The Sunshine State is a hotbed for foreclosure litigation, and standing continues to bedevil lenders — with several lenders losing on appeal.
The District Court of Appeal of Florida reversed and remanded a foreclosure that the trial court had dismissed with prejudice in Deutsche Bank v. Gonzalez. The court explained that, although the bank’s insistence that the mortgage note was lost turned out not to be true, the lender’s actions were not fraud upon the court and had actually prejudiced its own case.
“[T]he bank’s negligence first and foremost prejudiced the bank itself. A party’s negligence that undermines the party’s own case may be maddeningly foolish; it may test the limits of the best trial judge’s patience; but it does not rise to a fraud upon the court,” the appeals court said. “When such negligence causes the opposing side to incur unnecessary attorney’s fees, the proper remedy for that injury is an award of attorney’s fees, not a “lottery-like windfall to a party like the cancellation of the note and mortgage.”
Matthews v. Federal National Mortgage Association dealt with a lender loss on standing. Fannie Mae failed to establish standing at the beginning of the lawsuit, the appeals court said. The note attached to the complaint did not establish standing. It was not made payable to Fannie Mae and contained no endorsements.
Additionally, the note introduced at trial, while establishing Fannie’s standing at that moment in time, did not establish standing when the suit was commenced. The blank endorsement was undated. Nor does the backdated assignment, standing alone, establish standing. The assignment was executed on March 18, 2010, but provided for an effective date of Jan. 27, 2010. The lawsuit was filed in February 2010. Because Fannie Mae failed to establish standing, the appeals court reversed the final judgment of foreclosure.
In Lumarque v. Fannie Mae, Raymond Lamarque appealed from both a default and a final judgment. Based upon the lender’s confession of error and that the notice should be given in sufficient time to permit some meaningful action to be taken upon it after its receipt, the appeals court vacated the default and final judgments and remanded to the trial court for further proceedings. The opinion did not include information on the error.
Murray v. HSBC Bank dealt with standing and the question of a non-holder in possession.
“In this foreclosure puzzle, one of the pieces is missing,” the appeals court noted, agreeing with the borrowers that the bank failed to prove standing after a chain of transfers.
The issue was whether HSBC was a non-holder in possession with the rights of a holder, the appeals court said. HSBC had to prove the chain of transfers starting with Option One California as the first holder of the note. The only document admitted that purported to transfer the note was the pooling-and-servicing agreement. Although the note was included in the agreement, the parties to the pooling-and-servicing agreement were ACE, Option One Mortgage Corp., Wells Fargo, and HSBC; not Option One California. Although Option One Mortgage Corp. was a party to the pooling and servicing agreement, it was the servicer. Nothing in the agreement established that the servicer conveyed rights in mortgage loans to any party.
Also, even though the loan analyst testified that through a chain of transfers Ocwen was the current servicer of the loan, it did not prove that HSBC had standing as a non-holder in possession with the rights of a holder. The chain of transfers started with Option One California as the original holder of the note. ACE, as the depositor, transferred its rights in the note to HSBC through the pooling-and-servicing agreement. However, there was no evidence that Option One California transferred its rights in the note to ACE.
“This is the missing piece of the puzzle,” the appeals court noted.
The appeals court reversed an order by the trial court in Salazar v. HSBC, explaining that it was without jurisdiction to enter such an order. The trial court had dismissed the foreclosure and ordered HSBC to explain why it had apparently failed to renegotiate the borrower’s loan. The borrower said the lender had told him not to worry about foreclosure because they were modifying his loan.
But, the borrower’s condo was sold and a certificate of sale was filed by the clerk of the court. The trial court ordered the clerk to withhold the certificate of title until HSBC appeared “to explain why the mortgage modification had not been completed, had taken so long, and why Salazar will not qualify for a mortgage modification.” The trial court then dismissed the case and declared borrower the prevailing party for the purpose of awarding attorney’s fees after HSBC failed to appear to explain itself. The trial court had no authority to either order HSBC to explain why it had not agreed to renegotiate the loan or to dismiss the foreclosure, the appeals court said.
In HSBC Bank USA, N.A. v. Karzen, the appeals court reversed in favor of the lender in a case dealing with the statute of limitations.
“We agree with HSBC Bank that the filing date of the amended complaint for purposes of the statute of limitations related back to the filing date of the original complaint and the circuit court’s dismissal for untimeliness must thus be reversed,” the appeals court wrote.
Ham v. Nationstar Mortgage dealt with a lender loss at the appellate level on the issue of standing. The appeals court said the evidence of standing was not enough to support the final judgment. No note — and thus, no indorsement — no assignment of the note, and no affidavit of ownership of the note was attached to the complaint. And, the description by the witness of the evidence did not amount to competent, substantial evidence to remedy the deficiencies and “clear contradictions” to her testimony.
The evidence was insufficient to establish that Nationstar’s predecessor plaintiff, Aurora, had standing to enforce the note via an action for foreclosure on February 7, 2008. Accordingly, the evidence in the record was insufficient to support the final judgment of foreclosure in favor of Nationstar due to the insufficient evidence to establish the predecessor plaintiff’s standing.
Tremblay v. U.S. Bank was another lender loss on the appellate level on the issue of standing. The appeals court ruled that the lender lacked standing when it filed the foreclosure complaint.
Although the bank later filed an assignment of note, the assignment was executed after the bank filed its foreclosure complaint. And, at the non-jury trial, the bank’s witness was unable to identify the exact date the bank received the note.
