Florida Appellate Courts Are Getting It — and so is everyone else

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary




EDITOR’S COMMENT: It all comes down to “black letter law.” None of this is new. It’s just that the pretender lenders thought they could side-step the process by making it LOOK like they were complying with the law. The failure to comply is not just indicative that they tried to short-cut the process like many people are saying in the media.

  • That would mean that they actually DO “own and hold and the note,”
  • that they COULD “tender the original promissory note to the trial court,” or
  • that they COULD prove a case to “re-establish the lost note under [Florida] State statute [673.3091].
  • It would also mean that they could show and prove that the original note was payable to the would-be forecloser OR
  • that the note had a special indorsement in favor of the forecloser
  • [OR, if it isn’t subject to the restrictions against blank indorsements in the securitization documents, that they had a blank indorsement.
  • In the securitization environment it would mean that they could show and prove that the would-be forecloser was the assignee of an assignment “from the payee to the plaintiff”
  • OR in a motion for summary judgment that is unopposed (no questions of fact in dispute) that they have an affidavit from a competent witness to prove the would-be forecloser is the owner and holder of the note.

There are several common-sense presumptions behind each one of these black letter law requirements. This isn’t technical stuff. It is substantive. If the party seeking foreclosure is not the creditor and doesn’t lawfully hold and own the note then THEY can’t foreclose no matter when the last payment was received from anyone including but not limited to the borrower, third party co-obligors set up in the securitization documents or government bailouts. If the loan is subject to foreclosure it can ONLY be by a party fitting the above description as stated in the above case in a per curium (unanimous) opinion of the appellate panel. The reason is not just that we have rules and you can’t pick and choose which rules you will follow and which you can’t.

The reason is that in foreclosure there is a change of ownership and title to the property. Any subsequent party, innocent or otherwise, must know with certainty that if they buy that property or lend money using that property as collateral, that the title is clear, marketable and free from any cloud or defect. Without that certainty, commerce comes to a virtual standstill. Not only would real estate transactions be thrown into chaos, but the principles behind the requirements for foreclosure also are applied to any other debt or the transfer of anything else, tangible or intangible. So if ANY court allows for even the possibility that disinterested parties could legally intervene in the chain without proving their right to do so, all of commerce comes to a halt.

Which brings us to my final point in this article: in the context of securitization, there is no such proof. That’s why they are faking it. If they had it, they would show it. The reason they don’t have it is that it never existed. What they want the courts to do NOW is to allow them to substitute fiction for fact. They want courts to allow them to submit either fake documents or documents that have no legal effect. The basic problem they have is that the evidence of transfers and change of ownership of the note does not reflect the original liability of the borrower nor the existence of the original real creditor. The original payee was not the lender. Thus the mortgage or deed of trust secures a note that is invalid. They can’t bring a legal action to modify the note to reflect the real lender because that would be admitting that they ever made the proper disclosures required under federal (TILA) and state lending laws.

The ONLY way they can correct the title problem, the chain of ownership problem (title and obligation) is by getting BOTH real parties in interest to agree and sign something ratifying such an arrangement or by getting a court to issue a judgment cramming such an arrangement down the throats of investors and borrowers alike. Since their problem is that the property was never worth what was represented and the loan terms, now revealed in all their glory, are not viable, it is impossible to imagine that the investors would agree to anything other than getting their money back or that the borrowers would agree to anything other than a correction of the terms and principal of the obligation to reflect the true value of the property and the losses incurred between the time of closing and the present time.

As brilliant as some of the schemers are, they based their entire framework on a completely unworkable presumption and thought they had the “risk” problem solved. Now Wall Street finds itself the cowardly owner of the risk — because they tried to split the obligation, note and mortgage each from the others in such a complex way, with repeated iterations of “assignment” of receivables that it is in reality not possible to correct in the real world. They convinced the government to be the lender of last resort when the crisis started, but now the FED is asking for its money back , as are the investors. The borrowers are filing individual and class action suits, and the opinions from the bench are turning against Wall Street in strong, angry language from the bench.

Every day it gets worse for Wall Street’s prospects. All eyes are on Wall Street and how they could survive. The answer is that Wall Street will survive because there are hundreds of investment banking firms that would be only too happy to fill the void left by the resolution of the megabanks. There are 7,000 community banks and credit unions, many with assets in the tens of billions, that could and would easily fill the retail banking void. The electronic funds transfer backbone already exists and is in use in all of these firms and banks.


“It is the culmination of the worst civil procedure nightmare we’ve ever imagined,” said Anne L. Weintraub, a real estate attorney at Sarasota’s Syprett Meshad law firm, referring to the recent appellate rulings.

From Stopforeclosurefraud.com



Ruling might further complicate loan crisis

Published: Tuesday, November 9, 2010 at 1:00 a.m.
Last Modified: Monday, November 8, 2010 at 10:04 p.m.

( page of 4 )

Appellate courts in Tallahassee and West Palm Beach have admonished lower courts for allowing foreclosures to proceed without the proper paperwork and kicked the cases back to circuit judges in a move some experts say could further complicate the foreclosure crisis.

At issue is the use of sworn affidavits that convinced circuit judges the borrower’s original promissory note had been lost in the shuffle but that the lender still had a right to foreclose. Experts likened it to a used car dealer selling a vehicle using a photocopy of the title.

Circuit court judges have been using such promises to issue summary judgments, which have sped cases along at a time when the courts have been inundated.

Observers say the rulings from the 1st District Court of Appeal in Tallahassee and the 4th District Court of Appeal in West Palm Beach could become templates for more challenges.

It is unclear just how many cases could be affected — the chief judge in this region’s circuit says foreclosure paperwork is carefully scrutinized by teams of case managers — but the rulings come as the system already is dealing with disruptions from self-imposed bank moratoriums to deal with questionable paperwork.

“It is the culmination of the worst civil procedure nightmare we’ve ever imagined,” said Anne L. Weintraub, a real estate attorney at Sarasota’s Syprett Meshad law firm, referring to the recent appellate rulings.

What happens next could have widespread implications for the more than 200,000 Floridians who have lost their homes to foreclosure since January 2007, including the more than 12,000 in Manatee, Sarasota and Charlotte counties.

18 Responses

  1. In Colorado Judges have been hear to say, “if a thief finds a promissory note endorsed in blank, he is entitled to enforce the note in a court of law. Question. Can a thief be a real party in Interest if he has no injury in fact?

    Please contact me at reuben.nieves@yahoo.com

  2. Florida is just like Arizona, same thing; very corrupt courts and systems. I used to live in Arizona, and have actually won most of my cases there, but here in Florida I have friends and family who are victims of the corrupt court systems. I am moving away from law and don’t put my efforts anymore into courts; I have a few people I help right now with paperwork as a paralegal and I always tell them just file for bankruptcy, much easier than trying to win in court, esp. in these states. Doesn’t mean you want to give in, you don’t but if you have a choice and can file for BK instead of going into offense or defense, it is just easier to file for BK.

  3. Here may be the truth people. Read and understand ! X and Y ( not naming them) created virtual or imaginary MERS ( Mortgage Electronic Registration System) to quickly assign large numbers of mortgages from non-qualified customers to inflate demads for home loans and thus increasing the the stock market value by mortgage backed securities. Remember those times you got checks to take it to the banks to buy homes and wondered about it. People who can’t even afford to buy cheese burgers bought homes ( how nice ! )during those times which artificially inflated the stocks. They thought that MERS avoided the need to assign mortgages by paying recording fee at the town halls as these computer system was recording it like crazy from joe dow and blow. (This may be reason why you may not be able to see your mortgage in the land evidence records in your name.)

    So then the Government stepped in and created TARP ( Troubled asset relief program). Later it was modified by Mr. Obama and CHANGED it as Emergency Economic Recovery Act 2008 under which HAMP is created to satisfy the many law ignorant people. When people could not modify their mortgage under HAMP and HOPE, they came to know that WE THE PEOPLE did not have private individual right to enforce HAMP and HOPE or whatever hoop as the Act has some loose languages such as ONLY to “encourage” banks to participate in mortgage modification. This means people don’t have the right to take these banks to court and make them to modify and they are not required even to give the reason for denial. How nice, hey, the government took people for granted as buch of a.s.s.e.s.

    Oh yeah, change yes we can !

  4. The “Business Records Exception” is an evidentiary rule that allows plaintiffs to entire contracts, billing statements, and other business documents into evidence even though it violates the Constitutional right to confront and question the witness against you. All that is needed is the “keeper of records” to testify that the documents were kept in the normal course of businesss. The logic of the rule is that business records were so inherently reliable, so the courts ignored the constitutional defect. NOW we learn that bank records are completely compromised. Either hackers steal account information or some executive leaves a lap top somewhere that is stolen and compromised. The logic that underpinned the exception is gone. Even though the keeper of records can still testify their records were kept in the normal course of business, they have no idea whether their records are reliable or not.

  5. what if the originating sponsor NEVER TRANSFERRED the loan docs to the trust, and held them in their loan vault, then tried to endorse the note??

    Would seem to me they are not authorized.

  6. I sure wish that I saw more success stories from CA, other than in the BK courts.

  7. Diana also contact the Huffington Post. or Richard Fine, Esq He has fought the judicial system in California and maybe he can refer you to somebody. His Daughter works for the Huffington post and maybe she can help. Also Google the judge’s name maybe he has some enemies and you can find out information on the Judge.

  8. As I said in previous coments, Califoria U.D. judges LOVE the banks and want homelessness to increase. I am living proof!

  9. I Have The Note … What does that mean to me…. The original endorsed in blank…. Mers don’t scare me because I have … by their own letter that they were REMOVED and the MIN deactivated and still to this very day the FDIC is listed as the servicer on the MERS system, which as I have said before was the original lender was aquired by NETBANK and subsequently shut down by the FDIC in 2007… Does anyone Know of an attorney In SC or can Practice in SC … please email me @ sbrewer@email.com

  10. The above being davids comment

  11. Let’s offer a lot of money to do the above it’s the only thing they understand

  12. Some question about notary : Has the
    Notary Stamp and the Customers signature to be on the same page in Florida in 2004 ?
    I know that law was changed in 2007 , but in my case
    was the Notary Page added later and my initial was

  13. Mr. Stoppa’s post is heartening, yet Florida still has rocket docket star chambers, as recently described by Matt Tiabbi in Rolling Stone magazine:

  14. Posted on November 9, 2010 by Mark Stopa
    The front page of today’s St. Pete Times tells the story of my client, Michael Carlson, who is seeking to vacate a foreclosure judgment entered against him in 2008. Here’s the rub – after foreclosing, Bank of America sold the home to a third party, who has been living in the home since 2009, yet, for the reasons set forth in this Motion to Vacate Foreclosure Judgment, I firmly believe my client’s claim for ownership/possession takes priority over the third party purchaser.

    At the outset, I want to make it clear – there are limited circumstances in which a person who has lost his/her home via a Final Judgment of Foreclosure can file a motion to re-claim the home, particularly if someone else now owns it. The most straightforward way to do so, though, is the one outlined in the motion.

    The argument is actually quite simple. Like any defendant in any lawsuit, a homeowner in a foreclosure lawsuit cannot be deprived of property without “due process of law,” a right bestowed upon all Americans via the Fifth Amendment to the United States Constitution. The way Florida courts ensure due process in foreclosure lawsuits is to require that homeowners be served with a Summons and Complaint by a process server or sheriff (commonly called “service of process”). This way, if a homeowner has valid defenses, he/she has a chance to assert them in a court of law.

    In Mr. Carlson’s case, he was never served with a Summons and Complaint, as the bank served a tenant at a property where he never lived, so he never knew about the suit (until after it was over) and never had a chance to defend it. On these facts, I firmly believe the law requires that Mr. Carlson regain ownership of his home (even though it’s been more than two years since the foreclosure and even though the home was sold to someone else). In other words, the Final Judgment of Foreclosure entered against him is void, as if it never existed, because he never had a chance to defend the suit.

    If that sounds like an extraordinary result, bear in mind – that’s how strong the Fifth Amendment is.

    Homeowners cannot be deprived of property without due process of law.

    When I evaluate prospective cases like this, I’m looking for two facts:

    1. The homeowner never defended the foreclosure lawsuit in any way; and

    2. The homeowner was never served with a Summons and Complaint, or was served by publication.

    This is not to say that all foreclosed homeowners who meet these two criteria can file a motion to vacate a Final Judgment of Foreclosure, nor does it mean these are the only circumstances when such a motion can be brought. That said, if a Florida homeowner who fits these two criteria, I’d be interested in giving you a free consultation. Even if the foreclosure was months or even years ago, if the Homeowners were never served, and never defended the case, they may be able to re-claim ownership of their home.

    I understand some people reading this may sympathize with the third-party purchasers, the Winters. However, they are not without remedy. Their recourse is against Bank of America, the bank that warranted title to the home when they sold it to them, and/or the title insurance company, which issued a title insurance policy when they purchased it. In fact, if my client prevails on his motion, the Winters should, in my view, have a slam-dunk claim against the title insurance company. Of course, this is precisely what I’ve been talking about in all of the prior blogs and media stories about title insurance problems. Here, a title insurance company is looking at a significant claim, on what seems to be a very nice home in Dunedin, even though, arguably, all it did was issue a title policy on a home that Bank of America had foreclosed.

    This story is also a glaring illustration why Florida judges must ensure that foreclosure cases are done the right way, from the outset. Here, for instance, there could have been some requirement that the process server’s affidavit of service require the process server to indicate some provide personal knowledge that Mr. Carlson lived at the home where the tenant was served. That safeguard was lacking, however, Mr. Carlson did not live at the home, and now a big mess has unfolded. Respectfully, the entire court system should slow down and ensure foreclosures are done properly from the outset, failing which more and more of these problems are going to boomerang back to them.

    Mark Stopa


  15. Somebody forgot to remember that the ORIGINAL NOTE WITH THE ORIGINAL SIGNATURE is required to prove who the owner is and who the borrower is. Check out the Fair Debt Collections Practices Act.
    http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  16. I found the Fannie Mae 50-page document dated August 18,2010, stating its requirements for document custodians. I’m a fairly new dog in this fight, so maybe the document is old news, but just as a reminder, it is chock-full of interesting requirements about electronic records, notes, and assignments.

    I found the section about the note to be particularly perplexing. It states that a borrower must acknowledge any material changes to the note. Does that mean the crooks sometimes change the note after closing, or is this speaking of changes to the note in its original form at closing?

    The Document Custodian’s review of each note must determine that:

    The document is an “original” that has been signed by all of the borrowers. NOTE: in the case of an inter vivos revocable trust, the note must contain at least one Trustee signature and a signature of at least one individual whose income and assets are used to qualify for the mortgage . (see 8.1.1).

    All blanks have been filled in or crossed out, as applicable.

    Any “white outs” or changes to the document or to the information inserted in the blanks have been initialed by the borrower(s).
    If the borrower(s) did not initial changes that materially affect the terms of the note (e.g., changes to the original loan amount, interest rate, monthly payment, or maturity date, or deletion of one of the mortgage covenants) the document is not acceptable.
    If the borrower(s) did not initial changes that do not materially affect the terms of the note (e.g., corrections to the property street address, city, state, and/or ZIP code) the document will still be acceptable.

    As I read this document, I remembered many of the issues foreclosure defense lawyers have argued and it seems this document confirms their view of how the note and the mortgage must be handled, but were not.

  17. You said: “The ONLY way they can correct the title problem, the chain of ownership problem (title and obligation) is by getting BOTH real parties in interest to agree and sign something ratifying such an arrangement or by getting a court to issue a judgment cramming such an arrangement down the throats of investors and borrowers alike.”

    That makes sense to me, but how does the “MERS Pardon” article come into play in this situation – there still would be no way for ANY KIND of legislation to “cover” this problem, would there?

  18. Wouldn’t it be a great day if one of the bank employees is deposed and admits to feeding notes into the shredding machine?

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