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63 » VISIT US ONLINE @ DSNEWS.COM "Substantial Compliance" and Default Letters Most mortgages require the lender to send a notice of default prior to acceleration and foreclosure. Often called "paragraph 22 letters" in reference to their customary location in the mortgage, these letters usually require the lender to provide the fol- lowing information to the borrower: (1) the default; (2) the action required to cure the default; (3) a date at least thirty days away to cure the default; (4) the borrower's failure to cure the default can result in accelera- tion, foreclosure, and sale; (5) the borrower's right to reinstate the mortgage, if any; and (6) the borrower's right to assert in the foreclosure proceeding the non-existence of a default or any other defense to foreclosure. Florida courts have consistently held that defective default letters prevent the lender from foreclosing, even if the lender can prove that the letter was actually sent. Failure to meet this requirement often stops foreclosure actions not long after they start because borrowers can generally win on summary judgment if a defective default letter was sent. What actually constitutes a defec- tive default letter can vary from court to court, and even from judge to judge. Because the default letters rarely mirror the exact lan- guage in the mortgage, argu- ments over whether a letter is defective usually center on the degree to which the lan- guage var- ies from the requirements of the mortgage. For instance, a common example of a breach letter that has been found to be defective by some courts is one that advises the bor- rower that a separate court action must be filed in order to chal- lenge the default, instead of advising that the borrower can raise defenses to the default in the foreclosure ac- tion brought by the lender. Lend- ers have long argued for a "substantial compliance" standard that would allow for deviations from the exact language in the mortgage, as long as the required informa- tion was adequately conveyed to the borrower. is argument has gained traction as the courts have increasingly upheld variations from the paragraph 22 provisions and seem to be on their way to adopting the "substantial compliance" standard. However, given the uncertain- ty surrounding this issue, lenders and ser- vicers should attempt to have the default letter mirror the language from the mortgage as close as possible so as to avoid possible dismissal. "What actually constitutes a defective default letter can vary from court to court, and even from judge to judge." 1 http://www.bankrate.com/finance/real-estate/top-10-states-for- foreclosure/2 137 So. 3d 570 (Fla. 1st DCA 2014)3 2014 Fla. App. LEXIS 19783 (Fla. 5th DCA Dec. 5, 2014)

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