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What does it mean if you have an FHA loan? Consider the following: although FHA loans typically do not include the traditional protections of conventional loans, they still can pack a major hit in defending against foreclosure, if advocated properly. First thing to know that under Florida law, “the terms of a mortgage, like the terms of a contract, are construed in accordance with their plain language.” See Lopez v. JPMorgan Chase Bank, 187 So. 3d 343, 345 (Fla. 4th DCA 2016). The plain language of the underlying subject note and mortgage almost certainly will establish that the security instrument, upon which the Plaintiff’s case is premised, is a federally insured Fair Housing Administration (“FHA”) loan. FHA loans are governed by HUD, its regulations and Secretary.

Although there are not many cases in Florida, which go through the painstaking effort to define FHA loans specifically, other jurisdictions through the Country have endeavored to explain the implications of federally backed FHA loans. “[T]he FHA, which is part of HUD, provides mortgage insurance on single-family, multifamily, manufactured homes and hospital loans made by FHA-approved lenders. Lacy-McKinney v. Taylor, Bean & Whitaker, 937 N.E. 2d 853, 859 (Ind. 2010). Under the FHA program, “mortgagee/lenders are induced to make essentially risk-free mortgages by being guaranteed against loss in the event of default by the mortgagor.” Id. The Lacy-McKinney opinion is one of many, which has found that it would be senseless to allow lenders to enjoy the benefits of a risk-free, government insured loan while ignoring the regulations imposed by the government for that loan. Id.; see also Fleet Real Estate Fund Corp. v. Smith, 530 A.2d 919 (Pa. 1987) (“If such mortgagees do not care to abide by HUD forbearance provisions, they should not participate in HUD’s mortgage insurance program”); ABN AMRO Mortg. Group, Inc. v. Tullar, 770 N. W. 2d 851(Iowa 2009 (“there is no unfairness in requiring lenders that benefited from a federal mortgage insurance program to accept the obligations that the federal government intended to impose on them”).

Although recent case law makes clear that instruments which are not facially explicit in their deference to the Secretary are not then afforded the breadth of the protections afforded to a borrower, if the subject loan both incorporates explicit language stating that the Lender’s rights are “limit[ed]” by the Secretary of Housing and Urban Development (“Secretary”) in the case of “payment defaults,” as well as foreclosure if not paid, and further provides that “[t]his Security Instrument does not authorize acceleration of foreclosure if not permitted by regulations of the Secretary,” you have a strong position to use in your defense. (Emphasis added). If it is unquestionable that the underlying loan documents in a residential foreclosure matter fully incorporate the HUD Regulations as a condition precedent to their filing for foreclosure, let alone for final judgment then your Lender most certainly will have needed comply with the regulations conditions in advance of filing the foreclosure to begin with. A bank which is servicing a federally insured loan has most certainly contractually obligated itself to adhere to the terms of the conditions of the note and mortgage just as the defendants did, and to borrow from an old saying “what is good for goose is good for the gander.”