FL 2nd DCA: NOWLIN v NATIONSTAR – Fraudclosure Judgement Reversed – Offer, Acceptance, Consideration

This is an interesting one, not only for the issues raised by the parties, but for the issue raised by the appellate judges.

It is also a perfect example of how millions of homeowners were induced into foreclosure by servicers gaming the system through the loan modification process.

(emphasis added)

BAC Home Loans Servicing filed an amended foreclosure complaint against the Nowlins which alleged that the Nowlins defaulted on a mortgage and promissory note that were executed on October 7, 2002. BAC alleged that the installment payment due on August 1, 2009, was not received, and no subsequent payments had been received. BAC later transferred its right to enforce the loan to Nationstar, and Nationstar was substituted as the plaintiff on July 28, 2014.

At the subsequent bench trial, the Nowlins testified that BAC modified their mortgage in July 2009. Prior to this, the Nowlins had never missed a payment and had never made a late payment. On July 28, 2009, BAC, through its Home Retention Division, issued a letter to the Nowlins which states, “We are pleased to advise you that your loan modification has been approved. In order for the modification to be valid, the enclosed documents need to be signed and returned.” Two documents had to be returned: a Step Rate Loan Modification Addendum to Loan Modification Agreement and a Loan Modification Agreement. The modification documents were signed, notarized, and sent back to BAC via Federal Express. The Nowlins used the Federal Express envelope which was provided to them by BAC. The Nowlins produced a receipt from Federal Express indicating that the envelope was shipped on August 17, and that it was received on August 18, 2009.

The Nowlins were also required to send to BAC cashier’s checks for three consecutive mortgage payments beginning on October 1. They were informed that after the third payment was received, the modification would become permanent. The Nowlins introduced a certified check that was cashed by BAC on September 9 for the first payment that was due on October 1. Two other certified checks were introduced into evidence which had been cashed by BAC for the payments due on November 1 and December 1.

Despite the Nowlins’ compliance with the terms of the modification agreement, BAC sent a letter to the Nowlins in December 2009, notifying them that BAC was going to accelerate their loan because the August 1, 2009, payment had not been received. When Ms. Nowlin called to find out why the modification was cancelled, BAC informed her that the modification had been cancelled in November, and they would have to obtain another modification. The Nowlins sent in the paperwork for the second loan modification, but BAC claimed that the paperwork was not in their file.

BAC specifically defined what actions would constitute an acceptance of its offer to modify the mortgage contract. The Nowlins were required to sign and return the documents provided by BAC, and they were required to make three monthly payments beginning on October 1, 2009. The Nowlins testified that they returned the signed documents in the Federal Express envelope provided by BAC, and they produced a receipt from Federal Express indicating that the envelope was shipped on August 17 and that it was received on August 18, 2009.

At trial, Nationstar did not dispute the contents of the July 28 letter, the fact that a Federal Express envelope was enclosed to facilitate the return of the loan documents, or the fact that Federal Express delivered a package to a Pittsburgh address and its Home Retention Division address is 100 Beecham Drive, Suite 104, Pittsburgh, Pennsylvania. Rather, its default specialist testified that Nationstar had no record of receiving the loan modification documents. Therefore, it contended, the Nowlins must not have returned the loan modification documents. We do not find merit in this argument, because it was the mailing of the documents that constituted an acceptance of the offer, not whether Nationstar’s records showed that the documents were received(Love that last sentence by the way. Banks always use that argument for the default letters)

Finally, the evidence reflected, without contradiction, that subsequent to the mailing of the loan modification documents, the Nowlins tendered three consecutive monthly payments in the amount required by BAC. Nationstar’s witness confirmed that each of the Nowlins’ three payments had been received and accepted. When a party accepts the benefits under a contract, courts must ratify the contract even if that party contends that it had a contrary intent.

Thus, by accepting the benefits of the loan modification, Nationstar cannot now question the validity of the contract. Having entered into a valid modification agreement, Nationstar could only foreclose by alleging and proving a breach of the modification agreement and neither of which was done here.

And here is where it gets really interesting…

FINAL JUDGMENT (emphasis added)

Although not raised by the parties, we are greatly concerned over the final judgment issued in this case. The trial transcript reflects that the proceedings were heard before the Honorable Sandra Taylor. At the conclusion of the foreclosure trial, she made no findings of fact or rulings of law. However, the final judgment purports to have been rendered by the Honorable Donald C. Evans, Senior Judge. Nothing in our record establishes or even hints at why a judge, other than the trial judge, entered this final judgment. The entry of a final judgment by a judge who did not preside over the trial, without more, is improper.

Rubber stamping judgments is still alive and well!


We reverse the final judgment of foreclosure and remand with directions to enter judgment in favor of the Nowlins.

Full opinion below…