IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FIFTH DISTRICT

                                             NOT FINAL UNTIL TIME EXPIRES TO
                                             FILE MOTION FOR REHEARING AND
                                             DISPOSITION THEREOF IF FILED


ELNA F. MCINTOSH AND
CHRISTOPHER HALLMAN,

             Appellants,

 v.                                               Case No. 5D16-2189

WELLS FARGO BANK, N.A.
AND BELLALAGO AND ISLES
OF BELLALAGO COMMUNITY
ASSOCIATION, INC.,

             Appellees.

________________________________/

Opinion filed September 18, 2017

Appeal from the Circuit Court
for Osceola County,
Scott Polodna, Judge.

Andrew B. Greenlee, of Andrew B
Greenlee, P.A., Sanford, and Anthony N.
Legendre, II, of Law Offices of Legendre &
Legendre, PLLC, Maitland, for Appellants.

Kimberly S. Mello and Laura J. Bassini, of
Greenberg Traurig, P.A., Tampa, and
Michele L. Stocker, of Greenberg Traurig,
P.A., Ft. Lauderdale, for Appellee, Wells
Fargo Bank, N.A.

No Appearance for Appellee, Isles of
Bellalago Community Association, Inc.

ORFINGER, J.
       Elna F. McIntosh and Christopher Hallman (collectively “Borrowers”) appeal a final

judgment of foreclosure entered in favor of Wells Fargo Bank, N.A., following a non-jury

trial. On appeal, Borrowers contend that the trial court erred by concluding that United

States Department of Housing and Urban Development (HUD) regulations were not

conditions precedent to bringing the foreclosure action, denying Borrowers’ motions for

involuntary dismissal, and entering a final judgment of foreclosure.       We agree and

reverse.

       In April 2010, Borrowers executed a note to FBC Mortgage, LLC, and secured its

payment with a mortgage. The Federal Housing Administration (FHA) insured the loan.

Eventually, Wells Fargo became the holder of the note and mortgage. In its operative

complaint, Wells Fargo generally alleged that it had complied with all conditions precedent

to filing the lawsuit. In their answer, Borrowers denied that Wells Fargo had satisfied all

conditions precedent and asserted several affirmative defenses, including that Wells

Fargo failed to comply with the HUD requirement to send proper delinquency notices

under 24 C.F.R. § 203.602 (2016). Ultimately, the case proceeded to trial. After Wells

Fargo rested its case, Borrowers moved for an involuntary dismissal, asserting several

grounds, only one of which has merit—Wells Fargo’s failure to demonstrate compliance

with applicable HUD regulations prior to filing suit.

       The mortgage in this case specifically incorporates HUD regulations as limitations

on acceleration and foreclosure. Paragraph 9 of the mortgage states, in pertinent part:

              9.     Grounds for Acceleration of Debt.
                     (a) Default. Lender may, except as limited by
                     regulations issued by the Secretary [of Housing and
                     Urban Development], in the case of payment defaults,
                     require immediate payment in full of all sums secured
                     by this Security Instrument . . .



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                     ...

                     (d) Regulations of HUD Secretary. In many
                     circumstances regulations issued by the Secretary will
                     limit Lender’s rights, in the case of payment defaults,
                     to require immediate payment in full and foreclose if not
                     paid. This Security Instrument does not authorize
                     acceleration or foreclosure if not permitted by
                     regulations of the Secretary.

       Paragraph 6(B) of the note similarly provides:

              (B) Default
              If Borrower defaults by failing to pay in full any monthly
              payment, then Lender may, except as limited by regulations
              of the Secretary in the case of payment defaults, require
              immediate payment in full of the principal balance remaining
              due and all accrued interest. Lender may choose not to
              exercise this option without waiving its rights in the event of
              any subsequent default. In many circumstances regulations
              issued by the Secretary will limit Lender’s rights to require
              immediate payment in full in the case of payment defaults.
              This Note does not authorize acceleration when not permitted
              by HUD regulations. As used in this Note, “Secretary” means
              the Secretary of Housing and Urban Development or his or
              her designee.

       Wells Fargo concedes that pursuant to Palma v. JPMorgan Chase Bank, 

771 (Fla. 5th DCA 2016), compliance with certain HUD regulations is a condition

precedent to bringing a foreclosure action when, as here, the regulations are incorporated

into the terms of the loan.1     In Palma, we held that a promissory note specifically

incorporated HUD regulations by stating that “[i]f Borrower defaults . . . then Lender may,

except as limited by regulations of the Secretary in the case of payment defaults, require

immediate payment in full . . . . This Note does not authorize acceleration when not



       1 This Court decided Palma after the trial and after Wells Fargo filed its initial brief
in this case.



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permitted by HUD regulations.” 

at 773. Palma also held that the burden rests

with the plaintiff to prove compliance with conditions precedent if asserted in the complaint

and denied in the answer, but with the defendant if raised instead as an affirmative

defense in the answer. 

Here, Borrowers raised noncompliance with § 203.602

and the terms of the note and mortgage as both a specific denial and an affirmative

defense. Thus, the burden remained on Wells Fargo to demonstrate compliance with the

applicable HUD regulations.2     See 

(holding that specific denial that bank

complied with all conditions precedent shifted burden back to bank to prove at trial that it

complied).

       Compliance with HUD regulations was a condition precedent to bringing a

foreclosure action in this case. Wells Fargo’s argument that it substantially complied with

the HUD regulations is unavailing. Accordingly, we reverse and direct the trial court to

enter an order of involuntary dismissal.

       REVERSED and REMANDED.


WALLIS and EDWARDS, JJ., concur.




       2 Compliance with HUD regulations 24 C.F.R. §§ 203.604 and 203.605 is also
required.


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