       Third District Court of Appeal
                              State of Florida

                      Opinion filed September 21, 2016.


                             ________________

                              No. 3D13-2261
                        Lower Tribunal No. 11-23099
                            ________________


                           Celia Elmira Smith,
                                  Appellant,

                                     vs.

                 Reverse Mortgage Solutions, Inc., etc.,
                                  Appellee.


      An Appeal from the Circuit Court for Miami-Dade County, Jon I. Gordon,
Senior Judge.

       Kronhaus Law Firm, P.A., and Julie W. Kronhaus (Winter Park); Andrew D.
Tarr, P.A., and Andrew D. Tarr, for appellant.

     Marinosci Law Group, P.C., and Bart Heffernan (Ft. Lauderdale);
Akerman LLP, and Nancy M. Wallace (Tallahassee), William P. Heller (Fort
Lauderdale) and Kathryn B. Hoeck (Orlando), for appellee.


Before SHEPHERD, ROTHENBERG and SCALES, JJ.
                                 On Motion for Rehearing

      SCALES, J.

      We deny Reverse Mortgage Solutions’s motion for rehearing. We withdraw

our prior opinion of July 15, 2015, and substitute the following opinion for that

previously issued.

      Celia Smith (“Mrs. Smith”), who was the defendant below, appeals from a

Final Judgment of Foreclosure arising out of a home equity conversion mortgage

signed and executed in May of 2008, by Mrs. Smith and her now deceased

husband, Kenneth Smith (“Mr. Smith”). Because Reverse Mortgage Solutions, the

plaintiff below and appellee here, failed to establish the occurrence of a condition

precedent to its right to foreclose, we reverse.

      I.     Facts

      On May 8, 2008, while Mr. and Mrs. Smith were married, Mr. Smith signed

and executed an adjustable rate note secured by a home equity conversion

mortgage, or what is commonly referred to as a “reverse mortgage.” A reverse

mortgage allows elderly homeowners to receive monthly payments from a lender

based upon the homeowners’ equity in their principal residence. Instead of the

more conventional mortgage arrangement – where the borrower receives a lump

sum from a lender, and then repays the lender over time with monthly payments –

generally, in a reverse mortgage arrangement, the lender makes monthly payments



                                           2
to the elderly homeowners, and the homeowners’ obligation to repay the lender

ripens only upon the homeowners’ death or when the homeowners move from their

home. See, e.g., Bennett v. Donovan, 703 F.3d 582, 584-85 (D.C. Cir. 2013).

      The reverse mortgage at issue here encumbered the residential property

where Mr. and Mrs. Smith lived together as their principal residence. Mrs. Smith

executed the mortgage, but she did not sign the promissory note.1

      Following Mr. Smith’s death in December 2009, Reverse Mortgage

Solutions filed a verified complaint for foreclosure of the reverse mortgage,

alleging that Mr. Smith was the “sole borrower under the note and mortgage” and

that his death triggered the acceleration clause under the mortgage agreement. No

other ground for acceleration was alleged.

      The verified complaint alleged that: (i) $229,475 was due under the note and

mortgage, plus interest; (ii) all conditions precedent to the acceleration of the note,

and to foreclose on the mortgage, had been fulfilled or had occurred; and (iii) Mrs.

Smith owned the property.2 Mrs. Smith’s answer denied the complaint’s condition
1 Unlike a traditional mortgage arrangement, in a reverse mortgage arrangement,

the lender, after determining the value of the borrower’s principal residence,
generally will make regular (usually monthly) payments to the borrower during the
borrower’s lifetime. The note’s principal amount is derived by a lender formula
that includes the sum of the value of the lender’s payments to the borrower, closing
costs, accrued interest, insurance and servicer/lender fees. See, e.g., Bennett, 703
F.3d at 584-85. While the subject note and mortgage both reference a “Loan
Agreement” (which, presumably, defines the monthly amount paid to the borrower
and the calculation of the note’s principal), no Loan Agreement is contained in the
record on appeal. The subject note’s principal amount is $544,185.


                                          3
precedent allegations, and specifically pled: “This mortgage should not be

accelerated as the Defendant [Mrs. Smith] is still alive and living in the real

property as her homestead.”

         Following a bench trial, the trial court entered a form final judgment of

foreclosure in favor of Reverse Mortgage Solutions in the amount of $248,403.59,

foreclosing on Mrs. Smith’s interest in the property and setting a September 2013

foreclosure sale date. The final judgment contains no specific findings of fact or

other adjudications with regard to whether all conditions precedent had occurred.

         Mrs. Smith appeals the trial court’s Final Judgment of Foreclosure,

contending that acceleration of the mortgage is inappropriate under both the

express provisions of the mortgage document and the federal statute governing the

insurability of reverse mortgages by the U.S. Department of Housing and Urban

Development (HUD).3 Essentially, Mrs. Smith argues that she is a co-borrower

under the mortgage, which prohibits foreclosure until she either dies or no longer

maintains the property as her principal residence.

         We conclude that Mrs. Smith is a co-borrower as contemplated in the

mortgage and, therefore, a condition precedent to Reverse Mortgage Solutions’s


2 Pursuant to Eleventh Judicial Circuit Administrative Order No. 10-03 A1,
Reverse Mortgage Solutions filed, contemporaneously with its complaint, a form
certifying that the subject property is Mrs. Smith’s homestead residence.
3   See 12 U.S.C. § 1715z-20(j), infra note 4.

                                           4
right to foreclose (to wit, Mrs. Smith’s death) has not occurred. Thus, we remand

for a new trial to allow the trial court to adjudicate specifically whether the other

condition precedent to Reverse Mortgage Solutions’s right to foreclose has

occurred, i.e., whether the encumbered real property was Mrs. Smith’s principal

residence as of the date of the trial.

      II.    Analysis

      A. Issue Before the Court

      The issue before this Court is whether the trial court erred in its implicit

determination that all conditions precedent to Reverse Mortgage Solutions’s

entitlement to foreclosure had occurred. Specifically, we must determine whether,

as a matter of law, Mrs. Smith is a “Borrower” as that term is used in the mortgage.

If Mrs. Smith is a “Borrower,” either her death or her ceasing to use the subject

property as her principal residence is a condition precedent to Reverse Mortgage

Solutions’s right to foreclose the mortgage.

      B. Standard of Review

      We first note that, consistent with the dictates of Applegate v. Barnett Bank

of Tallahassee, 377 So. 2d 1150 (Fla. 1979), and its progeny, the burden is on Mrs.

Smith as the appellant to demonstrate error by providing this Court with an

adequate record of the proceedings below, and, without such a record, affirmance

is normally required. When, as here, the issue presented involves a pure question



                                         5
of law (i.e., judicial construction of the reverse mortgage to determine whether

Mrs. Smith is a “Borrower” as defined in the reverse mortgage), and the error of

law appears on the face of the final judgment,4 the absence of a transcript does not

prevent reversal. See BarrNunn, LLC v. Talmer Bank & Trust, 106 So. 3d 51, 52

(Fla. 2d DCA 2013) (“[T]he absence of a transcript does not preclude reversal

where an error of law is apparent on the face of the judgment[.]”) (quoting Chirino

v. Chirino, 710 So. 2d 696, 697 (Fla. 2d DCA 1998)).

      Normally, in a case such as this, the issue before this Court simply would be

whether the trial court’s conclusion (subsumed in the final judgment) – that all

conditions precedent to the plaintiff’s entitlement to foreclosure have occurred – is

supported by competent substantial evidence.          See Verneret v. Foreclosure

Advisors, LLC, 45 So. 3d 889, 891 (Fla. 3d DCA 2010) (“Findings of fact by a

trial judge in a nonjury proceeding will not be set aside on review unless totally

unsupported by competent and substantial evidence.”). In this case, however, the

trial court’s entry of the Final Judgment of Foreclosure hinged not on weighing any

trial evidence, but, rather, upon an interpretation of the reverse mortgage. The trial

court found that all conditions precedent had occurred based upon its legal

conclusion that Mrs. Smith was not a “Borrower” under the mortgage.


4 Paragraph 7 of the Final Judgment of Foreclosure expressly forecloses all of Mrs.
Smith’s interest in the subject property and implicitly recognizes that she is still
alive. Hence, the error appears on the face of the judgment on appeal.

                                          6
      A trial court’s construction of notes and mortgages involves pure questions

of law, and therefore is subject to de novo review. Nagel v. Cronebaugh, 782 So.

2d 436, 439 (Fla. 5th DCA 2001) (determining that general contract principles

governed the trial court’s interpretation of the promissory note; thus, the

appropriate standard of review was de novo). We, therefore, review the trial court’s

construction of the reverse mortgage de novo.

      C. Condition Precedent to Foreclosure

      It is axiomatic that in a mortgage foreclosure action a plaintiff must plead

and prove the occurrence of all conditions precedent. See Konsulian v. Busey

Bank, N.A., 61 So. 3d 1283, 1285 (Fla. 2d DCA 2011).

      Consistent with the requisites of 12 U.S.C. § 1715z-20(j)5 governing reverse

mortgages insured by HUD, the subject mortgage contains plain language

expressly conditioning the lender’s acceleration and foreclosure rights on the death
5 This statutory provision, discussed in more detail in section II. F, below, reads in

its entirety, as follows:

      (j) Safeguard to prevent displacement of homeowner

      The Secretary may not insure a home equity conversion mortgage
      under this section unless such mortgage provides that the
      homeowner’s obligation to satisfy the loan obligation is deferred until
      the homeowner’s death, the sale of the home, or the occurrence of
      other events specified in regulations of the Secretary. For purposes of
      this subsection, the term “homeowner” includes the spouse of a
      homeowner. Section 1647(b) of Title 15 and any implementing
      regulations issued by the Board of Governors of the Federal Reserve
      System shall not apply to a mortgage insured under this section.


                                          7
of any “Borrower” whose principal residence is the property encumbered by the

mortgage. Because the parties stipulate that Mrs. Smith has not died, and because

Mr. Smith’s death is the sole ground alleged for Reverse Mortgage Solutions’s

acceleration and foreclosure, if Mrs. Smith is a “Borrower” under the mortgage,

then a condition precedent to the lender’s right to foreclose has not occurred,

thereby precluding the lender’s foreclosure action.

           D. Analysis of Relevant Mortgage Language – Mrs. Smith’s Status as a
            “Borrower”

         We begin our analysis of whether Mrs. Smith is a “Borrower” by looking at

the language of the mortgage.6 The first paragraph of the mortgage begins by

identifying Mr. Smith as “a married man” and the mortgagor, which it thereafter

refers to as the “Borrower.”

         The mortgage’s fourth paragraph contains the Borrower Covenant,7 whereby

“the Borrower” acknowledges and covenants to the mortgagee that: (i) the

Borrower owns the property; (ii) the Borrower has the right to mortgage, grant, and

6With regard to the note, only Mr. Smith is referenced as the “Borrower.” Mrs.
Smith is neither mentioned nor referenced in the note. Reverse Mortgage
Solutions, however, seeks no relief from Mrs. Smith based on the note. It is only
Mrs. Smith’s status as a mortgagor that is implicated in this appeal.
7   The Borrower Covenant reads in its entirety, as follows:
        BORROWER COVENANTS that Borrower is lawfully seised of the
        estate hereby conveyed and has the right to mortgage, grant and
        convey the Property and that the Property is unencumbered. Borrower
        warrants and will defend generally the title to the Property against all
        claims and demands, subject to any encumbrances of record.

                                           8
convey the property; and (iii) the property is otherwise unencumbered. The

Borrower Covenant also requires the Borrower to defend the title to the property.

      The final portion of the mortgage plainly indicates that: (1) both Mr. and

Mrs. Smith are the “Borrower” under the mortgage; (2) both Mr. and Mrs. Smith

signed the mortgage as the “Borrower”; and (3) both Mr. and Mrs. Smith’s

signatures were verified jointly by two witnesses and one notary jurat.

      Specifically, immediately before the witnesses’s signatures, the mortgage

states the following: “BY SIGNING BELOW, Borrower accepts and agrees to the

terms and covenants contained in this Security Instrument and in any rider(s)

executed by Borrower and recorded with it.” Below this statement, both Mr.

Smith’s and Mrs. Smith’s signatures appear.       Mrs. Smith’s signature was no

accident as her name was pre-printed on the document below the line she was

required to sign.

      Paragraph 9 of the mortgage contains the condition precedent required in

such reverse mortgages by virtue of 12 U.S.C. § 1715z-20(j). This provision

specifically provides: “Lender may require immediate payment in full of all sums

secured by this Security Instrument if: (i) A Borrower dies and the Property is

not the principal residence of at least one surviving Borrower[.]” (emphasis

added).




                                         9
      Thus, based on the plain and unambiguous language of the mortgage –

which was executed by both Mr. and Mrs. Smith – (i) both Mr. and Mrs. Smith

were treated as the “Borrower” under the mortgage, and (ii) each borrower is

protected from the foreclosure of the mortgage until both borrowers die.

      Hence, this Court’s determination that Mrs. Smith is a co-borrower – and,

therefore, that her death is a condition precedent to Reverse Mortgage Solutions’

ability to foreclose – could end here.

      E. Conclusion Consistent With Florida’s Homestead Provisions

      Our conclusion that Mrs. Smith is a “Borrower” under the mortgage is also

supported by the reference to Mr. Smith as a “married man” in the mortgage’s

opening paragraph, coupled with the provision of the Borrower Covenant whereby

“Borrower” expressly covenants that “Borrower” has the right to mortgage, grant,

and convey the property.

      Florida’s Constitution requires Mrs. Smith’s signature on the mortgage to

effectuate the lender’s security interest in homestead property. Art. X, § 4(c), Fla.

Const. (“The owner of homestead real estate, joined by the spouse if married, may

alienate the homestead by mortgage . . . .”); see Pitts v. Pastore, 561 So. 2d 297,

301 (Fla. 2d DCA 1990) (holding that a mortgage is ineffectual as a lien until such

time as either the spouse joins in the alienation or the property loses its homestead

status). Additionally, because Mr. Smith was married to Mrs. Smith at the time the



                                         10
mortgage was executed, only a deed containing Mrs. Smith’s signature could

convey with validity her interest in the property. Id.

      Therefore, only if Mrs. Smith is a “Borrower” would this portion of the

Borrower Covenant be accurate; Mr. Smith, acting alone, did not “have the right”

to either encumber or convey both his and Mrs. Smith’s interest in the couple’s

homestead property.8

      Plainly, Reverse Mortgage Solutions intended for the Borrower Covenant to

confirm the mortgage’s validity and enforceability by having “Borrower” warrant

its capacity and ability to encumber and convey the property. Under Florida’s

constitutional homestead provisions, this goal is achieved only if Mrs. Smith is a

“Borrower.”

      F. Application of Federal Reverse Mortgage Law

      Even more persuasive to our determination is the application of relevant

provisions of federal law related to reverse mortgages.9

      At oral argument, the parties conceded that the subject mortgage was,


8It is not clear from the record how the subject property was titled at the time the
mortgage was executed by Mr. and Mrs. Smith. Reverse Mortgage Solutions’s
verified complaint, however, alleges that Mrs. Smith is the owner of the subject
property, an allegation Mrs. Smith admits in her answer.
9 Paragraph 17 of the mortgage reads, in relevant part, as follows: “This Security
Instrument shall be governed by Federal law and the law of the jurisdiction in
which the Property is located.”


                                          11
indeed, a “home equity conversion mortgage” issued by Reverse Mortgage

Solutions and insured by HUD, pursuant to 12 U.S.C. § 1715z-20.10 12 U.S.C. §

1715z-20(j) is titled “[s]afeguard to prevent displacement of homeowner” and

provides, in relevant part:

      The Secretary may not insure a home equity conversion mortgage
      under this section unless such mortgage provides that the
      homeowner’s obligation to satisfy the loan obligation is deferred until
      the homeowner’s death, the sale of the home, or the occurrence of
      other events specified in regulations of the Secretary. (emphasis
      added)

This provision goes on to expressly define the term “homeowner” as including the

spouse of the homeowner: “For purposes of this subsection, the term ‘homeowner’

includes the spouse of a homeowner.” Id.

      While the plain language of the statute imposes an obligation only on the

Secretary of HUD with regard to provisions that must be contained in reverse

mortgages insured by HUD, it is undisputed that the subject mortgage is, indeed, a
10 The record is replete with proof that the subject mortgage is a “home equity

conversion mortgage” issued and insured under the auspices of 12 U.S.C. § 1715z-
20. The subject mortgage references: (i) a Federal Housing Authority case
number, (ii) requirements promulgated by the HUD Secretary, (iii) certain events
of default triggering the lender’s right to foreclosure if authorized by the HUD
Secretary, (iv) the right of the lender to accelerate the amounts secured by the
mortgage if the HUD Secretary notifies the lender within eight months of loan
initiation that the loan is not insurable pursuant to the National Housing Act (which
includes 12 U.S.C. § 1715z-20). Additionally, both the verified complaint and the
mortgage expressly reference a second mortgage – in which HUD is the mortgagee
– securing any payments HUD might make on behalf of the Borrower pursuant to
the National Housing Act. Indeed, HUD was named as a defendant in the action
and HUD’s second mortgage was foreclosed in the Final Judgment of Foreclosure.


                                         12
reverse mortgage insured by HUD. We are compelled to construe a contract

consistent with specific statutes that regulate and govern the contract.          See

Westside EKG Assocs. v. Found. Health, 932 So. 2d 214, 216 (Fla. 4th DCA

2005); see also S. Crane Rentals, Inc. v. City of Gainesville, 429 So. 2d 771, 773

(Fla. 1st DCA 1983) (“The laws which exist at the time and place of the making of

a contract enter into and become a part of the contract made, as if they were

expressly referred to and incorporated in its terms, including those laws which

affect its construction, validity, enforcement or discharge.”).

      The explicit purpose of 12 U.S.C. § 1715z-20(j) is to provide a safeguard

against the displacement of elderly homeowners. The statute would be without

effect if a mortgagee were permitted to foreclose on a mortgage while a

“homeowner,” as that term is expressly defined in the statute, maintains the subject

property as his or her principal residence. This is true especially when, as here, the

“homeowner” executed the very mortgage giving the mortgagee a security interest

in the subject property.

      Our interpretation of the subject reverse mortgage is made rather easy in

light of Congress’s clear intent to protect from foreclosure a reverse mortgagor’s

surviving spouse who is maintaining the encumbered property as his or her

principal residence.11 The subject reverse mortgage is insured by HUD pursuant to

 It appears that, as part of the reverse mortgage origination process, some reverse
11

mortgage originators are alleged to have advised one elderly spouse to execute a

                                          13
a Congressionally prescribed scheme that expressly requires deferment of the

obligation to satisfy the loan secured by such mortgages until the death of the

borrower and any spouse of the borrower.

      G. Summary

      Against the backdrop of this unambiguous Congressional mandate, it would

be difficult, if not impossible, for us to construe Mrs. Smith as anything other than

a “Borrower” for the purposes of Paragraph 9’s express conditions precedent. Our

conclusion is reinforced by Mrs. Smith having executed the subject mortgage

before a notary and two witnesses – over her pre-printed name on the subject

mortgage – under a heading that reads, “BY SIGNING BELOW, Borrower

accepts and agrees to the terms and covenants contained . . . .” in the mortgage

(emphasis added). Our conclusion is further reinforced by the express provisions

of the mortgage’s Borrower Covenant, as well as Florida’s constitutional

requirement that the reverse mortgage could not have encumbered Mrs. Smith’s

interest in the subject property absent her signature. Art. X, § 4(c), Fla. Const.


quit-claim deed, deeding their jointly owned property to the other spouse, so that a
single “Borrower” would appear on all paperwork. See, e.g., Bennett, 703 F.3d at
585; Welte v. Wells Fargo Bank, N.A., No. EDCV-13-00463JGB, at *2-3 (C.D.
Cal. Dec. 18, 2013); Wiseman v. First Mariner Bank, No. ELH-12-2423, at *4 (D.
Md. Sept. 23, 2013). No such allegations have been made in this case. In fact, as
mentioned earlier, the verified complaint specifically alleges that Mrs. Smith owns
the subject property, and Mrs. Smith executed the subject mortgage. We need not,
and do not, reach the issues implicated in those cases where the nature of the
surviving spouse’s ownership interest in the subject property is in dispute.

                                          14
      III. Conclusion

      In light of the foregoing, we conclude that, as a pure question of law, Mrs.

Smith was a “Borrower” as that term is contemplated in Paragraph 9 (Grounds for

Acceleration of Debt) of the subject reverse mortgage. Therefore, pursuant to

Paragraph 9, as a condition precedent to its entitlement to foreclosure, Reverse

Mortgage Solutions was required to establish either that: (i) Mrs. Smith had died,

or, (ii) as of August 5, 2013 (the date of trial), the property was no longer Mrs.

Smith’s principal residence. Reverse Mortgage Solutions pleaded neither

occurrence.

      Reversed and remanded for entry of judgment in favor of Mrs. Smith.12

      ROTHENBERG, J., concurs.

                        Celia Elmira Smith v. Reverse Mortgage Solutions, Inc., etc.
                                                             Case No. 3D13-2261



      SHEPHERD, J., dissenting.

      The labor expended by the majority to keep Kenneth Smith’s widow in her

home is admirable. Unfortunately, the legal analysis used does not measure up.

For this reason, I respectfully dissent.



12Of course, nothing in this opinion should be construed to limit Reverse Mortgage
Solutions’s ability to file a new foreclosure action upon the future occurrence of
any of the conditions precedent outlined in Paragraph 9 of the subject mortgage.

                                           15
                                        I.

      The central issue in this case is whether there was a default under the

mortgage, authorizing Reverse Mortgage Solutions, Inc., to foreclose. Reverse

Mortgage Solutions asserts there was a default under Paragraph 9(a)(i) of the

mortgage. This paragraph reads as follows:

      9. Grounds for Acceleration of Debt.

        (a) Due and Payable. Lender may require immediate payment
        in full of all sums secured by this Security Instrument if:

           (i) A Borrower dies and the Property is not the principal
           residence of at least one surviving borrower, or . . .

(underline emphasis added).

      The applicable acceleration clause in the mortgage is triggered when: (1) a

Borrower dies; (2) there is a “surviving borrower;” and (3) the property is not the

residence of a surviving borrower. It was Reverse Mortgage Solution’s burden at

trial to prove the existence of the default. The Court has not been provided with a

transcript of the trial, and the form Final Judgment of Foreclosure includes no

findings of fact. It merely states, “On the evidence presented, IT IS ORDERED

AND ADJUDGED that Plaintiff’s Final Judgment of Foreclosure is GRANTED.”

The trial court may have reasoned in one of two ways: (1) Final Judgment of

Foreclosure was warranted because Celia Smith is not a “Borrower” under the

mortgage; or (2) Celia Smith was a “Borrower,” but a Final Judgment of



                                        16
Foreclosure was nevertheless warranted because by the date of the trial, the home

was no longer her “principal residence.” The majority grounds its reversal of the

Final Judgment of Foreclosure in this case on its belief that “The trial court found

that all conditions precedent had occurred based upon its legal conclusion that Mrs.

Smith was not a ‘Borrower’ under the mortgage.” Maj. Op. at p. 6. There is no

record support for the statement. The Court may as well have reasoned that Celia

Smith was a “Borrower” but no longer made the home her “principal residence.”13

      This case should be affirmed on the strength of Applegate v. Barnett Bank of

Tallahassee, 377 So. 2d 1150 (Fla. 1979).         As the Florida Supreme Court

explained, “Even when based on erroneous reasoning, a conclusion or decision of a

trial court will generally be affirmed if the evidence or an alternative theory

supports it.” Applegate, 377 So. 2d at 1152 (emphasis added). I do not believe

Celia Smith was a “Borrower,” as will be demonstrated below, but even if she was,

13 The “principal residence” issue was squarely before the trial court. In her
Answer, Celia Smith asserted as a defense that “This mortgage should not be
accelerated as the defendant, CELIA ELMIRA SMITH, is still alive and living in
the real property as her homestead.” (emphasis added). The majority seeks solace
from the fatal flaw in its reasoning in this case by latching onto a statement of
Reverse Mortgage’s counsel on an unsworn form required for the processing of
residential foreclosure cases during the foreclosure crisis, which was filed with the
complaint in foreclosure in this case. See ff. 2. The form can provide no succor to
the majority. Pleadings and attachments are no substitute for a trial transcript and
exhibits. See Fallon v. City Furniture, 959 So. 2d 306 (Fla. 3d DCA 2007)
("Pleadings are inadmissible to prove a fact in issue.”). Nor does the form
contribute any information concerning whether Ms. Smith resided on the property
as of the date of trial, which no one contests as being the critical moment. See
Majority Op. at p. 5.

                                         17
the record of proceedings may have included an alternate ground for affirmance if

one had been brought to us. We should affirm the Final Judgment of Foreclosure

in this case for lack of a complete record.

                                              II.

      If it is necessary to join issue on the question of whether or not Celia Smith

is a “Borrower” under the mortgage document, I conclude she is not.                          The

mortgage document in this case is a home equity conversion mortgage, insured by

the United States Department of Housing and Urban Development Home Equity

Conversion Mortgage (HECM) Program for Elderly Homeowners, under 12

U.S.C.A. 1715z-20. The mortgage and associated promissory note are HECM

form contract documents which follow the statute. The face of the mortgage

identifies the decedent, Kenneth Smith, and no other person, as the “Borrower”:

                                      State of Florida
                               ADJUSTABLE RATE
                       HOME EQUITY CONVERSION MORTGAGE

      THIS MORTGAGE (“Security Instrument”) is given on May 08, 2008. The
      mortgagor is KENNETH S. SMITH, A MARRIED MAN, whose address is
      9991 SW 154TH AVENUE, MIAMI, FL 33196 (“Borrower”). . . . The
      agreement to repay is evidenced by Borrower’s Note dated the same date as this
      Security Instrument (“Note”). This Security Instrument secures to Lender: (a) the
      repayment of the debt evidenced by the Note . . . up to a maximum principal
      amount Five Hundred Forty-Four Thousand One Hundred Eighty-Five and
      00/100 Dollars ($544,185.00). . . .The full debt, including all amounts described
      in (a), (b), and (c) above, if not paid earlier, is due and payable on September 07,
      2086. For this purpose, Borrower does hereby mortgage, grant and convey to
      Lender, the following described property located in MIAMI-DADE county,
      Florida:


                                              18
         The real property located at 9991 SW 154th Avenue, Miami, FL, in the County of
         Miami Dade, state of FL, described more fully on Exhibit A attached to this
         mortgage.


(underline emphasis added).

         The majority counters that Celia Smith must be a “Borrower” under the

mortgage because she signed it. The signature block, found on the last page of the

mortgage document, does indeed bear Celia Smith’s signature. It reads as follows:

         BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants
         contained in this Security Instrument and in any rider(s) executed by Borrower
         and recorded with it.

         Witness:     _____________/s/___________________

                      _____________/s/___________________

         Signature:

         ______________________________            ______________________________

         ______________________________            ______________________________

               /s/ Kenneth S. Smith                          /s/ Celia Smith
                                                   CELIA SMITH



However, there is nothing in the signature block (or elsewhere in the mortgage

document) that indicates Celia Smith signed the document as a “Borrower.” In

fact, the language of the signature block continues to reference a single

“Borrower,” just as does the opening paragraph of the mortgage quoted above.14


14   The majority insinuates that Celia Smith may have been in title to the property at

                                              19
      The only argument the majority offers to the contrary is its statement that

“Mrs. Smith’s signature was no accident” because “it was pre-printed on the

document below the line she was required to sign.” All can concede that her

signature on the document was arranged with forethought and was not an accident.

However, that just begs the question of the purpose of the drafters in requiring her

signature.

      The majority recognizes that a necessary purpose for the signature is that the

mortgage would have been unenforceable absent Celia’s joinder in the document.

See Art. X, §4(c), Fla. Const. (“The owner of homestead real estate, joined by the

spouse if married, may alienate homestead by mortgage, sale, deed or gift . . .);

Pitts v. Pastore, 561 So. 2d 297, 301 (Fla. 2d DCA 1990) (holding that a mortgage

is ineffectual as a lien until such time as either the spouse joins in the alienation or


the time Kenneth Smith executed the mortgage. The majority places its reliance
for this inference on the allegation found in Paragraph 7 of the Verified Complaint
for foreclosure that “Defendant(s), CELIA ELMIRA SMITH, own(s) the
property.” Of course, the Verified Complaint for foreclosure was filed after
Kenneth Smith’s death. Ironically, if one were to carry the insinuation of the
majority to its logical conclusion, then Celia Smith would be a borrower, liable
under the promissory note as well. See Maj. Op. at p. 9 (“‘BY SIGNING
BELOW, Borrower accepts and agrees to the terms and covenants contained in the
Security Instrument . . .’”); see also R. at 16 (“[Mortgage Agreement Paragraph 1:]
Payment of Principal and Interest. Borrower shall pay when due the principal of,
and interest on, the debt evidenced by the note.”). The logic of the majority has the
additional unintended consequence of placing Reverse Mortgage Solutions, Inc. in
violation of 12 C.F.R. § 202.7(d)(1) (2014) (“A creditor shall not deem the
submission of a joint financial statement or other evidence of jointly held assets as
an application for joint credit.”).

                                          20
the property loses its homestead status.). This imputation of purpose for Celia

Smith’s signature is harmonious with the evident intent of the drafters in the first

paragraph of the mortgage document. The additional imputation, interpretively

imposed on the mortgage document by the majority, conflicts with the

unambiguous definition and identity of the “Borrower” in the first paragraph of the

document. It is a basic principle of statutory and contractual interpretation that

where one interpretation of a statute or contract appears to conflict with another,

the courts will choose an interpretation which harmonizes the conflicting

interpretations wherever possible. See Homestead v. Johnson, 760 So. 2d 80, 84

(Fla. 2000) (“[W]e rely upon the rule of construction requiring courts to read

provisions of a contract harmoniously in order to give effect to all portions

thereof.”); see also Triple E Dev. Co. v. Floridagold Citrus Corp., 51 So. 2d 435,

438-39 (Fla. 1951) (“[I]f clauses in a contract appear to be repugnant to each other,

they must be given such an interpretation and construction as will reconcile them if

possible; if one interpretation would lead to an absurd conclusion, then such

interpretation should be abandoned and the one adopted which would accord with

reason and probability”). We should do so in this case.

      The conclusion reached by the majority that Celia Smith is a “Borrower” on

the mortgage is also counter to the express terms of the promissory note. The

promissory note defines the “Borrower” as meaning “each person signing at the



                                         21
end of this Note.” The only person who signed the promissory note was the

decedent, Kenneth Smith. Moreover, the promissory note contains substantially

identical acceleration language to that found in the mortgage document. Paragraph

7 of the promissory note reads as follows in relevant part:

      7. IMMEDIATE PAYMENT IN FULL

      (A) Death or Sale
      Lender may require immediate payment in full of all outstanding
      principal and accrued interest if:

           (i) A Borrower dies and the Property is not the principal
           residence of at least one surviving borrower, or . . .

(underline emphasis added). The decision of the majority creates the anomalous

result that the “Borrower” – expressly defined in two simultaneously executed and

related documents to be Kenneth Smith – now has two meanings. Although I am

unwilling to place my total confidence in the federal drafters of these financial

instruments (see Part III, infra), I do give them more credit than does the majority

in their ability to use the same word, in the same fashion, at the same time, in the

same transaction.

      Finally, the use of a single-borrower reverse mortgage vehicle by a married

couple is not ipso facto nefarious. The calculation of the amount that can be

borrowed and the size of the resulting line of credit, lump sum, or periodic

payment available to the borrower varies with the age of the borrower.          See

Plunkett v. Castro, 2014 WL 4243384 (D.D.C. 2014) (explaining why an older


                                         22
borrower will almost always be able to receive a bigger loan amount). One might

envision many circumstances – e.g., the need for a significant, large lump sum to

apply to a medical emergency – where a married couple might find a single-

borrower reverse mortgage to be appropriate for their needs. By its decision today,

the majority imposes its own collectivistic view of life planning on a cadre of

seniors who have demonstrated they are capable of amassing wealth and governing

their own affairs. We should allow the citizenry to be their own deciders.




                                        23
                                         III.

        The final question is whether the fact that the mortgage in this case is

insured under the federal Home Equity Conversion Mortgage Program for Elderly

Homeowners compels a contrary conclusion. The majority is of two minds on the

question. The majority first agrees that “the plain language of the statute imposes

an obligation only on the Secretary of HUD[15] with regard to the provisions that

must be contained in reverse mortgages insured by HUD” but in the next breath

incorporates section 12 U.S.C.A. 1717z-20(j) into the mortgage document in this

case. Maj. Op. at pp. 13-14 (emphasis added). The majority was right the first

time.

        The language relied upon by the majority reads as follows:

        The Secretary may not insure a home equity conversion mortgage
        under this section unless such mortgage provides that the
        homeowner's obligation to satisfy the loan obligation is deferred until
        the homeowner's death, the sale of the home, or the occurrence of
        other events specified in regulations of the Secretary. For purposes of
        this subsection, the term “homeowner” includes the spouse of a
        homeowner.

12 U.S.C.A. 1715z-20(j). However, the majority fails to appreciate that at the time

Kenneth Smith signed the mortgage document and promissory note, the Secretary

was promoting and cheerfully insuring single-borrower home equity conversion


15   The United States Department of Housing and Urban Development.

                                          24
mortgages in circumstances of the type before us. These actions were based on a

rule sentiently created by the Secretary, which the Secretary has since all but

admitted directly conflicted with 1715z-20(j), and which the United States District

Court for the District of Columbia has recently confirmed to be so. Bennett v.

Donovan, 4 F. Supp. 3d 5 *11 (D.D.C. 2013). The rule read as follows:

      The mortgage shall state that the mortgage balance will be due and
      payable in full if a mortgagor dies and the property is not the principal
      residence of at least one surviving mortgagor, or a mortgagor conveys
      all or [sic] his or her title in the property and no other mortgagor
      retains title to the property.

24 C.F.R. §206.27(c)(1) (adopted August 16, 1995). Asked by the United States

Court of Appeals for the District of Columbia Circuit during an intermediate

appellate phase of the Bennett litigation to justify the rule in the face of the

governing statute, the only explanation the Secretary could muster for flouting the

plain language of the federal statute was “concern[] about the scenario in which a

homeowner, after taking out a reverse mortgage, marries a spouse--particularly a

young spouse--and thereby significantly increases a lender’s risk.” Bennett v.

Donovan, 703 F. 3d 582, 586 (D.C. Cir. 2013).16 More recently, just five months


16Technically speaking, the HECM program is administered by Federal Housing
Administration, commonly known as the FHA. The FHA is an agency housed
within the United States Department of Housing and Urban Development. The
FHA was created pursuant to the National Housing Act of 1934, Pub. L. No. 73-
479, 48 Stat. 847 (1934), and has long had as its purpose the expansion of
mortgage access and the enablement of home ownership. In this case, it simply
forgets its place in our constitutional firmament.

                                         25
ago – perhaps recognizing that the United States Congress was right all along or,

forfend, having a momentary mental relapse to that quaint time in the past when it

was dogma that the Congress made the laws and the Executive carried them out –

the Secretary, at great expense and additional program risk, is now offering to

purchase single-borrower home equity loans of the type involved in this case from

the private lenders who funded them and allowing the non-borrowing spouse to

remain in the home until she dies or leaves the residence. See Letter 2015-03 from

U.S. Dep’t of Hous. and Urban Dev., to All Approved Mortgagees at p. 8 et seq.

(January 29, 2015) (on file with author).

      In all of this, HUD recognizes that section 1715z-20(j) does not empower it

to void or alter the terms of a bona fide mortgage contract between a “Borrower”

and a private lender. Id. at p. 3; Bennett v. Donovan, 797 F. Supp. 69, 77 (D.D.C.

2011) (“As the Secretary points out, whether the mortgages were properly insured

or not does not affect the mortgage’s own contractual terms, and it is these terms

that require Plaintiff’s spouses’ estates to repay the mortgages or sell the houses.”);

see also United States v. Neustadt, 366 U.S. 696, 709 and n. 24 (1961) (finding that

existence of mortgage insurance program did not create a legal relationship

between the government and the individual mortgagor.).             Yet, the majority

somehow seeks to empower HUD where Congress through section 1715z-20(j)

does not.    Perhaps the majority is swayed by the initial-appearing heavy-



                                            26
handedness or unfairness of the program. However, there is no allegation of fraud,

misrepresentation, or trickery in this case, and fairness is in the eye of the beholder.

As explained in full detail in Plunkett, HUD incentivized this program in this

fashion. It does not follow that just because HUD went rogue, agreements made

between private parties are ipso facto unenforceable. In this case, a private lender

and a private individual made their own private deal. We should not contort

ourselves to impose our own view of what is right or good. “Law is something

more than will exerted as an act of power.” Hurtado v. California, 110 U.S. 516,

535 (1884).

      I would affirm the decision of the trial court.




                                          27
                    On Motion for Rehearing En Banc

    Before SUAREZ, C.J., and WELLS, SHEPHERD, ROTHENBERG,
LAGOA, SALTER, EMAS, FERNANDEZ, LOGUE and SCALES, JJ.,

    Reverse Mortgage Solutions’ motion for rehearing en banc is denied.

    SUAREZ, C.J., and WELLS, ROTHENBERG, SALTER, FERNANDEZ,
LOGUE and SCALES, JJ., concur.

    SHEPHERD, LAGOA and EMAS, JJ., dissent.




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