## Facts

- The mortgagors executed an FHA-form installment note for $13,600 at 8.5% interest, payable in monthly installments of $104.58 due on the first of each month.
- The note and mortgage provided a 15-day grace period, authorized late charges after 15 days, and permitted the mortgagee to accelerate the entire debt if a delinquent installment was not cured before the next installment’s due date.
- Both instruments contained provisions obligating the mortgagors to pay costs of collection, including reasonable attorney’s fees, upon default and collection by an attorney.
- Payment delays occurred over time; the mortgagee accepted late payments and late charges on multiple occasions.
- A later attempted cure was rejected due to a deficiency in late charges, and by the time notice of rejection reached the mortgagor, another installment had come due.
- The mortgagee elected to accelerate and filed a foreclosure action.
- The circuit court found it inequitable to allow foreclosure because the litigation resulted from both parties’ conduct, denied foreclosure, and ordered reinstatement if the mortgagors timely paid specified arrearages, late charges, costs, and an attorney ad litem fee.
- The circuit court found $1,650 to be a reasonable fee for the mortgagee’s attorneys but ordered the mortgagee to pay its own attorney’s fees and certain other personal costs.

## Issues

1. Whether the trial court abused its equitable discretion by denying foreclosure despite a technical default and an acceleration clause.
2. Whether the trial court erred by declining to assess the mortgagee’s attorney’s fees against the mortgagors notwithstanding contractual fee provisions.

## Decision

- The appellate court affirmed the denial of foreclosure.
- The appellate court held the chancellor did not abuse discretion in conditioning relief on payment of arrears and reinstating the loan rather than granting foreclosure.
- The appellate court affirmed the attorney’s fee ruling, leaving in place the order requiring the mortgagee to bear its own attorney’s fees.

## Legal Principles

- Mortgage foreclosure is an equitable proceeding; foreclosure is not automatic even when contractual default and acceleration conditions are satisfied.
- An acceleration clause confers an option that remains subject to equitable control; a court may relieve against acceleration and foreclosure where strict enforcement would be inequitable and the mortgagor can cure and make the mortgagee whole.
- A chancellor may condition denial of foreclosure on prompt payment of arrears, late charges, and specified costs and may order reinstatement under the original loan terms.
- Contractual attorney’s fee provisions in notes and mortgages do not eliminate equitable discretion over whether, and against whom, fees are assessed, particularly when the plaintiff does not obtain foreclosure and both parties’ conduct contributes to the dispute.

## Conclusion

The court upheld the trial court’s equitable refusal to foreclose despite a technical default and acceleration election, approving reinstatement conditioned on curing arrears and related charges, and it also upheld requiring the mortgagee to pay its own attorney’s fees as part of the equitable disposition.


Federal Home Loan Mortgage Corp. v. Taylor, 318 So. 2d 203 (Fla. Dist. Ct. App. 1st Dist. 1975)