bar publication. (d) a communication mailed only to existing clients, former clients, or other lawyers. (e) professional announcement cards stating new or changed associations, new offices, and similar changes relating to a lawyer or law firm, and that are mailed only to other lawyers, relatives, close personal friends, and existing or former clients. (f) computer-accessed communications as described in subdivision (b) of rule 4-7.6. See, The Florida Bar v. Doe, 634 So.2d 160 (Fla. 1994).

ETHICS ALERT: PROVIDING LEGAL SERVICES TO DISTRESSED HOMOOWNERS

The Florida Bars Ethics Hotline recently has received numerous calls from lawyers who have been contacted by non-lawyers seeking to set up an arrangement in which the lawyers are involved in loan modifications, short sales, and other foreclosurerelated rescue services on behalf of distressed homeowners. These non-lawyers include mortgage brokers, financial management advisors, foreclosure consultants and others who engage in foreclosure related rescue services or other similar services. Non-lawyers have proposed a variety of agreements, even offering to hire lawyers as in-house counsel to provide services to the non-lawyer's customers. The Foreclosure Rescue Act, Section 501.1377, Florida Statutes, went into effect October 1, 2008 and imposed restrictions on non-lawyer loan modifiers to protect distressed homeowners. The new statute appears to be the impetus for these inquiries. Lawyers should be wary of these proposals, as many violate the ethics rules and may subject the lawyer to discipline. Florida Bar members: Cannot pay a referral fee or give anything of value to a nonlawyer for referring distressed homeowners to the lawyer. [Rule 4-7.2(c)(14)] Cannot be paid by a non-lawyer to provide services to distressed homeowners. [Rule 4-5.4(a)] Cannot directly or indirectly divide fees with a non-lawyer. [Rule 4-5.5(a)] Cannot assist in the unauthorized practice of law by: providing legal services for a distressed homeowner while employed as in-house counsel for a non-lawyer company; forming a company with a non-lawyer to perform foreclosure related services if any of the services are the practice of law; or assisting a non-lawyer individual or company in providing services that the individual or company is not authorized to provide or are otherwise illegal. [Rule 4-5.5(a)]

Cannot assist a non-lawyer in violating the provisions of the Foreclosure Rescue Act, Section 501.1377, Florida Statutes. [Rule 4-8.4(d)] Cannot directly contact distressed homeowners to offer representation (including by telephone or facsimile) and cannot allow someone else to directly contact distressed homeowners on the lawyers behalf. [Rules 4-7.4(a) and 4-8.4(a)]

Cannot accept referrals from non-lawyers acting in the guise of a lawyer referral service (legitimate lawyer referral services must comply with a rule which requires all advertisements and contact with prospective clients to be in compliance with the attorney advertising rules, in addition to other requirements) [Rule 4-7.10]

Must have a direct relationship with distressed homeowners who hire the lawyer for representation. [Rules 4-1.1, 4-1.2 and 4-1.4] Cannot allow a non-lawyer to choose a lawyer for a distressed homeowner or direct a lawyers representation of a distressed homeowner. [Rules 4-1.1, 4-1.2, 4-1.4, and 4-5.5(a)] This alert does not address every potential problem or concern. Lawyers should not assume that conduct is permissible merely because it is not listed aboveThis alert also does not address the issue of what conduct by non-lawyers is permissible. This opinion misinterprets Rule 4-7.4 as a w hole and w ould not be in accord w ith the Shapero case. Rule 4-7 does not ban unso licited w ritt en com m uni cation s to pot entia l client s but rath er restricts th e m anner of such com m unicat ions.

ADDITIONALRESOURCES: AnnualPercentageRateCalculationProgram forWindows(APRWIN) TheWindowsbasedversionoftheAnnual PercentageRateprogram(APRWINv6.2 Released5/2008)isanefficienttoolfor verifyingannualpercentageratesand reimbursementadjustments.Thisversion includesrelevantfinancechargeandAPR tolerancesforverifyingtheaccuracyofannual percentageratesandfinancechargesonloans securedbyrealestateoradwelling. http://www.occ.treas.gov/aprwin.htm
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Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com

CONTACTINFORMATION: JamesA.Bonfiglio,Esq. LawOfficeofJamesA.Bonfiglio,P.A. 777SouthFlaglerDriveSuite800 PhillipsPointWestTowers WestPalmBeach,FL33401 Telephone:5617344503 Fax:5617341872 Email:TILALawyer@aol.com Website:http://www.fightforeclosure.com Seminars:http://www.fightforeclosurecle.com

Law Offices of James A. Bonfiglio 2009 Telephone: (561) 734-4503 | Email: TILALawyer@aol.com