Bank Uses Business Records Exception to Overcome Hearsay Exception and Foreclose Property

Deutsche Bank National Trust Company, etc. v. Maria de Brito, 2017 WL 5163048 (Fla. 3d DCA Nov. 8, 2017)

In 2006, Mr. and Mrs. Brito, agreed to a modification of an adjustable rate mortgage through a principal only payment plan. The plan called for the interest portion of the loan to be deferred and added to the loan’s outstanding principal balance.

The lender reserved the right to adjust the interest rate at any time in the plan. For the next two years, the Britos made the required payments. Then, in 2008, Ocwen, the servicing agent for the lender, rejected a payment and returned the check to the Britos. Ocwen waited two years to notify the Britos in writing that they were in default of their loan and what steps were necessary to reinstate the loan.

When the Britos did not respond, the lender filed a foreclosure action. Two days before the trial, the Britos took the deposition of an Ocwen representative. At the trial, the Ocwen representative testified about the loan process, the payment history, and the notice of default on the loan. The trial court was given a copy of the original mortgage and the default letter that was sent to the Britos.

The trial court determined that Ocwen’s testimony was hearsay and the lender failed to prove that notice was sent to the Britos about the default. Consequently, the trial court dismissed the case in favor of the Britos.

On appeal, the Third District Court of Appeal reversed the trial court’s hearsay decision that excluded Ocwen’s testimony during the trial on the basis of the business records exception. This exception allows for a party to introduce business records that would normally not be allowed. Section 90.803(6), Florida Statue does not require the person providing the business record be the actual person who prepared the record. The person testifying on behalf of the records may be a records custodian or other qualified witness.

Section 90.803(6), Florida Statute requires that the records being introduced must have been made at or around the time of the event being discussed; the person communicating the information for that record had personal knowledge of the event; the records are kept in the ordinary course of a regularly conducted business activity; and the business has a regular practice to maintain such records.

The Third District also addressed the trial court’s determination that the lender had failed to prove the existence of a default letter being sent to the Britos because this issue was never raised during the proceeding. The Third District directed that a final judgment of foreclosure be entered by the trial court in favor of the lender.

It is important to understand exceptions for hearsay. The business exception rule allowed a party to introduce its records and have a witness testify to those records, even if the person was not responsible for creating the record in the first place.

Father gets Second Bite to Stop Paying Child Support

L.G. v. Department of Children and Families, 227 So.3d 653 (Fla. 4th DCA 2017)

In this case, Florida’s Fourth District Court of Appeal reversed an order denying a father’s (L.G.) request to renounce his paternity of a child. While the father and the mother were never married, L.G.’s name was listed as the father on the birth certificate. After a DNA test revealed that L.G. was not the biological father, he asked the trial court to remove him as the father to alleviate any financial obligations to support the child. The trial court denied the request on the basis that another father would first have to assume the paternity of the child and the related support obligations. However, in 2006, the Florida legislature enacted Section 742.18, Florida Statutes that provided a mechanism for paternity to be terminated.

Section 742.18, permits a father to renounce his paternity of a child or terminate a child support obligation, when he is found to not be the biological father. The petitioning father must present newly discovered evidence from the time he had assumed the child support obligations or from the initial paternity determination. A scientific test, such as a DNA test, must be administered within 90 days of the request to terminate or renounce the paternity obligation. Additionally, the petitioning father must be current on all child support payments and cannot have adopted the child.

Because the Statute does not require someone else to first stand in place of the petitioning father and assume the financial obligations for the child, the First District ruled that the trial court erred in its decision to deny L.G.’s petition without giving consideration to the above discussed statutory factors.

This case provides the method that a father can challenge his paternity or terminate his child support obligation without the requirement that another “father” step in and assume the financial responsibility.

Pay Disclosures May Await Brokers Switching Firms

Industry observers expect FINRA may soon begin requiring that highly-paid brokers who are lured from one financial services firm to a competitor must disclose any “enhanced compensation” that sweetened the employment offer. The Wall Street Journal reported on the expected move recently in an article titled “Brokers Face Pay Disclosures.”

FINRA closed comments in March on a proposed rule to require disclosure of conflicts of interest relating to recruitment compensation practices (Regulatory Notice 13-02).

At issue is what brokers must disclose when clients naturally follow them to a new firm on the basis of personal relationships, or when the broker attempts to encourage a client to move their account to the broker’s new place of employment.

The term “enhanced compensation” means compensation paid in connection with the transfer of securities employment to the recruiting firm, other than the compensation normally paid by the recruiting firm to its established registered persons. Enhanced compensation includes but is not limited to:

  • Signing bonuses
  • Upfront or back-end bonuses
  • Loans
  • Accelerated payouts
  • Transition assistance
  • Other similar payments

Investor protection is behind FINRA’s initiative. Many member firms offer significant financial incentives to recruit registered representatives to join their firms, according to FINRA, yet these compensation arrangements are not disclosed to customers when they are asked to transfer their accounts to a representative’s new firm.

Morgan Stanley, with 17,000 financial advisors, “fully supports the uniform disclosure of firms’ recruiting compensation arrangements as outlined in the Rule Proposal,” according to a firm comment letter submitted to FINRA. The University of Miami School of Law Investor Rights Clinic “supports the aims of transparency and disclosure … but would suggest certain modifications.” Click on the link to read all FINRA comment letters.

The proposed FINRA rules are intended to apply to financial services companies regulated by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), state securities authorities, and related firms.

Exemptions are provided for compensation under $50,000 or institutional customer accounts.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

FINRA Board Authorizes Arbitration Panel Changes

The FINRA Board of Governors authorized FINRA to file with the SEC proposed amendments to FINRA Rule 12403 to simplify the panel selection rules.

Rather than requiring the customer to elect a panel selection method, parties in all customer cases with three arbitrators would have the same selection method.

Under this method, all parties would see lists of 10 chair-qualified public arbitrators, 10 public arbitrators and 10 non-public arbitrators. The rules would permit four strikes on each of the public arbitrator lists. However, any party could select an all-public arbitration panel by striking all of the arbitrators on the non-public list.

Alternatively, if the parties leave on the non-public list one or more of the same non-public arbitrators, the parties could have a majority public panel—that is two public and one non-public arbitrator.

Other actions from the FINRA Board’s April 18th meeting include:

  • Beginning with the next FINRA Board meeting in July, designated Board members will host a webcast immediately following the meeting to share key points with investors.
  • The Board authorized FINRA to file with the SEC proposed amendments to the Discovery Guide used in customer arbitration proceedings to provide general guidance on e-discovery issues and product cases, and to clarify existing provisions relating to affirmations.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Checks Going Out to Mortgage Foreclosure Victims

A check for $1,000 may not do much to offset the financial distress associated with a mortgage foreclosure, but that is the most many victims can expect under a recent government program intended to provide compensation for mortgage errors. The payments will range from $300 to $125,000.

Military veterans who incorrectly had their home foreclosed on while they were on active duty will receive the highest payments.

Bank regulators initially planned a review of all qualifying mortgage files, but soon discovered that the number of actual mortgage errors exceeded expectations. The automatic portion of the review was then terminated early. Consumers were allowed to ask for a review of their foreclosure files, and about 439,000 did so. These borrowers are expected to be paid twice as much as those who didn’t seek a review.

Overall, payments of $3.6 billion payable to 4.2 million borrowers are scheduled to begin on April 12 following an agreement reached by the Office of the Comptroller of the Currency and the Federal Reserve Board with 13 mortgage servicers.

Qualifying mortgages must meet the following criteria:

  • Home that were in any stage of the foreclosure process in 2009 or 2010
  • Mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

Mortgage compensation checks will be sent in several waves beginning with 1.4 million checks on April 12.  The final wave is expected in mid-July 2013.  More than 90 percent of the total payments to borrowers at 11 of the 13 servicers are expected to have been sent by the end of April.  Information about payments to borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley will be announced in the near future.

In most cases, borrowers will receive a letter with an enclosed check sent by the Paying Agent—Rust Consulting, Inc.  Some borrowers may receive letters from Rust requesting additional information needed to process their payments.  Previously, Rust sent postcards to the 4.2 million borrowers notifying them of their eligibility to receive payment under the agreement.

Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.

Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement.  Information provided to Rust will only be used for purposes related to the agreement.

Borrowers should beware of scams and anyone asking them to call a different number or to pay a fee to receive payment under the agreement.

Accepting a payment will not prevent borrowers from taking any action they may wish to pursue related to their foreclosure.  Servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting payment.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

Prenuptial Agreements: Put Everything in Writing

A New York State appellate court, in a surprise move, recently rejected a prenuptial agreement. While the family and divorce laws vary from state to state, prenuptial agreements tend to be respected and upheld in most court proceedings when they are properly prepared and executed.

A recent Wall Street Journal article on the topic titled “Shoring Up Your Prenup” contains important reminders when preparing a prenuptial agreement in advance of a wedding:

  • Put everything in writing
  • Give your fiancee plenty of notice
  • Don’t try to keep it all
  • Don’t leave anything out

A prenuptial agreement, entered into before the marriage date, gives each party the comfort of knowing that their wishes are legally binding.

Reaching agreement as to how assets, liabilities, and family obligations will be handled makes it easier for the parties to focus on achieving a mutually supportive marital relationship.

Situations that may cause a prenuptial agreement to be questioned include an execution date very close to the wedding date, or competing claims of verbal agreements not reflected in the legal document. Failure to include significant assets in a prenup also can potentially cause trouble, particularly when there is a disproportionate level of wealth between the two parties.

A family law attorney who is experienced in prenuptial agreements can help a couple avoid common pitfalls that may cause trouble later in the marriage if there is a dispute over asset allocation or care of children.

Click on the link to read our Fact Sheet, Prenuptial Agreements Protect a Second Marriage.

Contact a Florida Prenuptial Agreement Attorney

Every family is different. Fort Lauderdale divorce attorney Marcy Resnik understands the personal and sensitive needs of a person contemplating a second marriage. Contact her to discuss your case.

Margate Commissioner David McLean Suspended

Florida Governor Rick Scott suspended Margate Commissioner David McLean from public office, effective today.

McLean allegedly used his influence in exchange for payment to assist a business owner in applying for an occupational license, among other activities.  Cooperating Witnesses in the case included a commercial property owner of a Margate strip shopping center and a general construction contractor.

McLean appeared in court to plead not guilty on Wednesday, and surrendered to the FBI.

The Governor’s Executive Order of Suspension directs that David McLean is prohibited from performing any official act, duty, or function of public office; from receiving any pay or allowance; and from being entitled to any of the emoluments or privileges of public office during the period of suspension, which period shall be from today, until a further Executive Order is issued, or as otherwise provided by law.

Federal bribery charges brought against Mr. McLean are a result of isolated incidents involving one elected official, according to the City’s website. No employees of the City and no other elected officials are involved. No city, state, or federal funds were misappropriated.

McLean is one of five City Commissioners who are elected “at large” by Margate voters. The Commissioners also serve on the Margate Community Redevelopment Agency (“CRA”) Board. McLean was first elected in 2004, and then re-elected in 2008 and 2012. He was elected as Vice Mayor of Margate from March 16, 2011 and served in that capacity until November 21, 2012.

The Fort Lauderdale Law Firm of  Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

SEC Approves Social Media for Financial Disclosure

Public companies can now use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD), says the SEC, as long as investors are notified of company communication plans.

Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites, according to the SEC. The announcement clarifies that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, Acting Director of the SEC’s Division of Enforcement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

Regulation FD requires companies to distribute material information in a manner reasonably designed to get that information out to the general public broadly and non-exclusively. It is intended to ensure that all investors have the ability to gain access to material information at the same time.

The SEC’s report of investigation stems from an inquiry the Division of Enforcement launched into a post by Netflix CEO Reed Hastings on his personal Facebook page stating that Netflix’s monthly online viewing had exceeded one billion hours for the first time. Netflix did not report this information to investors through a press release or Form 8-K filing, and a subsequent company press release later that day did not include this information. Neither Hastings nor Netflix had previously used his Facebook page to announce company metrics, and they had never before taken steps to alert investors that Hastings’ personal Facebook page might be used as a medium for communicating information about Netflix. Netflix’s stock price had begun rising before the posting, and increased from $70.45 at the time of the Facebook post to $81.72 at the close of the following trading day.

The SEC did not initiate an enforcement action or allege wrongdoing by Hastings or Netflix. Recognizing that there has been market uncertainty about the application of Regulation FD to social media, the SEC issued the report of investigation pursuant to Section 21(a) of the Securities Exchange Act of 1934.

The report of investigation explains that although every case must be evaluated on its own facts, disclosure of material, nonpublic information on the personal social media site of an individual corporate officer — without advance notice to investors that the site may be used for this purpose — is unlikely to qualify as an acceptable method of disclosure under the securities laws. Personal social media sites of individuals employed by a public company would not ordinarily be assumed to be channels through which the company would disclose material corporate information.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Home Prices Increase in South Florida

The median home sale price jumped to $235,000 in Palm Beach County in February 2013, up 27% from a median price of $185,00 for the same time period last year. Home prices in Broward County are also increasing, as shown in the chart below.

The news is especially good for sellers of upscale Palm Beach County homes, with an average sales price of $761,754 in February 2013 compared with less than half that amount – $307,806 – in February of 2012.

South Florida Home Prices

As reported by the Sun-Sentinel.

Data from Florida REALTORS® indicates the average number of days a home sits on the market is dropping, due in part to a decrease in the number of homes that are actively listed for sale.

The single family home inventory in Palm Beach County now stands at 5.8 months, down 47% from 11 months in February 2012.

All of this is good news for home sellers, who are finding a higher number of motivated home buyers. Some buyers are reportedly bringing their checkbook when they view a property, ready to put down an immediate deposit on the home of their dreams. Sellers are receiving an average of 91.4% of their original listing price on recent home sales, up from 88.4% last year.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

Rengan Rajaratnam Charged in Galleon Insider Trading

The SEC today charged Rajarengan “Rengan” Rajaratnam for his role in the massive insider trading scheme spearheaded by his older brother Raj Rajaratnam and hedge fund advisory firm Galleon Management.

The SEC alleges that from 2006 to 2008, Rengan Rajaratnam repeatedly received inside information from his brother and reaped more than $3 million in illicit gains for himself and hedge funds that he managed at Galleon and Sedna Capital Management, a hedge fund advisory firm that he co-founded. In addition to illegally trading on inside tips, Rengan Rajaratnam was an active participant in his brother’s scheme to cultivate highly placed sources and extract confidential information for an unfair advantage over other traders.

“Our complaint against Rengan Rajaratnam tells a sad tale of a man who followed his brother down an illegal path of greed to its inevitable conclusion,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement.

Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office, added, “Rengan Rajaratnam profited handsomely from his brother’s insider trading activities, and he may have believed he wouldn’t have to pay a price for his involvement. But now he is learning the true cost of his participation in the most expansive insider trading scheme ever perpetrated.”

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Rengan Rajaratnam.

According to the SEC’s complaint filed in federal court in Manhattan, Rengan Rajaratnam repeatedly received valuable insider tips from his brother that he used for illegal trading in the securities of Polycom, Hilton Hotels, Clearwire Corporation, Akamai Technologies, and AMD. For example, in July 2007, he made substantial profits trading Hilton stock in his personal account based on a timely insider trading tip from Raj Rajaratnam that Hilton was about to be taken private. Rengan Rajaratnam quickly loaded up on Hilton stock, and the price of Hilton shares jumped more than 25 percent after the news became public. Rengan Rajaratnam cashed in his recently acquired position for an illicit profit of more than $675,000.

According to the SEC’s complaint, after Raj Rajaratnam tipped him about an upcoming transaction involving Clearwire Corporation in March 2008, Rengan Rajaratnam complained to his brother that certain nonpublic information they had used to begin accumulating a position in Clearwire stock was about to be reported by the media before they could establish a larger position. Rengan Rajaratnam nevertheless profited by more than $100,000 in his personal brokerage account and more than $230,000 for Galleon hedge funds based on trades in Clearwire securities.

The SEC’s complaint charges Rengan Rajaratnam with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks a final judgment permanently enjoining Rajaratnam from future violations of these provisions of the federal securities laws, ordering him to disgorge his ill-gotten gains plus prejudgment interest, and ordering him to pay financial penalties.

The SEC has now charged 33 defendants in its Galleon-related enforcement actions, which have exposed widespread and repeated insider trading at numerous hedge funds and by other traders, investment professionals, and corporate insiders located throughout the country. The insider trading occurred in the securities of more than 15 companies for illicit gains totaling more than $96 million.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.