The Uniform Mortgage Instruments written and distributed by Fannie Mae and Freddie Mac for almost all homes with a mortgage in the United States have provisions for attorney's fees for the mortgage lenders. These provisions are written for two purposes or at least with two results in mind. The first is to protect banks and mortgage companies from incurring attorney's fees in actions on the mortgage loans they make. The second is to make homeowners pay in actions on the mortgage loans they take.
Some States have tried to reach a better balance. Some State efforts apply generally to contracts which authorize attorney's fees for a large corporate party. They authorize attorney's fees for the other contracting parties as well whenever one party has written its contract to authorize it to collect attorney's fees when someone sues on that contract.
Parenthetically, in many or most such cases, it is the large corporate party that wrote the contract.
For example, Florida Statute Section 57.105(7) on its face applies to "contracts" which authorize attorney's fees for only one party to the contract:
(7) If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract. This subsection applies to any contract entered into on or after October 1, 1988.
Fla. Stat. § 57.105(7), brought forward without change to 2019.
In the case of Madl v. Wells Fargo Bank, N.A., 244 So. 3d 1134 (Fla. 5th DCA 2017) & on rehearing (Fla. 5th DCA 2018) (Edwards, J.), there was a mortgage contract. That was not disputed. There was a dispute, of course, but it was about standing to bring the suit to enforce that contract.
In a unanimous opinion in this case written by Judge James Edwards, Florida's Fifth District Court of Appeal applied the language of Section 57.105(7). "Section 57.105(7) transforms a unilateral right into a reciprocal right so that all parties to the contract are entitled to recover attorney’s fees upon prevailing." Madl, 244 So. 3d at 1138. The appellate panel awarded appellate attorney's fees to the homeowners who prevailed in this action to enforce the mortgage contract against them.
As the Fifth District itself pointed out, Madl, 244 So. 3d at 1139, there is authority from the Fourth District which appears to stand to the contrary.
It is not necessarily free from doubt whether the Fourth District in a proper case would deny outright the availability of Section 57.105(7) in mortgage cases. However, it can be said that the Fourth District cases seem to involve disputes about whether the parties before the court were all parties to the contract, or even whether the contracts at issue were proven to exist in the first place. In Madl, there was no dispute but that the appellants and the appellees were parties to the mortgage contract that existed in that case.
So, on this Halloween day, trick or treat! Thanks to Florida law (with the possible exception of the Fourth District), attorney's fees for the rest of us and not just for the ones who write the contracts.
On the attorney's fees provision in the Uniform Mortgage Instruments of Fannie Mae and Freddie Mac, and particularly on its lack of reciprocity absent another Statute, see DENNIS J. WALL, LENDER FORCE-PLACED INSURANCE PRACTICES § 4.4, Attorneys and Lender Force-Placed Insurance Practices (2015 American Bar Association Publishing).
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