For a Foreclosure, Courts Requiring Lenders to Show They ‘Own & Hold’ Note
An interesting trend seems to be evolving in South Florida and I suspect across the nation—it’s called “No Note…No Foreclosure!” It seems courts are now slowly but surely, forcing banks to “follow the law”. Now, isn’t this an interesting concept?!
Most banks have been conducting their litigation by calling for “summary judgment” at the earliest possible moment. Hence, you have cases that, unopposed, can result in a foreclosure summary judgment in 120-150 days. However, the tide may be starting to wane as more and more property owners facing foreclosure fight back. A Miami-Dade circuit court judge sided with 2 homeowners when it ruled that the lender had failed to prove it had the right to foreclose on their Miami Beach condo. In particular, the court acknowledged the lender couldn’t prove it was the true owner of the loan. Now the case is headed for trial, and if the couple wins, they may get their $548,000 first mortgage rescinded.
Similarly, the Fourth DCA reversed a summary judgment granted to a lender on the basis that the promissory note the lender had produced in court reflected an “endorsement in blank”, this being a stamp with a blank line where the name of the assignee should be filled above the pre-printed line. Problem is, it was in fact “blank”, and despite the objections of the defense counsel at the trial level, the trial court granted the summary judgment. However, the judgment was reversed by the appellate court after finding the “unsigned and unauthenticated” endorsement created a “genuine issue of material fact”, which questioned whether that lender was really the “owner and holder of the note”.
These two recent decisions really serve to underscore what many defense lawyers have been saying for over a year: a mortgage foreclosure action is not a slam dunk for the bank. Instead, issues ranging from the failure to possess the original note to faulty and fraudulent assignments to pooling and servicing agreements serving to impact the foreclosure process, have all served to empower property owners and their willingness to stand up to an over-reaching, non-negotiating, lender. The judiciary, slowly but surely, is raising the bar to ensure “due process” is applied and at the same time, appears to be willing to similarly force lenders to “follow the law” and not merely rubber stamp the lender claims.
Savvy property owners are forcing lenders to muddle through and scrabble over and around the very hoops they created during the mortgage lending debacle of the last decade. The easy credit, high profits era of that time has now given way to uncertainty and cause for concern as lenders are beginning to face that challenges of having to prove they really “own and hold” the promissory notes. Considering the severe impact of a deficiency judgment, issuance of a 1099 and the way these judgments are reported by the banks to the credit bureaus, is it any wonder why property owners are now starting to appreciate what a disaster awaits them if they sit by and do nothing? Some have decided to fight back, defend their homes and preserve their rights. The American dream is alive and kicking.
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 Lopez, Melissa J. Ulloa, Phillip 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 Litigation, Real Estate Litigation, Residential Purchase & Sales, Commercial Acquisitions & Sales, Residential Landlord-Tenant Litigation, Commercial Landlord-Tenant Litigation, Short Sales Negotiations, Loan Modifications, Criminal Defense, Civil Rights Claims, Family Law, Corporate Work, and Labor & Employment Law.
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