Part 1 - How to Successfully Defend Your Florida Foreclosure

Melbourne Foreclosure Defense Attorney, Beau Bowin, has had many mortgage foreclosures dimissed by showing the mortgage company is not entitled to enforce the note and mortgage upon which the foreclosure is based. This is one of THE key defenses in Florida foreclosures. Because your mortgage loan has likely been transfered through several different mortage lenders, it is often the case the the bank that files the foreclosure is not the party currently entitled to enforce the note and mortgage. In legal jargon, the foreclosing bank does not have "standing" to foreclose the mortgage. If the foreclosing bank lacks standing, the case must be dismissed.

Anyone wishing to defend residential mortgage foreclosures in Florida needs to be familiar with the law surrounding the mortgage lender's standing to foreclose. Below is a memorandum we filed in an appeal of a mortgage foreclosure judgment. Although this memorandum does not exhaust all the legal arguments to be made on the bank's lack of standing, it provides a common scanario that we encounter in a lot of foreclosure cases in Florida.

SUMMARY OF ARGUMENT

Lack of Standing

BAC filed the instant foreclosure complaint alleging its standing as a "holder" of the Original Note. The copy of the note attached to the complaint, issued to Countrywide Home Loans, Inc., contained no endorsements to BAC or in blank. At trial six years later, GreenTree presented the Original Note, which now contained an undated blank endorsement from Counrywide Home Loans, Inc. GreenTree provided no evidence that BAC ever possessed the Original Note, or that the Original Note was endorsed in blank on the date the complaint was filed. In fact, GreenTree's sole witness testified that he did not know when the blank endorsement was placed on the Note and that he had no business record to indicate when the endorsement occurred.

To overcome these fatal flaws, GreenTree admitted two assignments of mortgage executed years after the foreclosure action was filed, and a screenshot of the National Information Center's website purportedly proving BAC's merger with a Countrywide entity (Countrywide Home Loans Servicing, LP) that has no established connection to this loan. GreenTree even failed to show any connection between BAC and Fannie Mae, the purported investor on this loan.

Because there was no evidence whatsoever that BAC ever actually possessed the Original Note, or that the Original Note was endorsed in blank before this foreclosure action was filed, GreenTree failed to prove BAC's standing as a "holder" at the inception of this case as a matter of law. The Final Judgment of Foreclosure should be reversed and remanded to the trial court with instructions to dismiss.

A. Greentree failed to prove that BAC had standing as a "holder" of the Note at the inception of this foreclosure action.

Pursuant to Fla. Stat. § 671.201(21), a "holder" is defined as "[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession." Thus, "the core elements [for standing], as established by Florida's Uniform Commercial Code, are (1)to whom is the note payable and (2)who has possession of the note on the date suit is filed. See Rodriguez v. Wells Fargo Bank, N.A., 178 So.3d 62, 64 (Fla. 4th DCA 2015) (concurring opinion) (emphasis in original). For GreenTree to prove BAC's standing as a "holder" of the note, GreenTree had to show that BAC had possession of the note on the date the complaint was filed and that the note was endorsed in blank or specifically endorsed to BAC on the date the complaint was filed. Id. If either core element is missing, BAC's standing under a "holder" theory fails. As stated more fully by Rodriguez:

The Florida UCC defines a "holder" to be "[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession." § 671.201(21)(a), Fla. Stat. (2010) (emphasis added). Thus, the statutory provisions regarding the definitions of holder and who is entitled to enforce a note make it clear that standing depends on (1) to whom the note is payable and (2) who has possession of the note, assuming the note was not lost or improperly surrendered or canceled. The case law says the critical time for determining the status of the two core elements is the date the suit is filed.

Id. at 66

As shown below, GreenTree failed to prove either core element for BAC's alleged standing as a "holder" of the Original Note.

I. There was no evidence that the Original Note was endorsed in blank at the inception of this case.

GreenTree's possession of the undated blank-endorsed note on the day of trial is not sufficient to establish BAC's standing as a "holder" of the Note at the inception of the case without evidence that the endorsement occurred prior to BAC filing the foreclosure complaint. See Green v. JPMorgan Chase Bank, N.A., 109 So.3d 1285 (Fla. 5th DCA 2013). 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. at 1288 (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, the Law Offices of David J. Stern filed the foreclosure complaint on December 15, 2009, alleging that BAC was the "holder" of Mr. Green's Note. As stated above, the copy of the Note attached to the complaint shows that it was issued to Countrywide Home Loans, Inc. and did not contain any endorsements to BAC or in blank.[1] The Original Note containing the undated blank endorsement from Countrywide Home Loans, Inc. did not appear until trial six years later. [Plaintiff's Exhibit 1]. When questioned on cross-examination, Mr. Lee testified that he did not know when the blank endorsement was placed on the Original Note. Mr. Lee's testimony on this issue was as follows:

Q: Mr. Lee, I'm going to show you the original note which is part of Plaintiff's Composite Exhibit No. 1. It contained an endorsement on it, a blank endorsement on it. Do you have any personal knowledge as to when that endorsement was made?

A: No, I don't.

Q: Do you have any business records here with you today which indicate when that endorsement was made?

A: No, I don't.

Q: Thank you, sir.

Trial Transcripts, page 45, lines 16-25.

Absent evidence of the date the Original Note was endorsed, GreenTree did not meet its burden of proving BAC's standing as a "holder" of the Original Note at the inception of this case. See Green, 109 So.3d at 1288. As such, GreenTree failed to prove the first core element for standing as a "holder" of the Note. Rodriguez, 178 So.3d at 64. For this reason alone, the final judgment of foreclosure should be reversed and this case remanded for dismissal.

II. GreenTree failed to prove BAC's possession of the OriginalNote.

GreenTree presented no evidence that BAC ever possessed the Original Note, much less that BAC possessed the Original Note on the date the complaint was filed. The two assignments of mortgage entered into evidence were executed years after the foreclosure action was filed, so there is no way those assignments can establish BAC's possession of the Original Note at the inception of this case. See Jelic v. LaSalle Bank, Nat. Ass'n, 160 So. 3d 127, 129 (Fla. 4th DCA 2015) ("Bank did not establish standing through the second assignment of the note and mortgage, as the assignment occurred after the foreclosure complaint was filed."); Rigby v. Wells Fargo Bank, N.A.,84 So.3d 1195, 1195–96 (Fla. 4th DCA 2012) (reversing entry of final summary judgment because the bank failed to establish it had standing to foreclose when the evidence showed the assignment was dated one day after the complaint was filed).

Perhaps just as importantly as the untimeliness of the two assignments is that the September 19, 2011 assignment was to Bank of America, N.A., not BAC. Indeed, BAC admittedly merged out of existence two years earlier in 2009. [Plaintiff's Composite Exhibit 2]. As such, there is no way this assignment could transfer any rights to BAC.

Even if you overlook the above flaws in the September 19, 2011 assignment, the assignment purports to transfer only the mortgage, not the note. An assignment of mortgage that does not also assign the note transfers no rights in the note to the transferee. See Kyser v. Bank of America, N.A., 2016 WL 699133, 1 (Fla. 1st DCA 2016) ("[A]n assignment of mortgage, even if executed before the foreclosure action commenced, is insufficient to prove standing where the assignment reflects transfer of only the mortgage, not the note.") (citing Tilus v. AS Michai LLC, 161 So.3d 1284, 1286 (Fla. 4th DCA 2015)). These assignments do nothing to establish BAC's possession of or right to enforce the Note at the inception of this foreclosure action.

The only other record GreenTree introduced to establish BAC's possession of the Original Note is a screenshot of the National Information Center website that purports to show BAC's merger with a prior Countrywide entity. However, as the screenshot shows, that alleged merger was between BAC and Countrywide Home Loans Servicing, LP, not the originator of this loan, Countrywide Home Loans, Inc. Because they are separate legal entities, Countrywide Home Loans Servicing, LP could not enforce or transfer Countrywide Home Loans, Inc.'s rights in the Note to BAC. See Wright v. JP Morgan Chase Bank, N.A., 169 So.3d 251, 252 (Fla. 4th DCA 2015) ("Thus, ownership of the note by subsidiary Chase Bank does not give parent corporation JPMorgan Chase the right to enforce the note, absent evidence that JPMorgan Chase acquired such a right through, for example, a purchase or servicing agreement."); Sanchez v. Suntrust Bank, 179 So.3d 538, 542 (Fla. 4^th DCA 2015) (same). Countrywide Home Loans Servicing, LP had no established interest in the Original Note; its alleged merger with BAC is irrelevant and passed no rights in this loan to BAC.[2]

Even if BAC's merger was with the correct Countrywide entity (which it was not), Mr. Lee did not testify that BAC acquired all or any of that Countrywide entity's assets during the merger. Absent such testimony, the fact that a merger took place does nothing to establish that BAC acquired the Original Note during that merger. See Kyser v. Bank of America, N.A., 2016 WL 699133, 2 (Fla. 1st DCA 2016) ("While Appellee's witness also testified that Appellee and Countrywide merged, she gave no testimony that Appellee acquired all or any of Countrywide's assets."). See also Fiorito v. JP Morgan Chase Bank, Nat'l Ass'n, 174 So.3d 519, 521–22 (Fla. 4th DCA 2015) (holding that the appellee failed to establish standing to sue for foreclosure where the bank officer testified that the appellee merged with "WAMU" but never testified that the appellee acquired all of WAMU's assets).

There is also no evidence that either Countrywide entity had possession of the Original Note or the right to enforce the note at the time of the alleged merger with BAC. Indeed, Mr. Lee testified that this was a Fannie Mae loan, but he had no knowledge of whether or when Fannie Mae took ownership of Mr. Green's loan. (Transcripts, page 45, lines 4 – 13).

GreenTree failed to present any other evidence that BAC was in possession of the Original Note at the time this foreclosure complaint was filed. Because there was no evidence that BAC possessed the Original Note at the inception of this case, GreenTree failed to establish the second core element to BAC's standing as a "holder" of the Note. See Rodriguez v. Wells Fargo Bank, N.A., 178 So.3d 62, 64 (Fla. 4th DCA 2015) (discussing the two core elements of standing). For this additional reason, the final judgment should be reversed and this case remanded for dismissal.

III. GreenTree failed to prove BAC's rights as a servicer of thisloan.

BAC's complaint alleged that BAC was a servicer of Mr. Green's loan. However, not only did GreenTree fail to present any documents or testimonial evidence to support BAC's status as a servicer of Mr. Green's loan, GreenTree failed to show for whom BAC was allegedly servicing Mr. Green's loan at the inception of this case. Although Mr. Lee testified that this was a Fannie Mae loan, he had no knowledge of whether or when Fannie Mae took ownership of the loan. (Transcripts, page 45, lines 4 – 13). GreenTree did not present any servicing agreements or power of attorneys between Fannie Mae and Countrywide Home Loans, Inc., Countrywide Home Loans Servicing, LP, Bank of America, N.A., BAC, GreenTree or DiTech. Absent such records, GreenTree cannot establish who the owner of the loan was at the inception of this case, or BAC's status as an alleged servicer of this loan. For this additional reason, this case should be dismissed.

B. Aside from BAC's lack of standing, it was improper to give judgment to GreenTree since the recordshows GreenTree no longer exists.

Aside from BAC's lack of standing at the inception of this case, it was improper to grant judgment to GreenTree since the record reflects that GreenTree no longer exists, having merged with and taken the name of DiTech Financial, LLC ("DiTech"). Supra, n.1. Nor could the trial court grant judgment to DiTech since DiTech is not a party to this action, having failed to substitute in before trial. See Beaumont v. Bank of New York Mellon, 81 So.3d 553 (Fla. 5th DCA 2012) ("It is fundamental error to enter judgment in favor of a nonparty.") (citing Beseau v. Bhalani, 904 So.2d 641 (Fla. 5th DCA 2005); Rustom v. Sparling, 685 So.2d 90 (Fla. 4th DCA 1997)). This defect can by raised for the first time on appeal. Id. ("The defect, which is jurisdictional, can be raised by this Court sua sponte.").

Because there is no plaintiff entitled to receive judgment in this matter, this case should be dismissed.[3]

CONCLUSION

For the foregoing reasons, Mr. Green requests this Court to reverse the final judgment of foreclosure and to dismiss this foreclosure case.

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