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.