For a Foreclosure, Bank MUST Prove Ownership

In my article: “No Note…No Foreclosure”, I highlighted how a  4th DCA appellate court decision resulted in the court reversing a summary judgment after finding that the “unsigned and unauthenticated” endorsement created a “genuine issue of material fact”, and led to questioning whether that lender was really the “owner and holder of the note”.

It is this “owner and holder of the note” that has the right to pursue an action. Industry experts say that between 25% to 50% of notes are missing. And this makes sense. In the “hey day” of the banking, free credit frenzy of the last decade, these notes were sold and resold, numerous times after having been bundled into securities, categorized electronically “somewhere”, deposited in unknown “vaults”, and likely lost in a whole bunch of “creative” (and some not so creative) ways as loans came and went out of control. That being the case, is it any wonder we need to inquire who is the legitimate owner of any promissory note? Especially when it is the note (secured by the mortgage) which serves as the basis of a foreclosure claim?

Now, logically, we have a new Florida Supreme Court rule that requires lenders to verify they are the actual owners of a note before filing an initial foreclosure case. And this makes more sense than ever.

The note is a “negotiable instrument”.

Other possible defenses aside, it goes to the very heart of a lender’s claim. It is what purportedly says, “I owe “x.00” dollars”. The primary intention of the Supreme Court rule is to “unclog” the courts dealing with the thousands and thousands of cases in the judicial system state-wide, and those about to come on-line soon. However, the real value as I see it is that is gives judges power to sanction plaintiffs who make false accusations on the ownership of notes or missing notes. Law firms that deal with foreclosures routinely file “lost note” claims with the original default notice, regardless of whether they have located the original promissory notes. And while lenders have a statutory “out” to this predicament if they really can’t locate the original note, the fact is your defense counsel ALWAYS has to insist for evidence of the original note and documents.

The sad story here is that 8 to 9 of 10 property owners finding themselves in a foreclosure action fail to defend and just walk away. As a result, with no one there on behalf of the borrower to defend and fight the foreclosure, these cases all sail right through. And as I’ve said before, – “turning over the keys”, “walking away”, or delivering a “deed in lieu of foreclosure” is a formula designed for years of financial headaches. And the worst part – it is “self-inflicted”! Lenders may obtain “deficiency judgments” at the foreclosure auctions (for the difference between what the borrower owed and what the bank sold the property for at auction) and once this is in their hand, they have 20 years to collect from you, with interest.

Remember, by defending against the foreclosure lawsuit, you put the bank to the test. The new Supreme Court rule serves as a reminder:  you’d be surprised at how difficult it can be for a bank to “prove their case”.

Preserve your rights, defend your property.

Carlos J. Reyes  is the Principal of Reyes Law Group. He has been a member of the Florida Bar since 1988 and practices state-wide.  Carlos has been awarded a rating of “AV Preeminent” which is the highest possible rating in both legal ability and ethical standards by Martindale-Hubbell – a well-recognized legal resource. The RLG Legal Team also include attorneys Stephan LopezMelissa J. UlloaPhillip A. Ortiz and the RLG Legal Support Team to bring you a dedicated, experienced and dynamic legal team to handle your legal needs.

We also assist clients in the areas of: Civil LitigationReal Estate LitigationResidential Purchase & SalesCommercial Acquisitions & SalesResidential Landlord-Tenant LitigationCommercial Landlord-Tenant LitigationShort Sales NegotiationsLoan ModificationsCriminal DefenseCivil Rights ClaimsFamily LawCorporate Work, and Labor & Employment Law.

Call us for a FREE consultation at (954) 369-1993  Se Habla Español.

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We are located at 150 S Pine Island Rd #210, Plantation, FL 33324


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Reyes Law Group

Reyes Law Group represents clients in a multi-disciplinary legal practice involving real estate transactions and litigation with a “footprint” that covers the State of Florida. Over the firm’s first 10 years, Reyes Law Group has closed over $100M in commercial closings, representing buyers and sellers in contract negotiations, due diligence, and the related title review and policy issuance related to closings. In litigation, the firm has commercial litigation experience focused on prosecuting or defending claims such as breach of contracts, partition actions, trade secret violations, and breach of non-competes. However, our firm’s MAIN FOCUS is assisting asset and loan portfolio managers, investors and private lenders with a “ 4-PILLAR APPROACH” to the legal challenges they face with non-performing assets: 1) LOAN WORKOUTS; 2) COMMERCIAL FORECLOSURES (across the State of Florida); 3) COMMERCIAL EVICTIONS; and 4) REO COMMERCIAL CLOSINGS.30+ years’ legal experience means - WE CAN HELP!

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