A mortgage dispute can become complicated when a lender’s own accounting records leave borrowers questioning how much they owe. A Florida couple faced this situation after their bank reversed four mortgage payments made in 2015 without explaining why. Although they continued making monthly payments for nearly two more years, the lender eventually refused to accept further payments, and the couple stopped paying. The dispute eventually reached an appeals court after a trial judge ruled that the bank had failed to prove a mortgage default.In an opinion dated November 4, 2026, Florida’s Second District Court of Appeal reversed that decision in The Bank of New York Mellon v. Fernandez, case number 2D2025-1819. The ruling, available on Justia, revived the bank’s foreclosure case against Michael and Dianna Fernandez. However, the court also directed the lower court to exclude the four disputed payments and certain related interest and fees when calculating the outstanding debt.
Four mortgage payments were reversed
Michael and Dianna Fernandez signed a $160,000 mortgage note in 2007, secured by their home. In 2012, they filed for Chapter 13 bankruptcy and subsequently entered into a mortgage modification agreement with the loan servicer. At the time, Bank of America was servicing the loan on behalf of The Bank of New York Mellon. On August 21, 2015, the bank reversed four mortgage payments the couple had made earlier that year, between January and April.However, the payment records did not explain why the transactions had been reversed. At the trial, the bank’s representative could not provide a definite reason and could only speculate about the circumstances that might normally cause such reversals. Dianna testified that she had made all four payments and that the money had never been returned to her. The reversals placed the loan four payments behind according to the bank’s records. Despite this, the couple continued making monthly payments from August 2015 through April 2017, and the bank accepted them.The situation changed in May 2017, when Bank of America returned their payment because it was insufficient to cover the amount the bank claimed was outstanding, including the four reversed payments. Dianna also visited a bank branch approximately twice that month to make a payment, but the bank refused to accept it.
Bank filed foreclosure proceedings
In 2017, the bank initially filed a foreclosure lawsuit but voluntarily dismissed it before trial. In January 2021, it filed another foreclosure action, claiming the couple had defaulted on payments beginning January 1, 2017, and all subsequent installments. The Fernandezes disputed the allegation, arguing that they had made their payments until the bank stopped accepting them. They also maintained that the lender’s own actions had created the alleged default.During the bench trial, Dianna acknowledged that the couple’s last accepted payment was made in April 2017. She also admitted that they had not made further payments and did not have sufficient funds to bring the mortgage current when the new foreclosure action was filed. The trial judge ruled in the couple’s favour, finding that the bank had failed to establish a default. The judge relied on the unexplained reversal of the four earlier payments, Dianna’s credible testimony and the bank’s decision to return the May 2017 payment and refuse subsequent attempts to pay. The bank appealed the judgment.
Appeals court found later missed payments established default
The appeals court agreed that the bank had failed to explain the four reversed payments. However, it found that this accounting problem did not eliminate the couple’s separate obligation to continue making their monthly mortgage payments. The majority pointed out that the undisputed evidence showed the couple had not made payments from June 2017 onwards. Each missed monthly installment constituted a separate default under Florida law.The court explained that a disagreement over how a lender accounts for earlier payments does not automatically excuse borrowers from continuing to meet their mortgage obligations. Even if the four earlier payments were improperly reversed, the couple still had to make subsequent payments. The court also rejected the couple’s argument that the bank’s refusal to accept payments amounted to unclean hands. It found insufficient evidence of fraud, dishonest conduct or wrongdoing that would legally prevent the bank from pursuing foreclosure.The majority further noted that the couple had not formally tendered their unpaid installments by depositing the money with the court or otherwise demonstrating that they had the amount due when the lawsuit began.
Foreclosure case sent back for further proceedings
The Florida Court of Appeal reversed the trial court’s judgment and remanded the case for further proceedings. It instructed the lower court to remove the principal amount of the four reversed payments, interest accrued before June 2017 and any fees charged before July 2017. The court also allowed the lower court to consider reducing attorney fees for work spent disputing the four reversed payments. Judge Silberman dissented, arguing that the trial court’s findings were supported by the evidence. He maintained that the bank’s unexplained accounting reversals, returned payment and refusal to accept subsequent installments had effectively created and prolonged the default.The ruling does not mean the couple has immediately lost their home. It restores the foreclosure proceedings while requiring the disputed accounting entries and related charges to be excluded from the debt calculation. The appeals court also noted that the couple could still explore options to retain their property, including redeeming the mortgage debt under Florida law or pursuing available federal bankruptcy protections.
