Felicia El Hassan had already lost one house.
During turbulent times decades earlier in communist Cuba, she’d been forced to surrender property before fleeing to America.
The 86-year-old woman thought those days were far behind her after living quietly for nearly 20 years in a modest house in Opa-locka, a working-class neighborhood in northern Miami-Dade.
But that peace of mind ended when a process server appeared on her doorstep with court papers informing her of a foreclosure lawsuit by Liberty Home Equity Solutions Inc., formerly Genworth Financial Home Equity Access Inc. The complaint’s sole basis was the lender’s claim that El Hassan violated a key covenant of reverse mortgages by moving out, thereby defaulting on the loan.
“The allegation is basically debunked,” El Hassan’s lawyer, Ricky Corona, said. “Not only was she living there, but … they served it at her house.”
This, defense attorneys say, is a new strategy by lenders and plaintiffs lawyers: sue to foreclose on government-guaranteed home loans under various defaults, then fast-track these suits by filing motions for orders to show cause. These motions shift the burden of proof to the borrower, requiring them to appear in court and explain why a judge shouldn’t grant final judgment against them.
“All of a sudden, we saw a spate of foreclosures where the mortgage companies alleged the seniors no longer lived in the home,” said Gladys Gerson, supervising attorney for Coast to Coast Legal Aid of South Florida’s senior unit. “This has been happening around the state.”
About a dozen similar cases reached Gerson and other attorneys at Coast to Coast, who have helped a growing number of low-income seniors fight and win dismissals despite aggressive lender litigation.
Florida is ground zero for seniors’ issues, but as the strategy has often proved effective, it’s likely to spread, according to defense attorneys. “If you see the volume of national advertising that’s geared to seniors, I can’t believe this is limited to Florida,” Corona’s father and partner, Ricardo, said. “The servicers are not even based in Florida, so I don’t see why they would limit themselves.”
Corona admits he didn’t expect a hard fight when he first reviewed El Hassan’s case, but court records show he was wrong. Over the last 10 months, the ongoing litigation yielded two hearings, 40 docket entries and attempts by both sides to collect attorney fees.
When he first met El Hassan, Corona expected the plaintiff would realize the error and dismiss the suit. Without charging her or entering a notice of appearance, he placed a phone call to plaintiffs lawyers at Robertson Anschutz & Schneid in Boca Raton to say El Hassan had never moved out of her home.
Robertson Anschutz & Schneid did not respond to requests for comment, but court records show they ratcheted up the litigation with a motion for an order to show cause weeks after Corona’s phone call.
“I looked at the document. I couldn’t believe it,” Corona said. “I was in shock (at) what the bank was trying to do.”
Too Good To Be True?
Reverse mortgages are federally insured loans that allow qualified homeowners age 62 and older to borrow against the equity in their property. Instead of making payments to lenders, homeowners receive loan proceeds. The loans grew in popularity as aging Baby Boomers looked to supplement retirement income and greying populations on fixed incomes sought additional funds to pay debts, do home repairs and maintain their standard of living.
“One of the concerns has always been people taking advantage of them,”Ricardo Corona- said in a video interview. “What we’ve seen unfortunately is … now institutionally, it seems like they’re being taken advantage of.”
The loans deplete homeowners’ equity and accumulate interest, but don’t become due until borrowers move out, die, sell the property or fail to pay property taxes and insurance. They attract investors drawn to the government guarantee, and proponents laud them as a means for seniors to supplement retirement income. But they also raise red flags among consumer advocates like the AARP, who say the products are expensive, high risk and likely to end in technical defaults for at least 10 percent of borrowers who can’t maintain the expense.
“The concept in my opinion was good—to preserve the senior in his home until he could no longer be in his home,” Gerson said. “But as with all things there were cracks in the system. Some seniors fell through those cracks and got foreclosed on.”
Watchdogs like the federal Consumer Financial Protection Bureau point to deceptive advertising that “seduce” cash-strapped seniors without disclosing the possibility of losing their home. A June 2015 CFPB report uncovered widespread misconceptions among borrowers who incorrectly believed they were receiving a government benefit, instead of a loan from a private lender who expected full repayment.
“As older consumers consider reverse mortgage loans to tap into their home equity, they need to be careful of those late-night TV ads that seem too good to be true,” agency director Richard Cordray said in a statement issued at that time. “It is important that advertisements do not downplay the terms and risks of reverse mortgages or confuse prospective borrowers.”
In December, the bureau took action against three reverse mortgage companies for deceptive advertisements that falsely claimed borrowers could not lose their homes through the loan program.
Among those penalized was Houston-based Reverse Mortgage Solutions Inc., which paid a $325,000 civil penalty under a consent order.
“The company also created a false sense of urgency to buy the reverse mortgage product,” according to the CFPB. “For example, one call script required representatives to tell potential customers that if they didn’t call back by close of business, they would … ‘miss out on a tremendous money-saving opportunity.’ In fact, it was not a limited-time offer.” It also “misrepresented that a reverse mortgage could ‘eliminate debt,’” when in reality the product created a large debt.
A loan serviced by Reverse Mortgage Solutions Inc. would come back to haunt El Hassan.
These flawed representations permeate an industry where real estate debt routinely changes hands through systems and processes that create a myriad of challenges in foreclosure cases. When reverse mortgages trade, elderly borrowers sometimes fail to realize the change. As new lenders mail postcards and letters requiring seniors to return the documents and certify occupancy, clients struggling with cognitive difficulties are especially vulnerable to technical defaults.
In El Hassan’s case, the loan originated with Liberty Home and sold to the Federal National Mortgage Association, but continued with a single servicer, Reverse Mortgage Solutions, which uses meticulous administrative processes and adhere to Department of Housing and Urban Development servicing guidelines for annual borrower certification, according to spokesman Rick Gillespie.
“Reverse Mortgage Solutions has established a detailed process to verify occupancy,” Gillespie said in a statement.
The company’s seven-step process includes two certification letters over 30 days, then an in-person inspection if those fail.
“The inspector is required to attempt to make contact with the borrower at least three times and must include one evening and one weekend,” according to the statement.
Meanwhile, staff attempt to reach borrowers by phone, and search the obituaries to see if clients have died. After three letters, two inspections, phone calls and other attempts over about four months, the company submits paperwork seeking approval from the housing department to call the loans due. It immediately halts legal action if borrowers send signed occupancy certificates, Gillespie said.
But defense counsel, like Katianna Mazard in Plantation, say otherwise, contending that lenders continue to press claims of default despite evidence to the contrary.
“Even with documentation, they fight,” Mazard said. “The send seniors certificates of occupancy … but rely on them not to send the forms back.”
‘They Started Saying We Didn’t Live here’
Deerfield Beach retiree Mary Carter and her husband, William, said they never received any forms before two unexpected brushes with foreclosure.
The Carters had grown accustomed to the visits by lender and loan servicer representatives who would drop by unannounced to verify they still occupied the property as required under the terms of the loan. They were sitting in their carport the last time a reverse mortgage inspector checked up on them.
Carter, a former elementary school teacher, said her 75-year-old husband would sign any paperwork handed to him at the end of these meetings.
But the last visit, which set the elderly couple on the path to two separate foreclosure suits for non-occupancy, was different. This time they said the inspector asked them to clear the driveway so he could take a photograph without them. They and a friend visiting from next door complied.
“He just said we couldn’t be in the picture, we had to move, so we all moved out of the way,” Carter said. “That’s when they started saying we didn’t live here.”
What followed stunned the couple: Oklahoma-based Mortgage lender Finance of America Reverse LLC claimed they defaulted on their loan by moving out of the home. “I can’t fathom why there would be any indication they weren’t occupying the property,” said the Carters’ attorney, Sarah Barker. “They don’t travel out of state. Their things are in the house.”
Finance of America attorneys at Greenspoon Marder declined comment.
Facing foreclosure in 2013, the Carters were forced to prove residency to dismiss the case. But that victory was short-lived, as an almost identical lawsuit followed within three years.
“It was the same default reason in the complaint,” Barker said. “Through the first lawsuit it was clear the Carters were living there, so we can’t understand why the second lawsuit would even be filed. We can’t understand why the first one was filed.”
Finance of America filed for foreclosure with a single-count complaint in 2016, calling due more than $119,925 in principal, plus interest, escrow, attorneys’ fees and other charges.
The seniors again beat back that suit, but still fear they’ll lose their home.
“We can’t afford to fight without help from Legal Aid,” Carter said. “We’re worried there’s going to be another foreclosure.”
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A Florida criminal court Judge agrees with attorney Rene Palomino of the Corona Law Firm P.A. and dismisses money laundering charges against Michell Espinosa in a precedent setting ruling that Bitcoin is not currency. We congratulate Rene on his fine work on this cutting edge case. Another defendant not represented by Corona Law Firm previously pled guilty and agreed to work with law enforcement.
For more information visit:
Miami Herald Post:
No note? No problem — at least for JPMorgan Chase N.A. in a foreclosure trial.
But the Third District Court of Appeal reversed the final judgment granted without “any document or other evidence to establish its foreclosure action.”
The bank triumphed in a bench trial after filing to foreclose on a condominium at 7910 Harbor Island Drive in North Bay Village in 2013.
The borrower, Angel Enrique Abreu, received $263,250 in July 2008 on a note that set an interest rate of 7.625 percent and monthly payments at about $1,863.
Abreu defaulted on the loan in January 2010, owing about $259,823 on the principal, according to court documents. Public records show he sold the property to 66 Team LLC for $243,300 in 2015.
JPMorgan Chase’s foreclosure suit claimed the bank was in “physical possession of the note,” but an appellate panel found it never submitted the document to the court and failed to produce any evidence to establish standing.
About two years later, the bank filed a motion to name a new lender as substitute plaintiff and attached documents showing a mortgage and note assignment to PROF-2013-M4 REO I LLC.
JPMorgan won the final judgment in trial before Miami-Dade Circuit Judge Monica Gordo, but it did not respond to 66 Team’s appeal and was later precluded from filing an answer brief.
“I believe they did not file a response, although they were ordered to by the court, because they read my brief and agreed with what it said,” 66 Team attorney Michael Winer of Fort Lauderdale said. “There was no competent substantial evidence presented to the court, and therefore the final judgment was subject to being vacated.”
The bank didn’t file a memorandum of points and authorities in support of its position in the appeal.
“At trial, JPMorgan Chase failed to introduce any document or other evidence to establish its foreclosure action. It did not introduce into evidence the mortgage, the note or an allonge to the note purportedly bearing a special endorsement in favor of JPMorgan Chase,” Third DCA Judge Kevin Emas wrote in a unanimous decision with Judges Thomas Logue and Edwin Scales concurring. “The testimony — comprising a total of two pages — was insufficient to establish JPMorgan Chase’s cause of action by competent, substantial evidence.”
Fort Lauderdale attorney Ira Scot Silverstein represented the bank. He did not respond to requests for comment by deadline.
The appellate court reversed Gordo’s ruling and remanded the case with directions to enter an order of voluntary dismissal.
Read More: http://www.dailybusinessreview.com/id=1202754752666/JPMorgan-Loses-Foreclosure-Appeal-for-Lack-of-Proof
This week the Corona Law Firm was showcased in the Daily Business Review for their victory over JP Morgan Chase.
This week the Corona Law Firm was showcased in the Daily Business Review for their victory over JP Morgan Chase. JP Morgan Chase attempted to prove that it was the rightful owner of a mortgage that had passed through several hands before ending up with them. The problem was they had no evidence! Evidence is what makes or breaks cases. The Corona Law Firm fought hard against the establishment to require them to prove what they asserted and while the trial court entered judgment in favor of the bank, the Corona Law Firm P.A. ultimately won his fight! The hard, long fight did not go unnoticed. The efforts of the attorneys here at the firm were acknowledged and applauded. Corona Law Firm uses its arsenal to fight for their clients against the big guys!
A purchase and assumption agreement was not enough to prove JPMorgan Chase Bank N.A.’s legal standing in a foreclosure case before the Fourth District Court of Appeal.
The bank filed suit as successor to defunct Washington Mutual Bank against homeowners Ottoniel and Luz Cruz, alleging it was the owner of a real estate debt that changed hands at least five times.
JPMorgan Chase purchased the debt in September 2008 from the Federal Deposit Insurance Corp. when WAMU was in receivership, but that deal was one in a string of transfers.
The original borrower executed a mortgage and note with WAMU and later quitclaimed the property to the Cruzes, who defaulted in December 2008.
By the time JPMorgan Chase filed a foreclosure lawsuit in April 2009, it appeared to have lost track of the note. Its complaint included a copy of the mortgage with a count to reestablish a lost note, alleging the bank owned the debt but couldn’t locate the paperwork to prove it.
In October 2009, JPMorgan Chase dropped the lost-note count but moved to reintroduce it years later after yet another transfer — this time to PennyMac Corp. in 2014.
“Because they didn’t have possession of the note, they had to rely on the purchase and assumption agreement, which the Fourth DCA found insufficient,” said defense attorney Ricardo M. Corona Jr. of the Corona Law Firm in Miami.
At a nonjury trial, the bank presented a copy of the note endorsed in blank but not the original. It also called a PennyMac Loan Services foreclosure operations supervisor as a witness to establish its standing.
That proved to be a misstep after the witness testified JPMorgan Chase was the previous servicer and PennyMac Loan serviced the loan on behalf of the current owner, PennyMac Corp.
“The number of entities through which the note and mortgage traveled complicates the facts,” Judge Melanie May wrote in the March 23 unanimous decision. “The bottom line, however, is JPMorgan Chase Bank National Association’s failure to prove standing requires a reversal of the final judgment of foreclosure.”
District Judge Alan Forst and Palm Beach Circuit Judge Rosemarie Scher, sitting by special designation, concurred.
Akerman attorneys Nancy Wallace, William Heller and Kathryn Hoeck represented JPMorgan Chase on appeal. They did not respond to requests for comment by deadline.
“The main issue is that they make these transfers electronically and come into court with nothing to show,” said Ricardo Corona Sr., who teamed with his son and Coral Gables attorney Paul Bravo to represent the Cruzes. “When the court requires them to show proof, they can’t or they won’t.”
Last week, Corona Law Firm was able to win two cases on appeal because of “standing.” Standing, when used in a legal sense, refers to the person or entity that has the legal right to sue. This has been a highly litigated issue especially in foreclosure cases such as these and is often a reason used to defend these cases. The appellate court in the cases that we won ultimately agreed with our arguments at trial, that the bank trying to collect and take our client’s home, could not prove that they were the party that could enforce the note and mortgage.
Banks and other lenders often sell the loans that they make. Which means if you took a mortgage from Bank of America five years ago and signed a Note naming Bank of America as the lender, it could have been sold various times to other banks or investors. In that case Bank of America no longer owns your Note and does not have the right to sue you on it. Only the person who owns the note at the time of the initiation of the suit AND at the time of judgment has legal standing.
The banks have had problems in the past few years being able to establish who is the rightful owner because they have sold these mortgages in huge bundles and have been sloppy in their transfers. This is where research, preparation, knowledge of the law and experience can help you if you are at risk of foreclosure. Last week, the appellate court agreed with trial lawyer, Ricky Corona, and dismissed two cases against our clients after they had lost at the trial level.
These decisions are an important win for our firm and a valuable lesson for those looking for the assistance of an attorney. It shows that these cases must be looked at with a magnifying glass and that we, at Corona Law Firm, do that for our clients. It also proves that the case is not necessarily over after a loss at trial. We keep fighting when we know our position is correct.
Corona Law Firm gets ANOTHER foreclosure judgment reversed! CRUZ vs JPMORGAN CHASE | FL 4DCA – The PAA has caveats where JPMorgan could refuse to acquire assets and there is no record evidence that the FDIC transferred the note to JPMorgan before the complaint was filed
DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT
OTTONIEL CRUZ and LUZ M. CRUZ, Appellants,
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, AS SUCCESSOR IN INTEREST TO WASHINGTON MUTUAL BANK, FORMERLY KNOWN AS WASHINGTON MUTUAL BANK, F.A., Appellee.
No. 4D14-3799 [March 23, 2016]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Thomas M. Lynch, IV, Judge; L.T. Case No. CACE09024572(11).
Paul Alexander Bravo of P.A. Bravo, Coral Gables, and Ricardo Manuel Corona of Corona Law Firm, Miami, for appellants.
Nancy M. Wallace of Akerman LLP, Tallahassee, William P. Heller of Akerman LLP, Fort Lauderdale, and Kathryn B. Hoeck of Akerman LLP, Orlando, for appellee.
The number of entities through which the note and mortgage traveled complicates the facts. The bottom line, however, is JPMorgan Chase Bank, National Association’s (“JPMorgan”) failure to prove standing requires a reversal of the final judgment of foreclosure.
The borrower executed a mortgage and note in favor of Washington Mutual Bank F.A. (“WAMU”). On March 5, 2008, the borrower quit- claimed the property to Ottoniel Cruz and Luz Cruz (“owners”). On September 25, 2008, the Federal Deposit Insurance Corporation (“FDIC”), receiver for WAMU, sold substantially all assets and liabilities of WAMU to JPMorgan through a purchase and assumption agreement (“PAA”).
Section 3.1 of the PAA reads, in part, “[T]he Assuming Bank hereby purchases from the receiver, and the Receiver hereby sells, assigns,
transfers, conveys, and delivers to the Assuming Bank, all right, title, and interest of the receiver in and to all of the assets (real, personal and mixed, wherever located and however acquired) . . . of the Failed Bank.”
Section 3.2 reads, in part, “All Assets and assets of the Failed Bank subject to an option to purchase by the Assuming Bank shall be purchased for the amount . . . as specified on Schedule 3.2, except as otherwise may be provided herein.” Section 3.3 reads, in part, “[T]he conveyance of all assets . . . purchased by the Assuming Bank under this agreement shall be made, as necessary, by Receiver’s deed or Receiver’s bill of sale.” Section 6.2 obligates the FDIC to deliver assets, including loan documents, “as soon as practicable on or after the date of this Agreement.”
The “Settlement Date” is defined as “the first Business Day immediately prior to the day which is one hundred eighty (180) days after Bank Closing, or such other date prior thereto as may be agreed upon by the Receiver and the Assuming Bank.” Article X explains that as a condition precedent, the parties were subject to the Receiver “having received at or before the Bank Closing, evidence reasonably satisfactory to each of any necessary approval, waiver, or other action by any governmental authority . . . with respect to this Agreement.”
On December 1, 2008, the owners defaulted by failing to pay their monthly payment. WAMU sent the default notice on January 28, 2009. On April 29, 2009, JPMorgan filed a foreclosure action. The complaint included a count to reestablish a lost note and a count for foreclosure of the mortgage. JPMorgan alleged that it “owns and holds said note and mortgage.” The lost note count stated that the note “has been lost or destroyed and is not in the custody or control of the Plaintiff who is the owner and holder of the subject Note and Mortgage and its whereabouts cannot be determined.” It also stated that JPMorgan or its predecessors were in possession of the note and were entitled to enforce it when the loss occurred, and “[t]he loss of possession was not the result of a transfer or a lawful seizure.”
Attached to the complaint was a copy of the mortgage, but not a copy of the note. On October 26, 2009, JPMorgan dropped the lost note count.
On April 12, 2010, the owners filed their answer and asserted several affirmative defenses, including lack of standing and failure to comply with conditions precedent.
In January 2014, JPMorgan transferred its ownership interests in the mortgage to PennyMac Corporation (“PennyMac Corp.”). On February 21,
2014, the FDIC executed an assignment of the mortgage to JPMorgan. The assignment read, in part, “This Assignment is intended to further memorialize the transfer that occurred by operation of law on September 25, 2008 as authorized by Section 11(d)(2)(G)(i)(II) of the Federal Deposit Insurance Act, 12 U.S.C. § 1821(d)(2)(G)(i)(II).”
On February 21, 2014, JPMorgan then executed an assignment of mortgage in favor of PennyMac Corp. Servicing of the loan was transferred from JPMorgan to PennyMac Loan Services, LLC (“PennyMac Loan Services”), which was the servicer at the time of trial. On August 1, 2014, JPMorgan moved to substitute PennyMac Corp. as party plaintiff, but the motion was never heard.
PennyMac Corp. allegedly discovered a week before trial that the original note was lost. On August 22, 2014, JPMorgan moved to amend the complaint to add a lost note count, and attached an affidavit from a PennyMac Loan Services foreclosure operations supervisor. The trial court denied the motion the day before the trial began.
On August 28, 2014, the case proceeded to a non-jury trial. JPMorgan called PennyMac Loan Services’ foreclosure operations supervisor as its witness. She testified that PennyMac Loan Services serviced the loan on behalf of the current owner, PennyMac Corp., and JPMorgan was the prior servicer.
She did not have the original note with her because it was lost or destroyed. The note “was lost after the complaint was filed,” but before it acquired servicing rights. PennyMac Loan Services conducted its due diligence, reached out to prior foreclosure counsel, and checked the court docket to see if the original note was already filed, but it was unable to find the original note.
The witness reviewed PennyMac Loan Services’ records, and the original note was not transferred to anyone else or seized by anyone. PennyMac Corp. was willing to indemnify the note maker for any claims that might be placed because of the loss. She obtained the copy of the note from PennyMac Loan Services’ business records, which were uploaded by PennyMac Loan Services’ loan boarding department at the time PennyMac Loan Services acquired servicing rights of the subject loan.
When JPMorgan attempted to move the copy of the note into evidence, defense counsel questioned the witness, and objected to the introduction of the copy of the note “based on the evidence rule and . . . trustworthiness and authenticity of it.” Counsel also argued that no reestablishment count
was pending before the court and “their complaint only seeks mortgage foreclosure and they dropped the establishment of lost mortgage note back in I believe 2010 . . . . [T]hey are asking the Court to improperly amend their pleadings . . . .”
JPMorgan responded that it was not asking the court to amend because “[t]he lost note count is the count that has become tradition to put in the complaint,” but “it is actually an evidentiary matter.” The trial court overruled the objection and admitted the copy of the note. The court also admitted, among other things, a copy of the PAA.
At the end of the trial, the owners moved for an involuntary dismissal, arguing JPMorgan was required to produce the original note and failed to comply with the conditions precedent to filing the foreclosure action. The trial court denied the motion.
The trial court granted final judgment of foreclosure in favor of JPMorgan. From this judgment, the owners now appeal.
The owners argue JPMorgan failed to prove it had standing to foreclose at the case’s inception and when the trial court entered final judgment. JPMorgan failed to attach a copy of the note to the complaint. The copy of the note that was eventually filed had an undated blank endorsement and JPMorgan failed to elicit testimony regarding the endorsement date. JPMorgan also introduced an assignment of mortgage showing its rights were transferred to PennyMac Corp. six months before trial.
JPMorgan responds that standing is determined at the time suit is filed, not at the time of trial. The endorsement date was immaterial because it proved ownership and did not rely on the endorsement. It was authorized under the Florida Rules of Civil Procedure to continue the action in its name after transferring its interest to PennyMac Corp.
The owners reply that the evidence failed to establish JPMorgan acquired standing. The PAA did not provide for the purchase of all WAMU’s assets, and required a separate conveyance instrument for assets actually purchased. The PAA provided only that JPMorgan had the right to purchase certain WAMU assets from the FDIC, but nothing shows any property was transferred, and 12 U.S.C. § 1821 does not save JPMorgan.
This Court reviews whether a party has standing to bring an action de novo. Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967 (Fla. 4th DCA 2013).
“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose” when the complaint is filed. McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “[S]tanding may be established from the plaintiff’s status as the note holder, regardless of any recorded assignments.” Id. (citation omitted). “If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement.” Id. The plaintiff may also show “an affidavit of ownership to prove its status as a holder of the note.” Id.; see Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 951 (Fla. 4th DCA 2014).
“A plaintiff alleging standing as a holder must prove it is a holder of the note and mortgage both as of the time of trial and also that [it] had standing as of the time the foreclosure complaint was filed.” Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 352 (Fla. 1st DCA 2014) (emphasis added).
Such a plaintiff must prove not only physical possession of the original note but also, if the plaintiff is not the named payee, possession of the original note endorsed in favor of the plaintiff or in blank (which makes it bearer paper). If the foreclosure plaintiff is not the original, named payee, the plaintiff must establish that the note was endorsed (either in favor of the original plaintiff or in blank) before the filing of the complaint in order to prove standing as a holder.
Id. at 353 (internal citations omitted). “A plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed and cannot be established retroactively by acquiring standing to file a lawsuit after the fact.” LaFrance v. U.S. Bank Nat’l Ass’n, 141 So. 3d 754, 756 (Fla. 4th DCA 2014) (citation omitted) (internal quotation marks omitted).
A “person entitled to enforce” an instrument is: “1) [t]he holder of the instrument; 2) [a] nonholder in possession of the instrument who has the rights of a holder; or 3) [a] person not in possession of the instrument who is entitled to enforce the instrument pursuant to s[ection] 673.3091 or s[ection] 673.4181(4).” § 673.3011, Fla. Stat. (2014); see Mazine v. M & I Bank, 67 So. 3d 1129, 1131 (Fla. 1st DCA 2011). “A person may be a
1 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.” § 671.201(21)(a), Fla. Stat. (2014).
person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.” § 673.3011, Fla. Stat.
JPMorgan alleged that it was the note holder, but it failed to prove its holder status at trial. JPMorgan did not attach the note to the complaint. It introduced a copy of the note at trial, which contained an attached allonge indicating a blank endorsement from “JP Morgan Chase Bank, NA Successor in Interest by Purchaser from the FDIC as receiver of Washington Mutual Bank F/K/A Washington Mutual Bank, FA.” However, PennyMac Loan Services’ witness did not testify to when the allonge was attached to the note or when the endorsement occurred. No other record evidence indicated when it occurred or when JPMorgan became the note holder. See Peoples v. Sami II Trust 2006–AR6, 178 So. 3d 67, 69–70 (Fla. 4th DCA 2015).
Although JPMorgan does not meet any of the requirements of a holder— and does not attempt to prove it did—it argues it proved standing because it owned the note and mortgage when it initiated the foreclosure action. It argues the 2008 PAA and a 2014 assignment of mortgage proved ownership. We disagree.
To prove its standing to foreclose, JPMorgan would have to prove it was “[a] person not in possession of the instrument who is entitled to enforce the instrument pursuant to s[ection] 673.3091 or s[ection] 673.4181(4).” § 673.3011(3), Fla. Stat. “[N]othing in [section 673.3011] allows an ‘owner’ to enforce the note without possession, except where the instrument is lost or destroyed.” Snyder v. JP Morgan Chase Bank, Nat’l Ass’n, 169 So. 3d 1270, 1273 (Fla. 4th DCA 2015). Therefore, JPMorgan would have to prove: (1) it was the owner, and (2) reestablishment of the lost note under section 673.3091. See id.
Here, there was no proof that JPMorgan had possession of the note at the time it filed the complaint. JPMorgan acknowledged that the note was lost and not in its custody or control. Because the original note was never filed with the court and there was no other evidence of possession, no competent substantial evidence exists of possession. See id. at 1272. And, similar to Snyder, there exists no competent substantial evidence of ownership. The PAA has caveats where JPMorgan could refuse to acquire assets and there is no record evidence that the FDIC transferred the note to JPMorgan before the complaint was filed. Id. We reverse the final judgment of foreclosure based on JPMorgan’s failure to prove standing.
Corona Law Firm gets foreclosure judgment reversed! SOSA v THE BANK OF NEW YORK MELLON | FL 4DCA – the witness’s entire body of knowledge on the subject was limited to what the witness learned from a search on “the internet.” Such evidence is not competent to establish the Bank’s standing as nonholder in possession with the rights of a holder.
JORGE SOSA and JEANETTE SOSA, Appellants,
THE BANK OF NEW YORK MELLON, f/k/a THE BANK OF NEW YORK AS SUCCESSOR IN INTEREST TO JP MORGAN CHASE BANK, N.A., AS TRUSTEE FOR STRUCTURED ASSET MORTGAGE INVESTMENTS II, INC., BEAR STEARNS ALT-A TRUST 2005-2, MORTGAGE PASS- THROUGH CERTIFICATES, SERIES 2005-2,
No. 4D14-810 [March 23, 2016]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; John J. Murphy, III, Judge; L.T. Case No. 09-321 (11).
Krista Bordatto and Ricardo Corona of Corona Law Firm, P.A, Miami, for appellants.
Donna L. Eng, Michael K. Winston and Dean A. Morande of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee.
This is an appeal from a residential foreclosure which ended in judgment in favor of Bank of New York Mellon (“the Bank”). On appeal, Jorge and Jeanette Sosa (“Homeowners”) argue, inter alia, that the Bank failed to prove it had standing to bring the action. We agree and reverse.
The following facts are pertinent to the standing issue. The Bank filed a mortgage foreclosure complaint against Homeowners alleging one count of foreclosure and one count for reestablishment of a lost note. Although it was not the original lender, the Bank alleged that it was the owner and holder of the Note and Mortgage and, in support, attached a copy of the Note containing a blank indorsement.
The matter proceeded to a bench trial. At the onset, the Bank announced it had located the original Note and intended to submit it as
evidence. The Bank then called a loan verification analyst for its purported servicer, Wells Fargo Bank, N.A., as its only witness. Through the analyst, the Bank introduced the original Note which, unlike the copy of the Note attached to its complaint, was specially indorsed to JP Morgan Bank as Trustee (“JP Morgan”). When asked about her knowledge of how the Bank acquired the Note from JP Morgan, the witness testified that she learned about the transfer through general research she did “on the internet” and that “the internet will illustrate the transfer occurred in 2006.” The Bank did not present any additional evidence establishing that it acquired the Note prior to filing the foreclosure action.
At the conclusion of the witness’ testimony, the Bank rested. At that point, Homeowners moved for an involuntary dismissal, arguing that the Bank failed to establish it had standing. Homeowners pointed out that the Note was indorsed to JP Morgan and there was no evidence establishing a relationship between JP Morgan and the Bank. The Bank countered that it identified itself as the successor in interest to JP Morgan in the style of the complaint. The court denied Homeowners’ motion and ultimately entered judgment in favor of the Bank. This appeal follows.
It is axiomatic that in a foreclosure case, “the plaintiff must prove that it had standing to foreclose when the complaint was filed.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “A plaintiff who is not the original lender may establish standing to foreclose a mortgage loan by submitting a note with a blank or special [i]ndorsement, an assignment of the note, or an affidavit otherwise proving the plaintiff’s status as the holder of the note.” Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 310 (Fla. 2d DCA 2013). A plaintiff can also establish standing by submitting evidence that an equitable transfer of the mortgage and note occurred before the filing of a foreclosure complaint. See McLean, 79 So. 3d at 173.
In the case of a note bearing a special indorsement, under section 673.2051(1), Florida Statutes (2014), the “instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person.” See also Dixon v. Express Equity Lending Grp., LLP, 125 So. 3d 965, 967–68 (Fla. 4th DCA 2013) (holding the bank which filed the foreclosure complaint did not have standing to foreclose when the original note contained a special indorsement in favor of another party). “Where a bank is seeking to enforce a note which is specially indorsed to another, the bank is a nonholder in possession.” Bank of New York Mellon Trust Co., N.A. v. Conley, 41 Fla. L. Weekly D127, D127 (Fla. 4th DCA Jan. 6, 2016). “A nonholder in possession may prove its right to enforce the note through: (1) evidence of an effective transfer; (2) proof of purchase of the
debt; or (3) evidence of a valid assignment.” Id. “A nonholder in possession must account for its possession of the instrument by proving the transaction (or series of transactions) through which it acquired the note.” Id.
Here, the Bank claims that it presented through its witness’s testimony substantial, competent evidence that the Bank was the successor trustee to JP Morgan and, thus, had standing to sue under the Note. The Bank’s position is patently overstated. The witness did not work for the Bank or JP Morgan and was unable to describe the relationship between the two. Moreover, the witness’s entire body of knowledge on the subject was limited to what the witness learned from a search on “the internet.” Such evidence is not competent to establish the Bank’s standing as nonholder in possession with the rights of a holder. Accordingly, we reverse and remand for entry of an order of involuntary dismissal of the action. See Balch v. LaSalle Bank N.A., 171 So. 3d 207, 209 (Fla. 4th DCA 2015) (reversing and remanding for entry of an order of involuntary dismissal when the bank failed to provide sufficient evidence of its standing).
Reversed and remanded.
MAY and GERBER, JJ., concur.
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