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IN THE CIRCUIT COURT OF THE 15TH JUDICIAL CIRCUIT,
IN AND FOR PALM BEACH COUNTY, FLORIDA
GENERAL JURISDICTION DIVISION
CASE NO.: 502008CA014156XXXMB
DIVISION: AW
WELLS FARGO BANK, N.A. AS TRUSTEE
FOR MLMI TRUST SERIES 2006-WMC1,
Plaintiff
VS.
3
FREDERICK MARAGH 3
and NORMA MARAGH, et al, enn A
ar ow
ce: 1
Defendant(s) a2. «N
/ 220 wz
ser =
nae
53
ANSWER AND AFFIRMATIVE DEFENSES re
COME NOW Defendants, Norma and Frederick Maragh, by and through the undersigned
attorney, and file this Answer and Affirmative Defenses as follows:
ANSWER
1.
Defendants are without knowledge or information sufficient to form a belief as to the truth
of the counts in the complaint and therefore they deny the same.
DEMAND FOR JURY TRIAL
2.
In accordance with Florida Statutes § 702.01, Defendants request the severance of the
affirmative defenses at law from the suit in equity so that the affirmative defenses can be
tried before a jury. See Dykes v. Trustbank Savings, F.S.B., 567 So. 2d 958 (Fla. 2d DCA
1990.)
hee
‘pe.3. As the trial of the affirmative defenses may affect the amount 2. foreclosure
judgment, if any, by offset and recoupment, Defendants requests that the jury trial be held
before the trail on the foreclosure complaint. Florida courts have routinely held that
where a counterclaim or affirmative defense may affect the amount of the award of the
final judgment, the execution on the final judgment of foreclosure should be stayed
pending trial on the counterclaim. See Heritage Real Estate Development Co. Inc. v.
Gaich, 620 So.2d 1118 (Fla. 5 DCA 1993.)
STATUTORY FRAMEWORK OF RESPA
. The Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA") was
enacted on December 22, 1974.
. Congress noted that "significant reforms in the real estate settlement process are needed to
insure that consumers throughout the Nation are protected from unnecessarily high
settlement charges caused by certain abusive practices that have developed in some areas of
the country." 12 U.S.C. § 2601(a).
One purpose of RESPA is "to effect certain changes in the settlement process for
residential real estate that will result ... in the elimination of kickbacks or referral fees that
tend to increase unnecessarily the costs of certain settlement services." 12 U.S.C. §
2601(b).
RESPA applies to "federally related mortgage loans," which is defined at 12 U.S.C. §
2602(1). RESPA initially applied only to certain first liens on residential real property. On
October 28, 1992, the law was amended to cover subordinate liens and loans used to prepay
or pay off an existing loan secured by the same property. 12 U.S.C. § 2602(1); 24 C.F.R. §
3500.2.
. RESPA prohibits kickbacks and referral fees: "No person shall give and no person shall
accept any fee, kickback, or thing of value pursuant to any agreement or understanding,10.
ll.
12.
13.
oral or otherwise, that business incident to or a part of a real estate settlement service
involving a federally related mortgage loan shall be referred to any person." 12 U.S.C. §
2607(a).
RESPA prohibits unearned fees: "No person shall give and no person shall accept any
portion, split, or percentage of any charge made or received for the rendering of a real
estate settlement service in connection with a transaction involving a federally related
mortgage loan other than for services actually performed.” 12 U.S.C. § 2607(b).
RESPA requires that the lender provide to the borrower a settlement statement which shall
"conspicuously and clearly itemize all charges imposed upon the borrower ... in connection
with the settlement." 12 U.S.C. § 2603(a).
RESPA requires that the lender and mortgage broker provide to the borrower "a good faith
estimate of the amount or range of charges for specific settlement services the borrower is
likely to incur in connection with the settlement." 12 U.S.C. § 2604(c); 24 C.F.R. §
3500.7.
The term "settlement services" includes "any service provided in connection with a real
estate settlement including, but not limited to...the origination of a federally related
mortgage loan (including, but not limited to, the taking of loan applications, loan
processing, and the underwriting and funding of loans)." 12 U.S.C. § 2602(3); 24 C.F.R. §
3500.2.
STATEMENT OF FACTS
On November 29, 2005 Defendants purchased as their primary residence the property
located at 14242 78" Place, North Loxahatchee, Fl. 33467. As such, the transaction
qualifies as a “federally related mortgage loan” as defined in RESPA.
. Defendants’ mortgage broker, East Coast Capital Corporation (“East Coast Capital”)
promised to get the Defendants the “best” interest rate possible. Instead of shoppingaround to find the best interest rate, East Coast Capital directed eee to WMC
Mortgage Corp whose address was 6320 Canoga Avenue, 10" Flooor, Woodland Hills, CA
91367 (“WMC Mortgage Corp”) for a loan.
15. WMC Mortgage Corp paid a yield spread premium to East Coast Capital in the amount of
$2,058.75 even though the Defendants paid East Coast Capital an application and
processing fee of $8,235. Based on Defense counsel’s experience with the mortgage
industry, the yield spread premium was compensation for locking Defendant into an
interest rate which was higher than the par rate — defined as the rate at which given
Defendant’s income and credit history Plaintiff would have been otherwise willing to make
them a loan ~ for which she actually qualified on the day of closing. It was also an illegal
referral fee under RESPA.
16. WMC Mortgage Corp knew that East Coast Capital was the agent of the Defendant and
owed him certain duties under Florida Jaw. Specifically, East Coast Capital had an
obligation to make a full and accurate disclosure of the terms of a loan to borrowers,
particularly those that might affect the borrower’s decision. See Florida Statutes Section
494.0025.' Obviously, the existence of a par rate which was substantially lower than the
upsold rate that Defendant received is a material fact that under F.S. Section 494.0025(5)
should have been revealed to the Defendant borrower. Said disclosure never took place.
Instead, WMC Mortgage Corp induced East Coast Capital to breach its agency contract
with and its statutorily-imposed duties owed to Defendant by offering and paying East
Coast Capital an illicit payment to steer Defendant into a loan at artificially inflated rates
and terms because higher-rate loans earned WMC Mortgage Corp the greatest profit when.
‘Florida Statutes Section 494.0025 Prohibited practices. —It is unlawful for any person....(5) In
any matter within the jurisdiction of the office, to knowingly and willfully falsify, conceal, or
cover up by a trick, scheme, or device a material fact, make any false or fraudulent statement or
representation, or make or use any false writing or document, knowing the same to contain any
false or fraudulent statement or entry.17.
19,
20.
21.
22.
it sold them into the secondary market. Unfortunately, this loan 2 its artificially-inflate
interest rate was not in the best interest of, or appropriate for, the Defendant.
The high interest rate on this loan made it unaffordable for the Defendant, and it is the
immediate and proximate cause of their inability to make the mortgage payments.
Defendant is now subject to this foreclosure action as a result of the illegal acts of WMC
Mortgage Corp, Plaintiff's assignor. If Defendant had received the par rate for which he
qualified on the day of the closing, he would have been able to avoid the extant foreclosure
action. Plaintiff, as WMC Mortgage Corp’s successor, stands in WMC Mortgage Corp’s
shoes; therefore, Defendants can bring any affirmative defenses and counter claims against
Plaintiff that they could bring against WMC Mortgage Corp.
FIRST AFFIRMATIVE DEFENSE
RECOUPMENT FOR VIOLATION OF RESPA
. Defendants incorporates paragraphs 11 through 17 above as if set forth herein.
The transaction between Plaintiff's assignor and Defendant was a “federally related
mortgage loan” as that term is defined in RESPA, 12 USC § 2602(1).
WMC Mortgage Corp’s funding and origination of this transaction are “settlement
services” as that term is defined in RESPA, 12 U.S.C. § 2601(3).
As part of this transaction, WMC Mortgage Corp paid fees to East Coast Capital for a loan
with an interest rate that exceeded Defendants’ par rate for this loan. No one ever revealed
to the Defendants what their par rate was.
In exchange for submitting an above par rate loan, WMC Mortgage Corp paid East Coast
Capital $1,237.50 outside of closing. This money was for steering the Defendants to
Plaintiff's assignor.23.
24.
25.
26.
27.
28.
WMC Mortgage Corp’s payment of this fee to East Coast eae ae RESPA’s
prohibition against providers of settlement services from paying referral fees and
kickbacks. 12 U.S.C. § 2607.
Hence, Plaintiff is responsible for its assignor’s violation of RESPA, a violation that
subjects Plaintiff to a civil penalty of three times the amount of any charge paid for
settlement services and attorney’s fees. 12 U.S.C. 2607(d)(2).
WHEREFORE, Defendants pray that this Court dismiss Plaintiff's complaint, with
prejudice, or in the alternative reduce the amount owed by Defendants by the amount of the
damages available under RESPA. Defendants also ask for legal fees and costs of court.
SECOND AFFIRMATIVE DEFENSE
INTENTIONAL INTERFERENCE WTH A BUSINESS RELATIONSHIP
Defendants incorporate paragraphs 11 through 17 above as if set forth herein.
The Supreme Court of Florida has recognized the tort of intentional interference with a
business relationship and established that the cause of action has four required elements:
(1) the existence of a business relationship, not necessarily evidenced by an enforceable
contract; (2) knowledge of the relationship on the part of the defendant; (3) an intentional
and unjustified interference with the relationship by the defendant; and (4) damage to the
plaintiff as a result of the breach of the relationship. See Tamiami Trail Tours, Inc. v.
Cotton, 463 Sp.2d 1126 (Fla. 1985).
Each of the elements set forth above is present in the instant action. First, there was a
business relationship between the Defendants and East Coast Capital. Specifically, East
Coast Capital agreed to find Defendant the “best” interest rate that it could and Defendants
paid East Coast Capital for its services. Second, WMC Mortgage Corp knew of the
relationship between Defendants and East Coast Capital. It goes without saying that
mortgage lenders know that the brokers who bring lenders to them receive funds from their
6clients for their services and that a key element of that service is t0'Secure a loan at the best
possible interest rate for the borrower. Third, WMC Mortgage Corp intentionally and
unjustifiably interfered with the relationship between the Defendants and their mortgage
broker by paying the mortgage broker a yield spread premium in exchange for
misrepresenting to the Defendants that his upsold interest rate was actually his par rate, the
rate at which WMC Mortgage Corp would have made the loan but for the existence of the
yield spread premium. If the Defendant had known that he could have received a
significantly lower interest rate by paying all the broker’s fees himself, he would have done
so. The mortgage broker, who had a duty under Florida Statutes Section 494.0025 to
reveal this information to Defendant, did not because it wanted to earn the yield spread
premium. Fourth, the Defendant has suffered damage in that he currently finds himself in
foreclosure. If the Defendant had received his par rate, he would have been able to afford
this loan. Therefore, but for WMC Mortgage Corp’s payment of the yield spread premium,
the instant action would not have been filed. WMC Mortgage Corp’s payment of the yield
spread premium is the immediate and proximate cause of the instant foreclosure action.
29. WHEREAS, Defendants request that the Court dismiss the instant case with prejudice
and award Defendants attorney’s fees, litigation expenses and costs of suit. In the
alternative the Defendant requests that the Court reduced the amounts owed by an
amount equal to the difference between the interest that Defendant paid with his upsold
rate and the par rate for which he qualified on the day of closing.
THIRD AFFIRMATIVE DEFENSE
UNCLEAN HANDS
30. Defendants incorporate paragraphs 11 through 17 above as if set forth herein.
31, A foreclosure action is an equitable proceeding which may be denied if the holder of the
note comes to the court with unclean hands or the foreclosure would be unconscionable.32.
33.
Federal Savings. & Loan Ins. Corp. v. Two Rivers Assoes., Inc. M3 1267, 1272 (1 im
Cir.1989); Limner v. Country Pines Condo. Association, Inc., 709 So. 2d 154 (Fla. 4th
DCA 1998) (confirming that the unclean hands doctrine applies to the equitable remedy of
foreclosure); Knight Energy Services, Inc. v. Amoco Oil Co., 660 So. 2d 786, 789 (Fla. 4th
DCA 1995) (holding that a “foreclosure action is an equitable proceeding which may be
denied if the holder of the note comes to the court with unclean hands or the foreclosure
would be unconscionable"); Lamb v. Pike, 659 So. 2d 1385, 1387 (Fla. 3d DCA 1995)
(stating that unclean hands is a valid equitable defense to a foreclosure action); Precision
Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 819, 65 S.Ct.
993, 999, 89 L.Ed. 1381 (1945) (unclean hands doctrine justifies dismissal where
"inequitable conduct impregnates ... entire cause of action.")
In the extant case, Plaintiff has unclean hands by virtue of the fact that its assignor, WMC
Mortgage Corp, violated RESPA by paying an illegal yield spread premium in exchange
for East Coast Capital’s locking the Defendant into an interest rate that exceeded his par
rate. WMC Mortgage Corp intentionally interfered with the contractual relationship
between Defendants and East Coast Capital and induced East Coast Capital to breach its
statutorily-imposed duties to Defendants so as to lock them into an interest rate that
exceeded their par rate. WMC Mortgage Corp’s illegal and tortious acts made this loan too
expensive and are the proximate cause for this foreclosure action. Defendants have
suffered and continue to suffer because of the illegal and tortious acts of the Plaintiff's
assignor for which Plaintiff is now responsible.
WHEREAS, Defendants request that the Court dismiss the instant case with prejudice and
award Defendants attorney’s fees, litigation expenses and costs of suit.VIOLATION OF FLORIDA’S DECEPTIVE AND UNFAIR
TRADE PRACTICES ACT, CHAPTER 501, PART II, FLA.STATUES (2007)
FOURTH AFFIRMATIVE DEFENSE
34. Defendants incorporate paragraphs |1 through 17 above as if set forth herein.
35. At all times relevant, the Defendants were “consumers” as defined by Chapter 501, Part
II, Florida Statutes (2007) (the “Act”).
36. At all times relevant, the Plaintiff and its assignor were engaged in “trade or commerce”
as defined by the Act.
37. A violation of the Act may be based on “any law, statute, rule, regulation, or ordinance
which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable
acts or practices.” See Section 501.203 (3)(c), Florida Statutes.
38. The provisions of the Act are to be liberally construed to promote the following policies:
a. To simplify, clarify, and modernize the law governing consumer protection,
unfair methods of competition and unconscionable, deceptive, and unfair trade
practices.
b. To protect the consuming public and legitimate business enterprises from
those who engage in unfair methods of competition, or unconscionable,
deceptive, or unfair acts or practices in the conduct of any trade or commerce.
Section 501.202(1) and (2), Florida Statutes.
39. Plaintiff's assignor violated the Act by engaging in unfair and deceptive acts and
practices including inducing the mortgage broker’s breach of its duties to the Defendant
under Florida Statutes Section 494.0025 at the time that the loan was generated and
paying an illegal yield spread premium to the mortgage broker to compensate the
brokerage for inducing the Defendants to enter into a transaction at an interest rate which
exceeded the par rate for which they qualified.40. In addition, WMC Mortgage Corp, Plaintiff's assignor, cae Act in part by
representing to the Defendants that it had reviewed the Defendant’s subprime loan
application in accordance with underwriting standards to confirm that the Defendants
were able to repay the loan pursuant to its terms.
4
. WMC Mortgage Corp, Plaintiff's assignor, violated the Act in part by representing to the
Defendants that the loan originator’s approval of the Defendants’ subprime loan
application, either expressly or impliedly, confirmed that the Defendants were able to
repay the loans pursuant to its terms.
42. WMC Mortgage Corp, Plaintiffs assignor, violated the Act in part by representing to the
Defendants that the loan originator’s closing and funding of the Defendants’ subprime
loan mortgage, either expressly or impliedly, confirmed that the Defendants were able to
repay the loans pursuant to its terms.
43. WHEREFORE, Defendants pray that this Court dismiss Plaintiff's complaint, with
prejudice, or in the alternative reduce the amount owed by the Defendant by the amount
of damages available under the Act. Defendant also request attorney’s fees pursuant to
the Act.
CERTIFICATE OF SERVICE
1 HEREBY CERTIFY that a true and correct copy of the foregoing was mailed by U.S.
Mail this 2" day of December, 2008 to the following:
Ryan T. Cox, Esq.
Smith, Hiatt & Diaz, P.A. Respectfully submitted,
P.O. Box 11438
Fort Lauderdale, FL 33339-1438
Florida Bar No. 0012839
1223) Forest Hill Blvd, Suite 110R
Wellington, FL 33414
Tel. (561) 868-2642
Fax (561) 658-5749
Attorney for Defendant(s)
10
Preview
IN THE CIRCUIT COURT OF THE 15TH JUDICIAL CIRCUIT, IN AND FOR PALM BEACH COUNTY, FLORIDA GENERAL JURISDICTION DIVISION CASE NO.: 502008CA014156XXXMB DIVISION: AW WELLS FARGO BANK, N.A. AS TRUSTEE FOR MLMI TRUST SERIES 2006-WMC1, Plaintiff VS. 3 FREDERICK MARAGH 3 and NORMA MARAGH, et al, enn A ar ow ce: 1 Defendant(s) a2. «N / 220 wz ser = nae 53 ANSWER AND AFFIRMATIVE DEFENSES re COME NOW Defendants, Norma and Frederick Maragh, by and through the undersigned attorney, and file this Answer and Affirmative Defenses as follows: ANSWER 1. Defendants are without knowledge or information sufficient to form a belief as to the truth of the counts in the complaint and therefore they deny the same. DEMAND FOR JURY TRIAL 2. In accordance with Florida Statutes § 702.01, Defendants request the severance of the affirmative defenses at law from the suit in equity so that the affirmative defenses can be tried before a jury. See Dykes v. Trustbank Savings, F.S.B., 567 So. 2d 958 (Fla. 2d DCA 1990.) hee ‘pe.3. As the trial of the affirmative defenses may affect the amount 2. foreclosure judgment, if any, by offset and recoupment, Defendants requests that the jury trial be held before the trail on the foreclosure complaint. Florida courts have routinely held that where a counterclaim or affirmative defense may affect the amount of the award of the final judgment, the execution on the final judgment of foreclosure should be stayed pending trial on the counterclaim. See Heritage Real Estate Development Co. Inc. v. Gaich, 620 So.2d 1118 (Fla. 5 DCA 1993.) STATUTORY FRAMEWORK OF RESPA . The Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq. ("RESPA") was enacted on December 22, 1974. . Congress noted that "significant reforms in the real estate settlement process are needed to insure that consumers throughout the Nation are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country." 12 U.S.C. § 2601(a). One purpose of RESPA is "to effect certain changes in the settlement process for residential real estate that will result ... in the elimination of kickbacks or referral fees that tend to increase unnecessarily the costs of certain settlement services." 12 U.S.C. § 2601(b). RESPA applies to "federally related mortgage loans," which is defined at 12 U.S.C. § 2602(1). RESPA initially applied only to certain first liens on residential real property. On October 28, 1992, the law was amended to cover subordinate liens and loans used to prepay or pay off an existing loan secured by the same property. 12 U.S.C. § 2602(1); 24 C.F.R. § 3500.2. . RESPA prohibits kickbacks and referral fees: "No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding,10. ll. 12. 13. oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person." 12 U.S.C. § 2607(a). RESPA prohibits unearned fees: "No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.” 12 U.S.C. § 2607(b). RESPA requires that the lender provide to the borrower a settlement statement which shall "conspicuously and clearly itemize all charges imposed upon the borrower ... in connection with the settlement." 12 U.S.C. § 2603(a). RESPA requires that the lender and mortgage broker provide to the borrower "a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur in connection with the settlement." 12 U.S.C. § 2604(c); 24 C.F.R. § 3500.7. The term "settlement services" includes "any service provided in connection with a real estate settlement including, but not limited to...the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans)." 12 U.S.C. § 2602(3); 24 C.F.R. § 3500.2. STATEMENT OF FACTS On November 29, 2005 Defendants purchased as their primary residence the property located at 14242 78" Place, North Loxahatchee, Fl. 33467. As such, the transaction qualifies as a “federally related mortgage loan” as defined in RESPA. . Defendants’ mortgage broker, East Coast Capital Corporation (“East Coast Capital”) promised to get the Defendants the “best” interest rate possible. Instead of shoppingaround to find the best interest rate, East Coast Capital directed eee to WMC Mortgage Corp whose address was 6320 Canoga Avenue, 10" Flooor, Woodland Hills, CA 91367 (“WMC Mortgage Corp”) for a loan. 15. WMC Mortgage Corp paid a yield spread premium to East Coast Capital in the amount of $2,058.75 even though the Defendants paid East Coast Capital an application and processing fee of $8,235. Based on Defense counsel’s experience with the mortgage industry, the yield spread premium was compensation for locking Defendant into an interest rate which was higher than the par rate — defined as the rate at which given Defendant’s income and credit history Plaintiff would have been otherwise willing to make them a loan ~ for which she actually qualified on the day of closing. It was also an illegal referral fee under RESPA. 16. WMC Mortgage Corp knew that East Coast Capital was the agent of the Defendant and owed him certain duties under Florida Jaw. Specifically, East Coast Capital had an obligation to make a full and accurate disclosure of the terms of a loan to borrowers, particularly those that might affect the borrower’s decision. See Florida Statutes Section 494.0025.' Obviously, the existence of a par rate which was substantially lower than the upsold rate that Defendant received is a material fact that under F.S. Section 494.0025(5) should have been revealed to the Defendant borrower. Said disclosure never took place. Instead, WMC Mortgage Corp induced East Coast Capital to breach its agency contract with and its statutorily-imposed duties owed to Defendant by offering and paying East Coast Capital an illicit payment to steer Defendant into a loan at artificially inflated rates and terms because higher-rate loans earned WMC Mortgage Corp the greatest profit when. ‘Florida Statutes Section 494.0025 Prohibited practices. —It is unlawful for any person....(5) In any matter within the jurisdiction of the office, to knowingly and willfully falsify, conceal, or cover up by a trick, scheme, or device a material fact, make any false or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false or fraudulent statement or entry.17. 19, 20. 21. 22. it sold them into the secondary market. Unfortunately, this loan 2 its artificially-inflate interest rate was not in the best interest of, or appropriate for, the Defendant. The high interest rate on this loan made it unaffordable for the Defendant, and it is the immediate and proximate cause of their inability to make the mortgage payments. Defendant is now subject to this foreclosure action as a result of the illegal acts of WMC Mortgage Corp, Plaintiff's assignor. If Defendant had received the par rate for which he qualified on the day of the closing, he would have been able to avoid the extant foreclosure action. Plaintiff, as WMC Mortgage Corp’s successor, stands in WMC Mortgage Corp’s shoes; therefore, Defendants can bring any affirmative defenses and counter claims against Plaintiff that they could bring against WMC Mortgage Corp. FIRST AFFIRMATIVE DEFENSE RECOUPMENT FOR VIOLATION OF RESPA . Defendants incorporates paragraphs 11 through 17 above as if set forth herein. The transaction between Plaintiff's assignor and Defendant was a “federally related mortgage loan” as that term is defined in RESPA, 12 USC § 2602(1). WMC Mortgage Corp’s funding and origination of this transaction are “settlement services” as that term is defined in RESPA, 12 U.S.C. § 2601(3). As part of this transaction, WMC Mortgage Corp paid fees to East Coast Capital for a loan with an interest rate that exceeded Defendants’ par rate for this loan. No one ever revealed to the Defendants what their par rate was. In exchange for submitting an above par rate loan, WMC Mortgage Corp paid East Coast Capital $1,237.50 outside of closing. This money was for steering the Defendants to Plaintiff's assignor.23. 24. 25. 26. 27. 28. WMC Mortgage Corp’s payment of this fee to East Coast eae ae RESPA’s prohibition against providers of settlement services from paying referral fees and kickbacks. 12 U.S.C. § 2607. Hence, Plaintiff is responsible for its assignor’s violation of RESPA, a violation that subjects Plaintiff to a civil penalty of three times the amount of any charge paid for settlement services and attorney’s fees. 12 U.S.C. 2607(d)(2). WHEREFORE, Defendants pray that this Court dismiss Plaintiff's complaint, with prejudice, or in the alternative reduce the amount owed by Defendants by the amount of the damages available under RESPA. Defendants also ask for legal fees and costs of court. SECOND AFFIRMATIVE DEFENSE INTENTIONAL INTERFERENCE WTH A BUSINESS RELATIONSHIP Defendants incorporate paragraphs 11 through 17 above as if set forth herein. The Supreme Court of Florida has recognized the tort of intentional interference with a business relationship and established that the cause of action has four required elements: (1) the existence of a business relationship, not necessarily evidenced by an enforceable contract; (2) knowledge of the relationship on the part of the defendant; (3) an intentional and unjustified interference with the relationship by the defendant; and (4) damage to the plaintiff as a result of the breach of the relationship. See Tamiami Trail Tours, Inc. v. Cotton, 463 Sp.2d 1126 (Fla. 1985). Each of the elements set forth above is present in the instant action. First, there was a business relationship between the Defendants and East Coast Capital. Specifically, East Coast Capital agreed to find Defendant the “best” interest rate that it could and Defendants paid East Coast Capital for its services. Second, WMC Mortgage Corp knew of the relationship between Defendants and East Coast Capital. It goes without saying that mortgage lenders know that the brokers who bring lenders to them receive funds from their 6clients for their services and that a key element of that service is t0'Secure a loan at the best possible interest rate for the borrower. Third, WMC Mortgage Corp intentionally and unjustifiably interfered with the relationship between the Defendants and their mortgage broker by paying the mortgage broker a yield spread premium in exchange for misrepresenting to the Defendants that his upsold interest rate was actually his par rate, the rate at which WMC Mortgage Corp would have made the loan but for the existence of the yield spread premium. If the Defendant had known that he could have received a significantly lower interest rate by paying all the broker’s fees himself, he would have done so. The mortgage broker, who had a duty under Florida Statutes Section 494.0025 to reveal this information to Defendant, did not because it wanted to earn the yield spread premium. Fourth, the Defendant has suffered damage in that he currently finds himself in foreclosure. If the Defendant had received his par rate, he would have been able to afford this loan. Therefore, but for WMC Mortgage Corp’s payment of the yield spread premium, the instant action would not have been filed. WMC Mortgage Corp’s payment of the yield spread premium is the immediate and proximate cause of the instant foreclosure action. 29. WHEREAS, Defendants request that the Court dismiss the instant case with prejudice and award Defendants attorney’s fees, litigation expenses and costs of suit. In the alternative the Defendant requests that the Court reduced the amounts owed by an amount equal to the difference between the interest that Defendant paid with his upsold rate and the par rate for which he qualified on the day of closing. THIRD AFFIRMATIVE DEFENSE UNCLEAN HANDS 30. Defendants incorporate paragraphs 11 through 17 above as if set forth herein. 31, A foreclosure action is an equitable proceeding which may be denied if the holder of the note comes to the court with unclean hands or the foreclosure would be unconscionable.32. 33. Federal Savings. & Loan Ins. Corp. v. Two Rivers Assoes., Inc. M3 1267, 1272 (1 im Cir.1989); Limner v. Country Pines Condo. Association, Inc., 709 So. 2d 154 (Fla. 4th DCA 1998) (confirming that the unclean hands doctrine applies to the equitable remedy of foreclosure); Knight Energy Services, Inc. v. Amoco Oil Co., 660 So. 2d 786, 789 (Fla. 4th DCA 1995) (holding that a “foreclosure action is an equitable proceeding which may be denied if the holder of the note comes to the court with unclean hands or the foreclosure would be unconscionable"); Lamb v. Pike, 659 So. 2d 1385, 1387 (Fla. 3d DCA 1995) (stating that unclean hands is a valid equitable defense to a foreclosure action); Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 819, 65 S.Ct. 993, 999, 89 L.Ed. 1381 (1945) (unclean hands doctrine justifies dismissal where "inequitable conduct impregnates ... entire cause of action.") In the extant case, Plaintiff has unclean hands by virtue of the fact that its assignor, WMC Mortgage Corp, violated RESPA by paying an illegal yield spread premium in exchange for East Coast Capital’s locking the Defendant into an interest rate that exceeded his par rate. WMC Mortgage Corp intentionally interfered with the contractual relationship between Defendants and East Coast Capital and induced East Coast Capital to breach its statutorily-imposed duties to Defendants so as to lock them into an interest rate that exceeded their par rate. WMC Mortgage Corp’s illegal and tortious acts made this loan too expensive and are the proximate cause for this foreclosure action. Defendants have suffered and continue to suffer because of the illegal and tortious acts of the Plaintiff's assignor for which Plaintiff is now responsible. WHEREAS, Defendants request that the Court dismiss the instant case with prejudice and award Defendants attorney’s fees, litigation expenses and costs of suit.VIOLATION OF FLORIDA’S DECEPTIVE AND UNFAIR TRADE PRACTICES ACT, CHAPTER 501, PART II, FLA.STATUES (2007) FOURTH AFFIRMATIVE DEFENSE 34. Defendants incorporate paragraphs |1 through 17 above as if set forth herein. 35. At all times relevant, the Defendants were “consumers” as defined by Chapter 501, Part II, Florida Statutes (2007) (the “Act”). 36. At all times relevant, the Plaintiff and its assignor were engaged in “trade or commerce” as defined by the Act. 37. A violation of the Act may be based on “any law, statute, rule, regulation, or ordinance which proscribes unfair methods of competition, or unfair, deceptive, or unconscionable acts or practices.” See Section 501.203 (3)(c), Florida Statutes. 38. The provisions of the Act are to be liberally construed to promote the following policies: a. To simplify, clarify, and modernize the law governing consumer protection, unfair methods of competition and unconscionable, deceptive, and unfair trade practices. b. To protect the consuming public and legitimate business enterprises from those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce. Section 501.202(1) and (2), Florida Statutes. 39. Plaintiff's assignor violated the Act by engaging in unfair and deceptive acts and practices including inducing the mortgage broker’s breach of its duties to the Defendant under Florida Statutes Section 494.0025 at the time that the loan was generated and paying an illegal yield spread premium to the mortgage broker to compensate the brokerage for inducing the Defendants to enter into a transaction at an interest rate which exceeded the par rate for which they qualified.40. In addition, WMC Mortgage Corp, Plaintiff's assignor, cae Act in part by representing to the Defendants that it had reviewed the Defendant’s subprime loan application in accordance with underwriting standards to confirm that the Defendants were able to repay the loan pursuant to its terms. 4 . WMC Mortgage Corp, Plaintiff's assignor, violated the Act in part by representing to the Defendants that the loan originator’s approval of the Defendants’ subprime loan application, either expressly or impliedly, confirmed that the Defendants were able to repay the loans pursuant to its terms. 42. WMC Mortgage Corp, Plaintiffs assignor, violated the Act in part by representing to the Defendants that the loan originator’s closing and funding of the Defendants’ subprime loan mortgage, either expressly or impliedly, confirmed that the Defendants were able to repay the loans pursuant to its terms. 43. WHEREFORE, Defendants pray that this Court dismiss Plaintiff's complaint, with prejudice, or in the alternative reduce the amount owed by the Defendant by the amount of damages available under the Act. Defendant also request attorney’s fees pursuant to the Act. CERTIFICATE OF SERVICE 1 HEREBY CERTIFY that a true and correct copy of the foregoing was mailed by U.S. Mail this 2" day of December, 2008 to the following: Ryan T. Cox, Esq. Smith, Hiatt & Diaz, P.A. Respectfully submitted, P.O. Box 11438 Fort Lauderdale, FL 33339-1438 Florida Bar No. 0012839 1223) Forest Hill Blvd, Suite 110R Wellington, FL 33414 Tel. (561) 868-2642 Fax (561) 658-5749 Attorney for Defendant(s) 10