Last Update: 8/17/18
We do not make a practice of sharing every foreclosure victory in a blog post. It is not our style. However, the recent publication of our appellate win against Bank of America merits some discussion today because the ruling on the issue of “Standing” may be helpful to others who are fighting against the foreclosure of their home.
If you are concerned that you may lose your Florida home or condo to a bank foreclosure, or if you are already being threatened with foreclosure proceedings by your lender, then this post may be helpful to you.
The case itself is officially styled, Barnett v. U.S. Bank Nat. Ass’n, 186 So. 3d 585 (Fla. Dist. Ct. App. 2016), and it is the decision of the Florida District Court of Appeal for the Fourth District (the appeals court), of a decision initially made by the Broward County Circuit Court for the Seventeenth Judicial District (the trial court).
What began as a simple refinance request by Mr. & Mrs. Barnett to lower their interest rates on a home with significant equity, ended with the Barnetts being convinced, by the now defunct Washington Mutual, to modify their loan under a program that was unheard of at the time. Thereafter, an unexpected foreclosure was filed which turned into a multi-year catastrophe caused by over a dozen subsequent banks, loan entities, law firms, and 3rd party processors all of whom were unable to resolve the matter in a way that righted the wrongs committed by everyone except Mr. & Mrs. Barnett.
You can read the full text of the case here, on Google Scholar.
Understanding Who is Really Filing The Florida Foreclosure Lawsuit Can Be Tricky
Our clients are two Florida homeowners. The foreclosing bank is much more complicated. It is a tiered bank, which is common in Florida foreclosure lawsuits.
What do we mean by tiered? In the foreclosure complaint filed against Mr. and Mrs. Barnett on May 25, 2010, the plaintiff described itself as “Bank of America, as Successor by Merger to LaSalle Bank, National Association, as Trustee for Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2005-11.”
This means that Bank of America (”BofAm”) was describing itself first as:
(1) successor by merger to LaSalle Bank, a National Association, meaning that LaSalle merged into BofAm and BofAm was then the successor in interest of LaSalle’s property holdings;
(2) including some Washington Mutual Mortgage Pass-Through Certificates, specifically the WMALT Series 2005-11, property which had been placed in trust with LaSalle, as as trustee.
However, if you read the entire opinion, you will see the following entities referenced, a total of eight (8) different institutions all involved in the Barnetts’ mortgage:
- Bank of America;
- LaSalle Bank;
- Washington Mutual Mortgage;
- First Savings Mortgage Corporation;
- Residential Funding Corporation;
- Mortgage Electronic Registration Systems, Inc.;
- JP Morgan Chase Bank, N.A.; and
- U.S. Bank Nat. Ass’n.
Every Florida Foreclosure Action Must Have Evidence: Check the Documents Attached to The Complaint
To file a foreclosure lawsuit, the bank has to file a pleading called a “complaint,” that explains things like (1) why the court has jurisdiction over the matter; (2) who the plaintiff and defendant are; and (3) the laws upon which the lawsuit is based (its cause of action).
To support a Florida foreclosure action, the bank needs to attach certain documents to the complaint as exhibits. These documents have to be properly executed (witnessed, notarized, etc.) and they are considered a part of the complaint itself. When these steps are properly taken, they may be considered evidence in the case (for example, if the defendant(s) do not deny the validity of the documents in their answer to the lawsuit, then the documents can be used as evidence).
In Mr. and Mrs. Barnett’s case, the B of A complaint alleged that B of A “is the current owner of or has the right to enforce the Note and Mortgage. See attached Exhibit C.”
1. The note
When you flip over to the document marked as “Exhibit C,” the photocopy of the note has First Savings Mortgage Corporation as the lender.
NOT Bank of America. In fact, Bank of America wasn’t mentioned anywhere in the document.
However, that note did mention another lender. It had an undated special endorsement from First Savings Mortgage Corporation to Residential Funding Corporation.
Who is Residential Funding Corporation? Well, not a party in the case. Residential Funding Corporation remained a third party to all of these proceedings through the final appellate decision.
2. The mortgage
The mortgage is also attached.
Here, again there is absolutely no reference to Bank of America. Or, LaSalle Bank for that matter. The bank named in the mortgage is shown as First Savings Mortgage Corporation.
Importantly, the mortgage includes the following language:
“”MERS” is Mortgage Electronic Registration Systems, Inc. MERS is a separate corporation that is acting solely as a nominee for Lender and Lender’s successors and assigns. MERS is the mortgagee under this Security Instrument.”
3. The assignment
Further, a photocopy of an assignment of mortgage dated April 8, 2010, which had never been recorded in the Broward County Public Records, is also included with the complaint.
This document stated that it was transferring both (1) the note and (2) the mortgage from MERS to Bank of America. And it referenced B of A as being the successor to LaSalle Bank, with the same name designation in the complaint.
(So the complaint copied what was shown here in the MERS assignment for B of A, ie., “Bank of America, as Successor by Merger to LaSalle Bank, National Association, as Trustee for Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2005-11.” This is where the name of the plaintiff as shown in the complaint that started the foreclosure lawsuit originated.)
Did the Plaintiff Have Standing to Sue?
Here is where the fight began and where it was won. The Barnetts legally challenged B of A and its “standing” to file the foreclosure lawsuit against them. Standing is an important issue — if the suing entity (the bank or the Trustee) doesn’t have standing to file the lawsuit, then the case should be dismissed. Here’s what was argued in the lower court case:
- Bank of America had no legal standing to foreclose on the Barnetts.
- The complaint failed to state a case against our clients under Florida foreclosure law.
- The case should be dismissed because of these deficiencies.
During the case, B of A first tried to fix their papers by filing the original note and mortgage in the court file. Then in February 2013, U.S. Bank entered the case as a plaintiff, arguing that the right to foreclose had been transferred to it.
At the trial, there was no jury; the judge entered his decision. Even though U.S. Bank only called one witness, a home loan research officer for the servicer of the loan, JP Morgan Chase Bank, N.A., who “gave confusing testimony about the ownership of the loan,” and no testimony regarding what bank had possession of the note at the time that the foreclosure lawsuit was filed — the bank won.
What? According to the trial court judge, “…I find that by virtue of possession of the original Note that there was standing at the filing of the suit, of the foreclosure action.”
So, Mr. and Mrs. Barnett decided to keep fighting by filing an appeal.
Florida Appellate Court Agrees to Review The Court’s Decision
In Florida, when a trial court judge makes a decision on standing, the appeals court can review that case “de novo.” This means that the appeals court makes its own decision on the evidence. See, GMAC Mortg., LLC v. Choengkroy, 98 So.3d 781, 781 (Fla. 4th DCA 2012).
In the appeal we filed, we simply argued to the appellate court that the plaintiff had no standing to pursue the case.
Under Florida law, standing to sue for any plaintiff seeking foreclosure must be established AT THE TIME THAT THE LAWSUIT IS FILED. See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So.3d 170, 173 (Fla. 4th DCA 2012); Rigby v. Wells Fargo Bank, N.A., 84 So.3d 1195, 1196 (Fla. 4th DCA 2012). “[P]ossession of the note determines standing to foreclose.” Everhome Mortg. Co. v. Janssen, 100 So.3d 1239, 1240 (Fla. 2d DCA 2012).
The appeals court agreed. U.S.Bank never proved that Bank of America had standing to sue Mr. and Mrs. Barnett. Specifically, there was no evidence put before the court and into the record that B of A had actual possession of the note when the lawsuit was filed.
And the MERS assignment? U.S. Bank never provided any evidence (1) showing when the assignment of the note and mortgage to B of A happened, before or after that undated endorsement of the note to a third party; nor any proof that (2) proved the undated special endorsement on the note from First Savings to the third party.
“[T]he unexplained, undated endorsement to the third party is … circumstantial evidence that Bank of America may not have possessed the note at the time suit was filed.” Barnett, at 186 So.3d at 587.
Case Dismissed by the Appellate Court
After finding that the trial court made an error in ruling that there was standing to sue Mr. and Mrs. Barnett, the appeals court reversed that judgment and ordered the case dismissed. Under Florida law, the appellate court has the power to order that a case be dismissed in its entirety (or it can order that a particular ruling be reversed and the issue sent back down to the trial court to render a decision using the new ruling as its guide). Klemencic v. U.S. Bank Nat’l Ass’n, 142 So.3d 983, 984 (Fla. 4th DCA 2014).
Sometimes, Justice Means Having To Take Your Case Up On Appeal.
Mr. and Mrs. Barnett had to fight both at the trial court level and at the reviewing court (appellate) level to get justice in their case. It’s a hard road that takes time and money and comes with lots of emotional stress and frustration.
These are two courageous clients, who were willing to stay in the fray through the appellate process and not give up and throw in the towel. We are proud to have been their appellate advocates!
What’s The Bottom Line?
The bank lost because it didn’t follow the rules. It didn’t have admissible and authenticated evidence to file a foreclosure lawsuit. Before they filed the foreclosure lawsuit, they had to have physical possession of the note (unless the note was lost, destroyed or stolen). That’s the law.
This is far from the first time this has happened — that a bank tries to foreclose without having its legal ducks in a row. For details on how bad these cases can be, check out our free ebook here, particularly section two, “Things Get Lost: Lenders Lose Key Documents in Gleeful Days of Making More and More Money,” on page 5.
If you are facing foreclosure and believe the bank’s paperwork is not in order, then a good piece of advice is to speak with an experienced Florida real estate lawyer to learn about your rights. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
If you found this information helpful, please share this article and bookmark it for your future reference.
We are in appeals court now and have a modification offered to us, but we originally made all our payments and did nothing wrong. Should we hold out for the appellate ruling? If we win, what happens to our mortgage and house? It’s all been explained to be very vague to us. Even though we may win, we still have to go to the banks afterwards so what is the point?