Florida Supreme Court Annuls Ownership of Third Circuit: Note Replaces Mortgage in Conflict | Trout pepper


IN Funding WVMF against Palmero, Florida Supreme Court overturned Third Circuit Court of Appeals ruling in OneWest Bank, FSB v. Palmero, 283 So. 3d 346 (Fla. 3d DCA 2019) that Ms. Palmero was the “borrower” on the mortgage “legally”. In its order, the Court emphasized that, in accordance with Graham vs. Fitts as well as Hotel Mgmt. Co. v. Krickle, “The mortgage deed should be read in conjunction with the note it provides” and “the note shall prevail in the event of a conflict.”

In this case, Mr. Roberto Palmero and Ms. Luisa Palmero signed five documents concerning the reverse mortgage for their primary residence and estate: (1) an application for a home loan; (2) an equity conversion loan agreement; (3) an adjustable rate bill; (4) proof of ownership of the spouse who is not the borrower; and (5) reverse mortgages.

The loan application, the equity conversion loan agreement and the promissory notes were solely signed by Mr. Palmero and identified as the sole borrower. Of particular importance is that the note defines “borrower” as “each person who signs at the end of this note”.

Both Mr. and Mrs. Palmero signed a certificate of ownership of the non-borrower spouse and a reverse mortgage. Although the certificate identified Ms Palmero as a “non-borrower spouse” and the certificate and mortgage identified Roberto Palmero as the “borrower”, Ms Palmero signed the mortgage deed under the proposal in the mortgage that said: “SUBSCRIBE BELOW, Borrower. accepts and agrees to the terms and conditions contained in this safety tool and in any riders executed by and recorded with the Borrower. “

Subsequently, Mr. Palmero passed away, which led to an acceleration in the payment of the debt to the maturity date. When his estate failed to pay off the loan, OneWest (predecessor on behalf of WVMF Funding) attempted to foreclose on him. Ms Palmero and her two children (the defendants) argued that Ms Palmero was a co-borrower on the mortgage and thus foreclosure of the property was not permitted. They referred to the following language in the note and mortgage regarding the terms of debt collection: “The borrower dies and [mortgaged] The real estate is not the primary residence of at least one surviving Borrower. ”

The trial court ruled that Ms Palmero was not a “co-borrower” but refused to transfer the foreclosure “on the basis of federal law governing reverse mortgage insurance by the Secretary of the Department of Housing and Urban Development”. On appeal, the Third Circuit ruled that the trial court erred in refusing to foreclose on the basis of the relevant federal law. However, it ruled that the Third Circuit was mistaken in finding that Ms. Palmero was not a “co-borrower” – considering, “legally”, that the mortgage identified her as a “borrower.” The Supreme Court has found jurisdiction to resolve “the apparent and direct conflict between the decision of the Third Circuit and our decisions in Graham as well as Krickl… “He overturned the Third Circuit Court of Appeals ruling that Ms. Palmero was a” borrower “on a mortgage” by law. “

The Supreme Court ruled that Ms. Palmero’s signature on the mortgage does not make her a “co-borrower” on the mortgage from a legal point of view. Emphasizing their positions in Graham as well as KricklThe court ruled that the courts must read the mortgage and the note together and must “refer to the note to resolve any conflict.” Here it emerged that both the bills and the mortgage identified Mr. Palmero as the “borrower.” Thus, the definition in the note of Mr Palmero as sole borrower is considered to have resolved the conflict between Ms Palmero’s signature on the mortgage and the definition of “borrower” in the note. He found that the defendants ‘argument (and the dissenting judges’ argument) that the precedent arose in Graham as well as Krickl applies only to “traditional mortgages” unconvincingly.

Accordingly, he overturned the Third Circuit ruling that Ms. Palmero was a “surviving co-borrower” and noted the disapproval of the Third Circuit decisions in Smith vs. Reverse Mortgages Solutions, Inc. as well as Edwards vs. Reverse Mortgage Solutions, Inc.., to the extent that they are incompatible with the judgment of the Court.

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