Written by attorney Richard Paul Zaretsky


Getting a house free and clear of a mortgage obligation to pay back money seems inequitable - and it is. Make no doubt about it, it is absolutely unfair. There is no moral right to "stick it to the bank". But legally it is a reality. The law and process as explained below, is about creating order out of chaos and consistency out of randomness. That is the reason for laws within society. It is so everyone knows the rules and is guided by them in their dealings, whether business, marriage or criminal acts. The reason for the statute of limitations on obligations is that no person should have to defend against some alleged wrong done to another for an indefinite period of time, usually because evidence can become stale, or in the case of a promissory note, so there is some finality to the transaction.

The Prediction -

Two things that we predicted were coming on the foreclosure horizon are coming true: 1) That the statute of limitations on the collection of promissory notes would allow the invalidation of mortgages, and 2) That borrowers with short sale deficiencies that were not forgiven would become harassed by lenders and sued for those monies.

Getting the House for Free:

The too good to be true scenario of "getting the house for free" has been touted by several scams, especially in Florida, that used concepts of Land Trusts and Constitutional Rights to razzle dazzle borrowers into paying them thousands of dollars to make their mortgages go away. As reported in my blogs and in numerous newspaper articles, as wells as being the target of civil and criminal complaints by bilked borrowers and the Attorney General's Office (Florida), these scams are finally being exposed as fraudulent and predatory businesses preying on the borrower in distress with phoney unworkable solutions.

But the concept of "getting the house for free" is not pie in the sky. It exists. It happens. And it is going to happen (in Florida) for thousands of borrowers over the next few years. Here's why.

Lost in the Cracks -

In 2008 and 2009, the beginning of the flood of foreclosue filings, the lenders had to file foreclosure cases the the tens of thousands per month. This volume of foreclosure filings many times more than had ever been filed monthly - by a vast factor. The infrastructure to handle this volume did not exist - neither at the lenders nor at the law firms that had been doing the foreclosures for the banks in the past. The rapid expansion of personnel to handle the flood of cases meant untrained or undertrained people were given the task of preparing the files for the attorneys to foreclose, and the attorneys were inundated with too many files to effectively handle competently. The banks pushed the attorneys to do more for less money and the attorneys couldn't say no to litterally millions of dollars in sudden revenue from the lenders.

The result was that files were improperly documentated (yes, robo-signing is part of that), or documents were misplaced, or files were put in file draws and never saw the light of day again. Although all these cases were supposed to have "timelines" adheared to by the attorneys, the reality was that the attorneys' goal was to initiate new cases (and start the revenue stream) than finish existing cases.

Our Experiences - The Bale of Hay

My law firm represents borrowers in distress, but we also represent lenders needing foreclosure representation in Florida. In addition, we represent investors that buy packages of mortgages from lenders. Let me explain that last one.

Almost everyone now knows about the "packaging" of mortgages and there being portfolios of thousands of mortgages in "security bundles" or "bonds" that were then sold in "units" to investors worldwide. These bundles are essentially a "commodity" or sort of like a bale of hay. Each strand of staw is a mortgage.

What next happened is that when the mortgage market for these bonds went south, the bales of hay were taken apart and made into smaller bags of hay. Each bag contains a fraction of the number of mortgages in the bale. This was done so smaller investors (those with millions instead of billions to invest) would buy these bags at some discount to the face value of the mortgages. Why a discount? The discount was because many of the mortgages in the bale, and now the smaller bags, were now over-valued (meaning the mortgage was for more than the home was worth), and therefore not worth the face amount of the mortgage.

When one of our clients is researching a bag of mortgages, they hire us to review the mortgages in the bag to determine if there is a good chance that the mortgage can be successfully foreclosed.

In our "due diligence" of the mortgages in the bag of mortgages, we sometimes see a mortgage that would qualify for a quiet title action to remove the encumbrance (lien) of the mortgage on the house because the promissory note was declared in default more than 5 years prior to our investigation. Amazingly, this is not that rare an occurence! If a mortgage was put into default back in 2008 or 2009, the borrower should be consulting with an attorney to understand what laws may be able to help them in the most amazing ways!

Statute of Limitations -

The Florida statute of limitations on the collection of a mortgage has more to do with the promissory note than the mortgage. I have explained the difference between a mortgage and a promissory note in a previous articles. Essentially, if the promissory note cannot be enforced, the collateral for the promissory note should be cancelled. The quiet title action is the judicial mechanism to get that cancellation accomplished when the lender refuses to do it voluntarily. In its simplest concept, imagine the promissory note is a cow, and the mortgage is the cow's tail. The cow can live without its tail, but the tail cannot exist without the cow. Thus, no enforceable promissory note means no enforceable mortgage. Some discussion on this issue can be found in my other articles. See these links: QUIET TITLE IN FLORIDA - A SUCCESSFUL CASE STUDY and how NOT to do a quiet title at ** QUIET TITLE SCHEME GONE WRONG MAKES ATTORNEY GO MISSING and**** QUIET TITLE MORTGAGE FORECLOSURE DEFENSE MERITLESS IN FLORIDA**

Success in Florida on Legitimate Quiet Title Actions -

Newspapers have recently begun reporting successful quiet title actions based on actual service of process upon the lender as well as valid statute of limitations factual basis. This scenario can benefit the condominium association or homeowners association that filed its own foreclosure action and acquired title to the property by foreclosure sale - but subject to the first mortgage of the delinquent owner; or a homeowner that literally is going to get the house for "free".

Isn't this an INEQUITABLE Result?

From a lawyer's perspective, yes. this is inequitable. But it is the law. In fact, just this June Florida enacted an amendment to its foreclosure laws regarding the statute of limitations. As I had written years ago in my blog, a deficiency after a foreclosure sale could be sought up to 5 years after the foreclosure sale. In Florida this law has now been changed so that a deficiency can now be sought only for 1 year after the foreclosure sale. The result to a lender that waits more than one year to enforce the unpaid portion of the promissory note is that they can no longer pursue it in a court of law. Inequitable? Maybe, but it brings finality to the parties' dispute.

© 2013 Richard P Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 [email protected]- FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! [email protected]New Website

See our easy to find articles at


Additional resources provided by the author

Free Q&A with lawyers in your area

Can’t find what you’re looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer