Florida lender wins appeal, defeats oral loan deal in foreclosure case

A Florida lender has won its appeal after a court ruled that certain agreements won't stop foreclosure. Here's what mortgage pros need to know

Florida lender wins appeal, defeats oral loan deal in foreclosure case

A Florida court has made it clear: if you’re handling commercial loan modifications, get it in writing—or risk losing in court. 

On July 2, 2025, Florida’s Fourth District Court of Appeal issued its decision in American First Federal, Inc. v. Trugon Properties, Inc., a case that reinforces a key compliance rule for mortgage professionals: no written, signed agreement means no enforceable loan modification or forbearance. The case serves as a timely reminder for those managing commercial loans or foreclosure actions. 

The facts go back to 2005, when Trugon Properties secured a $2.6 million loan from Wachovia Bank, backed by a mortgage on commercial property. Nectalier Gonzalez and Edelberto Trujillo provided personal guarantees. Wachovia later assigned the loan to American First Federal. When Trugon defaulted, American First Federal filed for foreclosure in 2008. The following year, the court entered a final foreclosure judgment in the lender’s favor, totaling over $2.5 million, including a 25% post-judgment interest rate. 

The foreclosure sale was set but repeatedly delayed as both sides discussed loan modification options. In 2011, the parties signed an agreement clearly stating that no future modification would be binding unless it was in writing and signed by both parties. Despite this, Trugon made monthly payments based on what it claimed was an oral deal—7% interest and capital improvements in exchange for the lender’s agreement to hold off on the foreclosure sale. The lender accepted these payments through 2020. 

In 2021, the lender moved to reset the foreclosure sale, arguing that the judgment remained unsatisfied. Trugon responded by filing a new action to reform the foreclosure judgment based on the alleged oral agreement, or, alternatively, to recover under a claim of unjust enrichment. The trial court ruled that there was an enforceable oral forbearance agreement and entered judgment in Trugon’s favor. 

But on appeal, the Fourth District reversed. The court held that Florida’s Banking Statute of Frauds requires agreements to forbear repayment or make financial accommodations to be in writing and signed by both sides. Because no such written, signed agreement existed, the alleged oral forbearance deal was unenforceable. The court ordered reinstatement of the original foreclosure judgment. 

For mortgage professionals, especially those managing commercial workouts or foreclosure proceedings, the takeaway is clear: written agreements are not just recommended—they’re required to avoid costly legal battles. The case is a sharp reminder of the importance of documenting deals properly to protect your position when foreclosure or loan modification is in play.