For years, perhaps decades, it was a relatively simple matter for banks to take homes back in foreclosure. They appeared before a judge, demanded the home and the judge granted it. Up until very recently, there were not many appellate court decisions that addressed foreclosure cases and the procedures adopted by courts that allowed foreclosures went largely unexamined by the outside world. One important side effect of this wave of foreclosure litigation is that attorneys, judges and consumers have now begun to closely examine the entire foreclosure process. This close examination reveals real flaws in the court processes and procedures that awarded foreclosure to banks for decades in this state.
As I’ve now examined the process, there are several key areas of concern that I believe should prevent judges from granting foreclosure in the current system:
1. Plaintiffs in foreclosure cases must present some legitimate, admissible evidence they are entitled to foreclose on the mortgage.
2. A related issue, but improperly blended together with the first by many is, Plaintiff’s must prove they possess the right to enforce the note.
The first thing to understand is a mortgage loan transaction, and a foreclosure case seeking to enforce that loan transaction is based on two separate and distinct documents, 1)The Mortgage; 2) The Note. Under the current system, Plaintiffs file cases with copies of mortgages that are easily copied from the public records. There is often no connection in the documents, either in the mortgage or note, between the Plaintiff in the case and the name on the note and mortgage which clearly state that a party other than the Plaintiff has the legal capacity to enforce that contact. In many cases, the Plaintiff fails to even attach the copy of the note that is at issue in the case.
The Three Appellate Court Cases That Form The Core of Foreclosure in Florida
Defense attorneys routinely challenge the facts that the contracts the Plaintiffs are suing upon show that a party other than the Plaintiff is entitled to enforce the documents. The Plaintiffs argue, “Just ignore the names on those documents, we’re the banks and we’re entitled to foreclose”. The next step of the argument is that Plaintiffs argue, “When we present the original Note, that’s all we need to do and foreclosure must be granted. Unfortunately, judges across the country have bought those arguments in thousands of cases. The entire universe of cases that support these (in my opinion) incorrect propositions is very small, but the primary cases are:
WM SPECIALTY MORTGAGE v. SALOMON, 874 So.2d 680 (Fla.App. 4 Dist. 2004)
JEFF-RAY CORP. v. JACOBSON, 566 So.2d 885 (Fla.App. 4 Dist. 1990)
JOHNS, ET UX., v. GILLIAN, ET AL., 134 Fla. 575 (1938).
Click on the links and print them out, they’re just about all you need to know about foreclosure in Florida. If you know each of these three cases, you know just about all the cases that have been used to improperly grant foreclosure in cases across the state. The crazy thing is the legal reasoning used to support the most questionable aspect of the current foreclosure judicial decision-making, that is not requiring a Plaintiff to show an assignment of mortgage is found Johns, a case that was published in….1938! Consider how different the legal and financial markets were in 1938, when mortgages and lenders were largely isolated in the counties where the mortgages were located…and here is the one paragraph that, in my estimation has led to thousands, if not hundreds of thousands of improper foreclosures across the country:
However, it has frequently been held that a mortgage is but an incident to the debt, the payment of which it secures, and its ownership follows the assignment of the debt. If the note or other debt secured by a mortgage be transferred without any formal assignment of the mortgage, or even a delivery of it, the mortgage in equity passes as an incident of the debt, unless there be some plain and clear agreement to the contrary, if that be the intention of the parties. Jones, on Mortgages, Vol. 2, Sec. 1033; Collins v. W.C. Briggs, Inc., 98 Fla. 422, 123 So. 833; Miami Mortgage & Guaranty Co. v. Drawdy, 99 Fla. 1092, 127 So. 323.
The fourth case has been released by the Second District Court of Appeals, and when it is final, it will be the nuclear bomb that goes off in Plaintiff’s Foreclosure Firms Across the State.
Read this gem of an opinion in a case titled BAC Funding v. US BANK and now you know all you need to know about foreclosures in Florida! The key points from this brand spanking new case that turns foreclosures on their heads are as follows:
- Further, it did not file any supporting affidavits or deposition testimony to establish that it owns and holds the note and mortgage. Accordingly, the documents before the trial court at the summary judgment hearing did not establish U.S. Bank’s standing to foreclose the note and mortgage, and thus, at this point, U.S. Bank was not entitled to summary judgment in its favor. (This language is key because it directs the courts to demand an evidentiary basis for documents, not just the documents themselves.)
- Regardless of whether BAC answered the complaint, U.S. Bank was required to establish, through admissible evidence, that it held the note and mortgage and so had standing to foreclose the mortgage before it would be entitled to summary judgment in its favor. Whether U.S. Bank did so through evidence of a valid assignment, proof of purchase of the debt, or evidence of an effective transfer, it was nevertheless required to prove that it validly held the note and mortgage it sought to foreclose. See Booker v. Sarasota, Inc., 707 So. 2d 886, 889 (Fla. 1st DCA 1998) (The key word here is ” validly”. The Plaintiff cannot just show up in court with the documents, it must validate them and authenticate the documents for the court to consider.)
- The incomplete, unsigned, and unauthenticated assignment attached as an exhibit to U.S. Bank’s response to BAC’s motion to dismiss did not constitute admissible evidence establishing U.S. Bank’s standing to foreclose the note and mortgage, and U.S. Bank submitted no other evidence to establish that it was the proper holder of the note and/or mortgage. (The Plaintiff must introduce authenticated, properly introduced evidence to proceed.)