The Florida Supreme Court will decide whether financial firms can escape or remedy allegations of fraud in foreclosure proceedings by voluntarily dismissing the case.
The case is a landmark in Florida since many financial firms rely on the dismissal-refile option to fix issues stemming from foreclosure complaints.
The case that sparked this legal question — Roman Pino v. The Bank of New York Mellon (BK) — will be heard by Florida's highest court on Thursday.
The final decision could significantly impact foreclosures in the state if the Supreme Court decides banks cannot evade issues of alleged fraud associated with foreclosure processing by simply dismissing the foreclosure complaint and starting over again.
In other words, the plaintiff, Pino, wants the justices to decide whether a court can ignore a voluntary dismissal of a foreclosure case when fraud allegations are in play. A decision not to ignore the dismissal would making it possible for the courts to still sanction financial firms.
The original case involves a Florida man, Roman Pino, who claimed an unrecorded mortgage assignment made a foreclosure action filed against him fraudulent.
When Pino attempted to address the fraud issue in state court, BNY Mellon, as trustee overseeing the mortgage, voluntarily dismissed the foreclosure case and refiled it with corrections, according to court records.
Pino wanted the trial court to give him a chance to present the fraud allegations, but the trial court and subsequent judges held that the voluntary dismissal of the foreclosure terminated the issue.
The case is now in front of the Florida Supreme Court.
The Mortgage Bankers Association filed a friend-of-the-court brief with the Florida Supreme Court, warning that a move away from voluntary foreclosure dismissals would upend foreclosures in the state.
The MBA fears that radical changes in the foreclosure process in Florida will jeopardizes the nascent housing recovery in the state.
"The amici’s members rely on the stability and consistency of Florida law in order to advance foreclosure proceedings efficiently and fairly," the MBA wrote in its legal brief. "An affirmative answer to the certified question would impact general credit and lending practices, just as the fragile real estate finance industry begins to rebound from a severe economic downturn."