Our Melbourne Foreclosure Attorney recently filed an appellate brief appealing the trial court's judgment of foreclosure. One of the issues in the appeal is whether the foreclosing bank is the correct bank to foreclose. In legal terms, do they have "standing" to foreclose on the mortgage. In our last blog, we included a summary of the arguments made in the appeal. In this blog, we give you the legal arguments against the bank's proof of standing.
Bank of America did not have standing to foreclose
"A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose." See McLean v. JP Morgan Chase Bank Nat. Assoc., 79 So.3d 170, 173 (Fla. 4th DCA 2012); Hunter v. Aurora Loan Services, LLC, 137 So.3d 570, 573 (Fla. 1st DCA 2014) (citing McLean). A foreclosure plaintiff can show its standing as a "holder" of the note if the promissory note names the plaintiff as payee or if it contains a blank endorsement. See McLean, 79 So.3d at 173. Alternatively, the plaintiff can show standing as a "holder" of the note by submitting evidence of an assignment of the note. Id.
Standing must be determined as of the time the lawsuit is filed. Id. (citation omitted). A plaintiff's lack of standing at the inception of the case is not a defect that can be cured by acquiring standing after the case is filed. Id. ("[A] party is not permitted to establish the right to maintain an action retroactively by acquiring standing to file a lawsuit after the fact.") (citation omitted). To demonstrate its standing at the inception of a foreclosure case, a plaintiff must show that it acquired the right to enforce the note before suit was filed. See Green v. JPMorgan Chase Bank, N.A., 109 So.3d 1285 (Fla. 5th DCA 2013). Mere possession of a blank-endorsed note on the date of judgment is not sufficient to establish standing as a" holder" of the note at the inception of the case, where the blank endorsement is undated. Id. at 1288. Absent other evidence of the date the plaintiff acquired the right to enforce the note, the plaintiff has not met its burden of proving standing. Id. As stated in Green:
Within the original note, the indorsement in blank did not establish that the Bank had the right to enforce the note when it filed suit, because the indorsement was undated. Moreover, the Bank's standing also was not established by its act of filing of the original note. Although the filing of the original blank-indorsed note showed the Bank's possession of (and thus right to enforce) it at the time of filing the note, that filing occurred more than a year after the Bank filed suit.
Id. (citations omitted).
Accord McLean, 79 So.3d at 174 ("Where plaintiff contends that its standing to foreclose derives from an endorsement of the note, the plaintiff must show that the endorsement occurred prior to the inception of the lawsuit."). Wright v. Deutsche Bank National Trust Company, (4D13-3221, January 7, 2015) (reversing foreclosure judgment because the blank-endorsed note was undated and there was no other evidence to establish that the note was endorsed before the foreclosure suit was filed).
In the instant case, Bank of America alleged in its verified complaint that Fannie Mae is the "owner" of the Note. (Vol. 1, page 1-22, paragraph 3). Bank of America's only alleged grounds for standing in this case are its rights as a "servicer" for Fannie Mae and as a "holder of the Note." Id. Greentree presented no evidence to show that Bank of America was a "servicer" for Fannie Mae, nor is there any evidence to show that Fannie Mae is in fact the true "owner" of the Note with any power to transfer servicing rights in the first place. The record is completely silent on Fannie Mae's "ownership" status and on Bank of America's rights as a "servicer" for Fannie Mae.
The only remaining ground for Bank of America's standing is its alleged rights as a "holder" of the Note. The only evidence Greentree presented to establish Bank of America's standing as a "holder" of the Note was the original Note itself. Although the note was endorsed in blank, the purported endorsement was not by the original payee, "America's Wholesale Lender". Instead, the Note was purportedly endorsed by Countrywide Home Loans Inc. "doing business under the fictitious business name of America's Wholesale Lender, a New York Corporation." (emphasis added). There is nothing in the record to establish any legal relationship between Countrywide and America's Wholesale Lender, a New York Corporation, or Countrywide's authority to endorse the Note on America's Wholesale Lender's behalf.[1] Because Bank of America's rights as a "holder" derive from the Countrywide endorsement, Greentree's failure to provide proof of Countrywide's authority to endorse the Note on behalf of America's Wholesale Lender defeats Bank of America's claim to standing as a matter of law. See Gee v. U.S. Bank National Association, 72 so.3d 211, 213 (Fla. 5th DCA 2011). In Gee, this Court invalidated an assignment of mortgage where one of the assignors in the chain of assignments failed to show its authority to sign "as successor in interest" to the prior mortgage holder. This Court explained:
The second assignment purported to transfer the mortgage from American Home, as successor in interest of [the prior holder] Option One, to U.S. Bank. However, and significant to our consideration, U.S. Bank provided nothing to demonstrate how American Home came to be the successor in interest to Option One.
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As U.S. Bank failed to offer any proof of American Home's authority to assign the Mortgage, we conclude that it failed to establish its standing to bring the foreclosure action as a matter of law.
Id. at 213 – 214.
Because Greentree failed to offer any proof of Countrywide's authority to endorse the Note on behalf of America's Wholesale Lender, "a New York Corporation", Greentree failed to prove Bank of America's standing to bring this foreclosure as a matter of law.
Even setting the invalidity of the blank endorsement aside, the endorsement on the Original Note is undated and there is no evidence in the record to establish when it was endorsed. The original Note containing the blank endorsement was filed in the trial court on October 4, 2013, almost 5 months after the suit was filed. Mr. Visser provided no testimony at all regarding when the Note was endorsed in blank, much less whether it was endorsed prior to Bank of America filing this foreclosure action. In fact, Greentree does not even mention Countrywide's name through the entire trial, instead choosing (perhaps wisely) to gloss over the issues surrounding Countrywide's alleged endorsement of the Note.
Greentree also failed to introduce any record evidence of an assignment of the Note and Mortgage from Countrywide to Bank of America, from Bank of America to Greentree or from Fannie Mae to either of the alleged servicers. In sum, the record is completely devoid of any evidence to show that Bank of America had the right to enforce the Note at the inception of this case, either as a "servicer" for Fannie Mae or as a "holder" of the Note. Because Greentree failed to establish that Bank of America had standing to foreclose at the inception of this case, the Final Judgment in favor of Greentree must be reversed and this case dismissed.
If you live in Melbourne or Palm Bay Florida, or anywhere in Brevard County, and you are faced with the foreclosure of your home, contact us today to schedule a free consultation so we can determine whether the bank suing you has "standing" to do so.
Bowin Law Group - Brevard's Hometown Law Group
[1] It is strange that the endorsement would refer to America's Wholesale Lender as a d/b/a of Countrywide, but then also refer to it as a New York Corporation. It can either be a fictitious name or a corporation, but it cannot be both. As a "New York Corporation", it is a separate legal entity from Countrywide.