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The Florida Fourth District Court of Appeals just issued an opinion that is a very big deal for Florida homeowners everywhere — but especially those who are facing foreclosure as well as those with underwater mortgages who are wondering what their future holds.  In Robert McLean v. J.P. Morgan Chase, as Trustee, Florida’s homeowners won a victory.

It’s a big win.   Here’s why.

First things first.  If you want to read the full court opinion (issued in Cause No. 4D10-3429 on December 14, 2011), you can do so for free online or download it to your computer or printer, if you prefer.

What’s going on? Well, the story underlying this case — and there’s always the real, human story behind every law case — involves a man named Robert McLean who hired a foreclosure defense lawyer to fight for his home in Broward County over a 2009 foreclosure filed by JP Morgan Chase.

Seems that JP Morgan Chase filed a foreclosure lawsuit, seeking to foreclose on Mr. McLean’s property, and in its papers the bank claimed that the note itself was “lost, stolen or destroyed.”  We’ve been posting about how important notes are … especially in foreclosure proceedings and where the lender cannot find the original documents.  For details, please read our posts:

1.  The Power of Real Estate Law: Banks Cannot Legally Foreclose Upon Real Estate Loans They Don’t Own (Even Though YES They’ve Been Foreclosing On Homes Without Them)

2.  Florida Foreclosure Defense Basics: The Difference Between Your Note and Your Mortgage and Your Deed of Trust (and Why You Should Care About This)

Meanwhile, back to the story of Mr. McLean.   Back when the lender filed its foreclosure lawsuit, it was doing what banks and other mortgage servicers were doing all over the State of Florida (as well as the rest of the country):  if they couldn’t find the original documentation, they still went ahead and filed the foreclosure actions.  What the heck, Florida law allows for this provided certain conditions are met.

What’s important in the new Fourth Court of Appeals opinion is this:  the court stated that the way Chase filed the foreclosure wasn’t right under state law.  The paperwork, showing ownership of the note, needs to be in place before the lawsuit is filed by the bank trying to foreclose. And, if there’s questions about that paperwork, then the homeowner should get a hearing before the trial court judge to determine the validity of the paperwork (an “evidentiary hearing”).  From the opinion itself:

On remand, in order for Chase to be entitled to summary judgment, it must show, without genuine issue of material fact, that it was the holder of the note on the date the complaint was filed (i.e., that the note was endorsed to Chase on or before the date the lawsuit was filed). By contrast, if the evidence shows that the note was endorsed to Chase after the lawsuit was filed, then Chase had no standing at the time the complaint was filed, in which case the trial court should dismiss the instant lawsuit and Chase must file a new complaint. See Jeff-Ray Corp., 566 So. 2d at 886. An evidentiary hearing may also be required if there is disputed evidence on an issue, such as to the date the note was endorsed to Chase.

Bottom line:

  • Lenders must prove they own that note when they file their lawsuit.
  • For those foreclosure lawsuits already filed down in Florida courthouses, lenders need to be considering how risky it might be to go forward with their current paperwork. Maybe they should just go down to the clerk’s office and file a Notice to Dismiss the foreclosure action until (and unless) they can get their paperwork properly in order and then re-file a lawsuit that complies with the Fourth Court of Appeal’s opinion.
  • Trial court judges will need to look at foreclosure lawsuits filed in their courtrooms with a tip of the hat to the new Fourth Court opinion: the bank’s paperwork must be scrutinized with care.
  • Florida Homeowners who are fighting foreclosure can now look to the Fourth Court opinion as a basis for requesting a hearing to review the bank’s paperwork.
  • Florida Homeowners can now expect less of the old day’s wham-bam summary judgments granting foreclosures and more opportunities to have a full trial on the merits of whether or not the foreclosure of their home is wrongful.

Now, this isn’t all over but the shouting.  JP Morgan Chase can still file a motion for rehearing.  And, there’s the chance as well that JP Morgan Chase might try to take this opinion up to the Florida Supreme Court, asking the highest Court in the State to grade the papers of the Fourth District Court of Appeals.

Or, Chase can just return to the trial court and follow through with the instructions given in this opinion by the Fourth Court of Appeals.

Either way, it’s a good week for Florida Foreclosure Defense.  Let’s all appreciate a victory for home owners — they’ve had so few victories over the past few years.

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