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Not Just Standing – Standing at Inception
by Mark Stopa

On the heels of two similar decisions just a few weeks ago, Florida’s Fourth District Court of Appeal just issued another ruling which explains the need for a bank to have standing to foreclose, not just in general terms and not just when it moves for summary judgment, but at the inception of the lawsuit. McLean v. J.P. Morgan Chase Bank, issued today out of the Fourth District, does the best job of any foreclosure case I’ve read so far, at least in Florida, of explaining the distinction.

I strongly encourage everyone to read the opinion, but I’ll summarize.

Generally, the issue of whether the bank had standing at the inception of a foreclosure case arises in one of two contexts. The first is where the bank contends it has standing to foreclose based on an Assignment of Mortgage, yet that assignment post-dates the filing of the Complaint. This was the fact pattern in McLean, and the Fourth District makes it clear that such an assignment is insufficient, particularly without proof that the actual transfer of the Note/Mortgage took place prior to the suit being filed. In other words, it’s okay for an assignment to post-date the filing of the Complaint so long as the actual transfer of the Note/Mortgage took place before suit was filed, and the bank must present evidence of that transfer to prevail.

The second and perhaps more common fact pattern is where the bank relies on an indorsement that was executed after the original Complaint was filed. (The indorsements are always undated, so how can you tell if the indorsement post-dates the Complaint? Easy – compare the Note attached to the Complaint, which often has no indorsement, to the ”original” Note filed thereafter, which usually does.) As the McLean court explained, this fact pattern also requires dismissal:

if the evidence shows the Note was indorsed 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.

In either scenario, i.e. whether the bank’s standing is based on an Assignment of Mortgage or an indorsement, the bank must present evidence that it acquired the requisite standing before it filed suit, failing which a summary judgment of foreclosure would be improper. In other words, even if the homeowner doesn’t know when the indorsement was executed, if the bank can’t/doesn’t prove when it was executed, then it cannot foreclose.

Notice how the court calls for an evidentiary hearing? In my view, the evidence from the homeowner would be simple. I’d have my client testify that the copy of the Note attached to the Complaint that he/she was served with did not have an indorsement. (This is easy – the Complaint is in the court file.) This would put the onus on the bank to prove it obtained the indorsement before filing suit even though the copy of the Note attached to the Complaint did not have that indorsement. In other words, a bank representative would have to testify when the indorsement was obtained, and trust me – that’s easier said than done.

One fascinating part of the opinion is the court’s indication that this issue can be addressed via a motion to dismiss. To illustrate, did you notice how the court kept saying the homeowner raised these arguments via motions to dismiss? Then, perhaps most tellingly, the court held:

where a mortgage foreclosure action is based on an assignment that was executed after the lawsuit was filed, the plaintiff has failed to state a cause of action. In such cases, the proper course of action is for the plaintiff to file a new Complaint.

The term ”failed to state a cause of action” is critical here. This is, quite simply, the clearest indication yet from any Florida appellate court that a plaintiff’s lack of standing at the inception of the case can be brought via a motion to dismiss.

It’s an exciting day for foreclosure defense, folks – and yet another reason to keep fighting your lawsuit.

(By the way, if you check my old blogs, here and here, for example, you’ll see I’ve been arguing “standing at inception” in foreclosure cases for years. It’s terrific to see the arguments I’ve been making for so long are being adopted by Florida’s appellate courts.)

Mark Stopa Esq.


55 Responses

  1. lots of discussion, will have to come back and read all of this

    still wondering how a resolution (is that the right word) coming out of the 4th Court of DCA would be interpreted by a Court in the 2nd District. Can a judge hearing a case in the 2nd district disregard the 4th’s finding?

    Is this the path to the Florida Supreme Court?

    When do these issues leave the state court system and go to the Federal one (again word choice).

  2. Tony’s absolutely right. BK is all about disclosure. The value of the suit is contingent, unliquidated and unknown, but so long as you disclose it you won’t be barred from filing it later and the trustee won’t take it away from you.

  3. Cheryl,

    Your lawyer wasn’t telling you the truth. All you have to do is put in your schedules the amount you are suing for and say that you might have this amount of money, if you win suit. Then they can not say that you didn’t disclose it, and can still sue in the near future.

    This is simple, and if your lawyer don’t knows this you might want to find a new lawyer.

  4. Bob –

    My atty. told me that if I ever went in bankruptcy I would forfeit my rights to file a lawsuit, which includes QT. Check with an attorney. Good Luck.

  5. nabdulla, Enraged and javagold:

    I actually do have a blue wet ink note at home – not the primary mort – an equity line never used. The signature page that got recorded says “borrower copy” at the bottom. I think I may have asked for a copy at the time and they handed me whatever theyhanded me…..however my copy that I walked away without a clue at the time and stuck in a file at home says “bank copy” and it was signed with a blue pen. When the servicer sent copy of the note for the first mort (they have done this a few times without me asking – pretty much whenever I ask a question about the terms) they accidentally sent the equity line note as above along with copy of the first mort deed of trust – sure enough signature page says borrower copy just like what is recorded.

  6. @ Javagold

    no “copies” of signed note- its akin to counterfeiting
    unsigned note yes!! there should be a copy.

  7. excellent STANDING opinion – detail analysis
    57568003-IN-RE-VEAL-vs WELLS FARGO / AHMS

    Constitutional Standing
    Constitutional standing requires an injury in fact, which is
    caused by or fairly traceable to some conduct or some statutory
    prohibition, and which the requested relief will likely redress.

    Prudential Standing
    Even though Wells Fargo and AHMSI may meet the
    constitutional minima for standing, this determination does not
    end the inquiry. They must also show they have standing under
    various prudential limitations on access to federal courts.
    Prudential standing “‘embodies judicially self-imposed limits on
    the exercise of federal jurisdiction.

    In this case, one component of prudential standing is
    particularly applicable. It is the doctrine that a plaintiff
    must assert its own legal rights and may not assert the legal
    rights of others.

  8. question ,,,,,,,, i have on good authority that world savings now out of business has no records to contest validity of foreclosure and that also means country wide, b.o.a, hsbc, america wholesale lender, wachovia, and wells fargo cannot prove they hold title or any paper work at all, the question should i file for a motion for quiet title and try to make them prove legal papers to show chain of title? i am in a chapter 13 as of this writing. bob……………………..

  9. @ Javagold

    “2. doesnt the homeowner or their attorney have a wet ink note in their files….”

    Possibly. Why don’t you look in your file for the note you signed at closing. If it’s not wet ink, contact your closing attorney, and ask him to check his files.

  10. @ Enraged

    🙂 🙂 🙂

    “3) No offense but… are you for real?”

    Man, you be cracking me up every time I come here. You have absolutely NO PROBLEM calling a jack a jack and a spade a spade. But, after a couple of years, me and the others tenants on this site are used to and respect your no-nonsense, no-bullshit attitude and way of talking.

    Dude – you should go easy on the “new jacks”. Me, I would have absolutely no problem if I were to say something and you called me ignorant, dumb, crazy or “what brick fell on your head”. I would not be offended in the least – because I know your way of trying to get me and others to THINK and pay attention. My Grandfather was JUST LIKE you.

    Lower your wings to the “Grasshoppers”.

  11. @cubed2k- just for reference, the NY Countrywide/BOA “settlement” which first prompted NY AG Schneiderman to intervene included 426 securitizations, and have read elsewhere that a Moody’s or S&P spokesperson said ” we didn’t rate all of these MBS, we only rated 43,600 of them. So that would be 43,600 additional MBS leveraged to the hilt.

  12. ;o)

  13. carie, I’ll see your ???, and raise you ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

  14. ???

  15. E Tolle and Cubed 2

    Its Neils site – that’s all for now

    (damn these dudes are getting dangerous)


  16. LL Reader:

    Motions, sanctions and any thoughts regarding the path I should take??

    MSoliman: You cannot be held to a standard denying you due process so you cannot be held to a cease and desist for filing motions.

    Filing gibberesih is another story .

    Try this …(he’s talking …tonight…)

    Party “A” Settlement Lender
    Party “B” Member Bank Wire
    Party “C” Broker dealer Constribution
    Party “D” Registration “REMIC” Securities

    Note Amount / $250.00 = Asset tru Com
    Basis in assets = Book value
    Preferred Shares: Mo Payment x 120 mos
    Goodwill = Asset Tru pref.

    Derecognition: Loan – Line = Zero Basis
    Liquidation: Reverse “REPO” asset rerpurchase
    (See M&A Case law)

    Post Script :

    Drinking causes death.
    Party “A” Drinker
    Party “B” Drink Server
    Party “C” Driver
    Party “D” Injured Party

    How can Party “B” or “C” be held liable for “A”? If all three are one in the same …..

    NO ASSIGNMENTS JUDGE BOYKO. They perfected the day they got married.

    No Bifurcation MA Land Court .

    UCC article 3 and 9 …? Not if Article 8 is implied. It superecedes the other two arguments after the cutoff date. (see your attorney here as always) .

    Latest comment heard –

    Trust and perfection are sperate matters …..

    Ahhh Okay !

    What about Lima Beans!


  17. E. Toile,

    I don’t have any case that I could cite and, so far, judges have pretty much ruled as they wished and, in some cases, either ignored or rewritten the laws. I would say that it is definitely changing with the latest decisions and the SC judgment reversals.

    That being said, I don’t quite understand why a bank having been dismissed w/o prejudice on the question of standing via faulty assignment (i.e. after filing of the legal action) would introduce a new assignment. Because of the first faulty one, the second one becomes immediately suspicious. The obvious question then becomes: “Which one is the real one or are they both faulty?” I mean, the bank would have quite a bit of explaning to do…

    I cannot imagine a judge knowingly taking the chance of being overturned on appeal over something like that. Maybe someone has cases illustrating what you describe and in which the judge ruled that the 2nd assignment was proper and admissible but, somehow, it doesn’t make sense to me.

    Now, the thing about banks refiling after having gotten a dismissal w/o prejudice: when i look a court cases, I do see it happen but what I’ve noticed is that:
    1) the players are different;
    2) the allegations are different; and/or
    3) the defendant is not represented and the bank counts on the defendant not being savvy enough to ask the right questions.

    ThHarry handles foreclosure defense, as I unerstand. Why not ask him?

  18. Or, let me say that differently….the depositors, upon transferring the assets to the trustees/trusts have severed any further control over these assets, rendering foreclosure impossible due to FASB 140? Because the transferors have no continuing involvement? Am I close? Do I get a door prize?

  19. soliman

    ” underground economy’ = debt collectors?

  20. Mr. Soliman, are you saying that the foreclosing entities have surrendered control over transferred financial assets, and therefore have no standing?

  21. Soliman. Foreclosureinfosearch———

    There is no assigment for a derecognized asset

    please provide reference or ucc or calif law, or
    I call u haul.

  22. highlight any of my questions and right click and do a google search

  23. ….is not to hear various conjectures

    Then pull your head out and read GAAP and rules for derecognition of assets and liabilties under FAS 140

    There is no assigment for a derecognized asset …how many more homes will be lost to ignorance , I don’t know. (I wrote this back three plue years ago here. )

    To the reader who wrote the intro herein above…not targeting you but your right. The conjecture is kiiling homeonwers in this underground economy. I spent 23 years stealing homes (in jest ) and got to tell you …folks here are so far off. Call U haul .


  24. What is money? What is exchange? What is a product or service?

    Where does money come from? Who issues money?

    What is credit? Who can give credit? What is debt based money system?

    Do a google search?

  25. “The law firm’s clients, which claim to own the requisite 25% of the deals necessary to mount a challenge, have instructed trustees of 243 securitizations to begin seeking loan put-backs. In practice, this would entail stepping aside and allowing the law firm to file suits.”

    The above is from post by jjg007, as posted below===========

    Does anybody realize what this means?

    “have instructed trustees of 243 securitizations to begin seeking loan put-backs.”

    243 securizations to begin seeking loan put-backs?

    that is a lot of loans.

    How many of these loans were sold to debt collectors, acting as Servicers of loans? Pretender Servicers?

    Debt Collectors?

    What a confusion of money.


  26. @mary,

    Like “tony” always says—have you tried getting them dismissed on subject matter jurisdictional grounds?

    Judge to bank’s lawyer: “Does the servicer have standing?”
    Bank’s lawyer: “No”.
    “Can they join real party in interest?”
    “No…but we have the note!”
    “You can’t even get past jurisdiction first, much less talk about notes.”
    Dismissed with prejudice.

    Question—if someone is served with an unlawful detainer in a non-judicial state—how can they get it into federal court and use the subject matter jurisdiction/dismissal issue there?

  27. Javagold..

    You need to “Chill Out,” not “Enraged.”

    Read the complete thread, from “Tyzao” at 10:47 AM until your first post at 4:05 PM.

    There is only one note sighed in “wet ink” at a loan closing… and that specific note is kept (or should be) by the “lender” of the money (or the “lender’s” appointed agent until that note…. which has a “cash-like” quality like a US Bank Note — with a specific serial number)… until the lender’s agent forwards the note to a custodian who will create a “paper trail” and keep the note in a secure location until it is paid off or needed to foreclose on a “mortgage” or a “deed to secure debt.:”

    The only party in a foreclosure who has to produce the original “wet-ink” note evidencing the loan, is the orginal “lender” or the party in due course who can prove current ownership and possession of the “cash equivalent” swapped for an asset of value at the the original loan closing…. That is done not with a “copy” of the original, but by “producing the note” to the court. Once done, that producing party must be the party legally authorized to institute a foreclosure proceeding.

    Part of the trouble in many “Fraudclosures” is that the judges are not remembering (or are ignoring) basic Law 101. A suing party must have “lawful standing” to bring suit and (if standing is disputed) must be able to prove that very important legal requirement.

    Part of the instant dispute is that (in their rush to speed up the funding for real estate acqusitions,) it appears that there has been a systemic failure… and possibly a systemic attempt to “counterfeit” so-called “true copies” of original “wet-ink” notes that have not been produced.

    This specific issue, though, re-addresses the process… the specific “past-to-present” order of actions that evidentially prove legal standing before the case can proceed. This procedural evidence of ownership and current possesion of the evidence of a debt must exist before the onset of the plaintiff’s attempt to sue to protect against real, financial loss… and cannot be “produced” after the legal process begins adjudication in a court environment.

    At least…. this is my opinion… but that’s up for grabs… I willingly confess I am not the owner, nor the possessor thereof, of a law degree, nor do I have a license to practice law anywhere except at my kitchen table… neither do I charge for the counsel of a layman in these matters.

    I do, however Javagold, reserve the right to opine on matters of civil discourse, and I think you owe Enraged an apology for you response to his pointed but searching question.

  28. @ Enraged, with all due respect, javagold’s got a point. Not everyone spends 20 hours a day studying this stuff like some on this blog (you and I?). And if you re-read his/her post, it’s obviously a serious and valid question.

    I believe the answer might be somewhere in between, that possibly both of you are right, to a degree. Enraged is possibly correct in that they would have problems in that the bank already screwed the pooch on that particular issue, and that the assignment would fail due to its flawed nature. I’d argue against your line of reasoning as to their legal costs, as they’re ramping up big time and don’t seem to care the cost. Remember, money’s nearly free to them, thanks to us by way of Bernanke. And javagold’s possibly got a point that the bank would more than likely try to re-assign and re-foreclose, as they’re desperately seeking free houses and who’s to say anyone will catch them? It’s paid off for them so far, at least around 95% of the time, from what I’m hearing.

    I recently read a case where a creditor tried to pull a corrective assignment of mortgage on the court, where the first assignment they did was obviously flawed/fraud and unmistakably so, but the point become moot due to other circumstances. The court did question Plaintiff bank heavily as to the nature of this action, but declined to go there all the while waiving a finger in the air as in “Why I oughta’!”

    And Enraged, as to our discussion earlier, what you’re doing reminds me of when someone discovers that the person they’ve been talking to doesn’t speak English, and they then start shouting their questions still in English as if this might help the person understand after all. I do understand what you’re saying, I honestly do, but you’re still not addressing the question that I continue to raise, and that is about not being able to acquire standing after the fact.

    Example: Bank has a post dated assignment. Court rules against the bank, w/o prejudice. Banker files a new foreclosure with a new corrected assignment. Foreclosure granted. EXCEPT as was discussed by Stopa, that small fact that a plaintiff cannot acquire standing to foreclose after filing suit. So, there’s an issue with the assignment as Stopa said, and I’ve read elsewhere that I’d like some closure on….once an assignment is bad….it’s just plain bad — void. It’s my belief that due to a faulty initial assignment, that corrected assignment is a nullity, because one cannot correct a void document.

    The reason I’m kicking this dead horse is not to hear various conjectures, but hopefully to see actual case cites as to screwed assignments/nullity/void and such. Comprende?

  29. Mark Stopa Esq. – Nevada Attorney General Sues LPS – LPS Response to Nevada AG Complaint – Hogwash!

    Lender Processing Services is the largest provider of mortgage default services in the United States, processing more than 50% of all foreclosures in America. Today, the Nevada Attorney General sued LPS, alleging it:

    1. Engaged in a pattern and practice of falsifying, forging, and/or fraudulently executing foreclosure related documents, resulting in countless foreclosures that were predicated on deficient information;

    2. Required employees to execute and/or notarize up to 4,000 foreclosure related documents every day;

    3. Fraudulently notarized documents without ensuring that the notary did so in the presence of the person signing the document;

    4. Implemented a widespread scheme to forge signatures on key documents, to ensure that volume and speed quotas were met;

    5. Concealed the scope and severity of the document execution fraud by misrepresenting that the problems were limited to clerical errors;

    6. Improperly directed and/or controlled the work of foreclosure attorneys by imposing inappropriate and arbitrary deadlines that forced attorneys to churn through foreclosures at a rate that sacrificed accuracy for speed;

    7. Improperly obstructed communication between foreclosure attorneys and their clients; and

    8. Demanded a kickback/referral fee from foreclosure firms for each case referred to the firm by LPS and allowed this fee to be misrepresented as “attorneys’ fees” passed on to Nevada consumers and/or submitted to Nevada courts.

    These allegations are so powerful I see no need to elaborate. Instead, I’ll ask you this … if these things happened in Nevada, what are the chances they didn’t happen in Florida and every other state?

    LPS Response to Nevada AG Complaint – Hogwash!
    Posted on December 19th, 2011 by Mark Stopa

    Suppose someone found thousands of terminally ill, cancer ridden patients and systematically killed them. Do you think he/she would avoid criminal prosecution for murder by arguing they were going to die anyway?

    That sounds bizarre, I realize. But take a look at the statement issued today by Lender Processing Services in response to the Complaint filed by the Nevada Attorney General. The part that stuck out to me:

    the company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by its employees.

    Apparently, in the eyes of LPS, the end always justifies the means, so I’d love to ask LPS:

    Do you think you could commit murder without penalty if the victims were terminally ill?

    Mark Stopa Esq.

  30. Livinglies – Generally, the issue of whether the bank had standing at the inception of a foreclosure case arises in one of two contexts. The first is where the bank contends it has standing to foreclose based on an Assignment of Mortgage, yet that assignment post-dates the filing of the Complaint.

    M.Soliman – Herein the argument fails on two levels. The assignment is “moot” or immaterial relevant to the presumptive claim of parties shown on the note are so entitled to perfection as recorded in county records.I contend the only prevailing argument I can see and offer counsel in controversy (as expert qualified under local court rules) is that your home will satisfy the debt, as was recorded or is otherwise perfected under any state or local law that applies “if ” it were never sold.

    As of and to the “cut off date – the creditor claims to a mortgage, as secured debt is evidenced from when he placed his home up as collateral to protect the interests of the lender. Therefer “Closing Date” the tranferred mortgage falls under gain on sale accounting methods used for reporting.

    This is a core delema for government to defend claims made under TARP and subsequent legislation as part of the emergency economic stabilization scheme placed into law beginning in 2009. Under the Cost Basis Reporting regulations passed under the Economic Stabilization Act of 2008, the assignment covers the mortgages exit from the trust under the PAS. Or does it cover the themortgage as a portfolio loan . The final IRS regulations were published on October 12, 2010.

    The current status of foreclosure is pled while never addressing the issues and response that merits discovery and cost basis reporting . What is a covered security is specified under IRS Code – read it. It is “Cost Basis Reporting” and not the assgnment . . .as a security acquired for cash on or after the applicable effective date as per IRS Code §1.6045 (g)(3)(A).Herein the arguments center on proper gain on sale accounting as equitable interest in a SPV(again with no assignemnt necessary – beleive me) .

    By comparison, if the late assignment is made for a loan in default as secured debt . . . it is one in same when you signed the instrument (such as a mortgage, deed of trust, or land contract) .

    I say no ! Its not the latter , and cannot place your ownership of title under a qualified home security for payment of the debt. Therefore the conventional rationale for the judicious is lost to the foreclosure if proper entitlements are not addressed at time of default, power of sale, trailing assignments etc

    .The late assignment is for perfection of somthing other than what the court is seeing. It is something else’s and that is where I believe the merit to prevail is and to restore title in these cases.


  31. @mary – leave to amend what? your answer? and it sounds like the assignment was executed some months prior to the recording of same. not sure you get any mileage out of that itself. the repudiation of the MERS contract so as to make it ineffective may be worth something. have you done discovery? any depositions? maybe try summary judgment?

  32. @javagold – since there are no stupid questions, I would characterize yours as a remarkably misinformed question. there should be no circumstances where the homeowner has a wet ink version of the note in their files. there should only be one wet ink note, and it should always be in the banks’ possession. of course, they either lose them or destroy them, so it’s usually not there either. your lashing out at enraged was just wrong.

  33. In the foreclosure case against me, an assignment of mortgage was recorded late 2009 with a retro effective date of early 2009. Served prior to recording of this alleged asg. This asg comes from servicer/mers as nominee for NCMC, (under bankruptcy), to a trust which closed in early 2007. Aside from some issues within this asg that I pointed out to the judge at status conference hearing, I just found out that NCMC repudiated it contract with Mers. As per other legal blogs and information. I got a copy of such from scribd. The judge ordered me at last hearing not to file any more motions and attorney says he will move for sanctions if I do since my motion to dismiss was denied. I believe I can file leave to amend due to newly discovered information and also attach proof.

    Any thoughts regarding the path I should take??

  34. Enraged , you need to chill the fuck out !

  35. @Javagold

    1) What do you think? Honestly? Knowing that a judge dismissed your claim because you had no standing when you filed it, knowing that the previous filinf is public record and that the homeowner can invoke it at any time (and would), what do you think the judge would say if you simply refiled as is, the same action? Use your common sense.

    2) Do you have your original, wet ink note? You would be THE ONLY ONE! Did you notice that all you got back after closing were COPIES?

    3) No offense but… are you for real?

  36. […] No I am not an attorney and no I am not providing legal advice.  This is the name of an article I just read posted on Neil Garfield’s LivingLies blog.  The article is from Mark Stopa, an attorney in Florida.  Read this article first and then come back and read my comments below: […]

  37. tOO BiG To fAiL LOan MOdIFiCATioN FOrm r.1.A.002.B.XXXX

    Don’t read it! Just sign it…you can trust these guys!



    1. cant the plaintiff just refile the foreclosure which would now be AFTER the assignment ?

    2. doesnt the homeowner or their attorney have a wet ink note in their files and cant the bank/servicer/plaintiff just ask the defendant to produce THEIR note ??

  39. It’s about time Mr. “Demon” face the music. Get your securitization audit / Bear Stearns Trusts coming back to life in the very near future.

    JPM Facing Massive PLS Buyback Claims

    Monday, December 19, 2011

    By Jeff Horwitz

    JPMorgan Chase & Co.’s chief executive, Jamie Dimon, told investors at the beginning of 2011 that potential repurchases of private-label mortgage securities are “not that material” for his bank — an assertion that increasingly appears to be in doubt.

    Dimon might not be quite so confident these days. Gibbs & Bruns LLP, the law firm that negotiated an $8.5 billion mortgage repurchase settlement with Bank of America Corp. on behalf of a group of large investors, has announced that it is seeking put-backs on $95 billion in private-label mortgage-backed securities issued by JPMorgan Chase, Washington Mutual Inc. and Bear Stearns. Private-label securities are mortgage-backed securities or other bonds that are created and sold by companies other than government-sponsored entities like Fannie Mae and Freddie Mac.

    “Our clients continue to seek a comprehensive solution to the problems of ineligible mortgages in RMBS [residential mortgage-backed securities] pools and deficient servicing of those loans. Today’s action is another step toward achieving that goal,” said Gibbs & Bruns attorney Kathy Patrick in a press release Friday.

    The law firm’s clients, which claim to own the requisite 25% of the deals necessary to mount a challenge, have instructed trustees of 243 securitizations to begin seeking loan put-backs. In practice, this would entail stepping aside and allowing the law firm to file suits.

    JPMorgan Chase did not respond immediately to a request for comment by American Banker.

    The company has appeared to take private-label repurchases more seriously of late. “We’ve been sued at [over] $54 billion of securities,” Dimon said at a Goldman Sachs investor conference earlier this month. “We expect that number to go up … We’ve hired top lawyers … top mortgage people, to make sure we understand exactly the exposure.”

    Were private-label investors to enjoy the same success as GSEs have had — which is unlikely, given that they have weaker contractual rights — JPMorgan Chase’s exposure could potentially rise to $6 billion, Dimon said. He added, however, that he believes it will be “pretty tough” for investors to prove their claims.

    “If someone was going to be reasonable on this, we’d have a conversation, [but] it in my opinion [it] is unlikely,” he said at the conference. “It’s just too complicated. It’s loan-by-loan, sometimes it is tranche-by-tranche. And there are too many players.”

    JPMorgan Chase’s reserve for repurchase claims is “predominantly calculated based on the Firm’s repurchase activity experience with the GSEs,” the company said in its most recent quarterly filing with the Securities and Exchange Commission. “While it is possible that the volume of repurchase demands from … private-label securitizations will increase in the future … the firm cannot offer a reasonable estimate of those future demands.”

    To formally reserve for legal loss, accounting rules require that claims be both probable and calculable.

    While less dramatic, JPMorgan Chase’s acceptance that private-label put-backs at minimum will involve it in a large legal battle echoes Bank of America CEO Brian Moynihan’s famous comparison of disgruntled investors to consumers who had purchased low-end Chevys and then sued over sub-Mercedes quality performance. That was before Moynihan backtracked and entered into a settlement with investors.

  40. Mark
    Great Job . Very informative Can I copy and pass articles on to people who need this

  41. To Dee:

    Perry bet big on tax grants to subprime lenders
    Texas homeowners paid $35 million in subsidizes to lure mortgage companies.

    WASHINGTON — As Texas governor, Rick Perry spent tens of millions in taxpayer money to lure some of the nation’s leading mortgage companies to expand their business in his state, calling it a national model for creating jobs. But the plan backfired.

  42. E.Toile,

    “where a mortgage foreclosure action is based on an assignment that was executed after the lawsuit was filed, THE PLAINTIFF HAS FAILED TO STATE A CAUSE OF ACTION. In such cases, the proper course of action is for the plaintiff to file a NEW COMPLAINT.”

    You see what I’m saying? The victory is that, once the plaintiff blew it on standing, even though it’s been dismissed without prejudice, he has to find some other grounds on which to file.

    I think it’s excellent! What is the likelihood that plaintiff has a different cause of action? That plaintiff has other grounds on which to file? Pretty remote, right?

  43. @E. Toile,

    Which is not to say that, should the banker later on trip and fall on the property in question, he couldn’t file a bodily injury claim against the homeowner. The prejudice concerns only ownership of and/or title to the property itself and whether the plaintiff has proved it could foreclose on it.

  44. @E. Toile,

    Something else I forgot to state: notice that the case refered to by Stopa mentions that as far as the allegations contained in the first lawsuit, plaintiff failed to prove its case. The judge leaves it up to plaintiff to refile with different allegations.

    When the case has been dismissed WITH prejudice, this is it. There is no refilin ever again by that plaintiff against that specific defendant ON ANY ALLEGATION whatesoever, as regards the real estate property.


  45. @E. Toile,

    You’re right: “There is a well-established line of cases holding that a plaintiff cannot acquire standing to foreclose after filing suit”.


    1) It isn’t the consensus all across the board. Some states have still not ruled accordingly and even within states, counties don’t agree on the issue.
    2) As you may recall, there have been cases where the plaintiff showed up in court with an affidavit of loss of the note, hoping it would fly. It didn’t and the judge said: “Come back with the endorsed note when you find it”. Dismissed without prejudice to give the plaintiff plenty of time to “find” or “make up” the missing note.
    3) There have been cases where the chain of transfer was broken and the judge said: “I don’t know when and how you came into the picture. You’re nowhere on the note and there is no allonge. Go figure it out and come back when you can show me.” Dismissed without prejudice.

    So, those cases do exist. In fact, they are the reason we have not made more progress. The thing is: once it has already been dismissed, it is much harder for the bank (I know, Carie) to prevail the next time around. And the legal fees keep adding up.

    It’s a game. A cruel one but a game nevertheless.

  46. @ Enraged, I hear you. But the question still remains, regardless of whether the bank’s willing to eat another legal fee or not:

    There is a well-established line of cases holding that a plaintiff cannot acquire standing to foreclose after filing suit.

    This doesn’t jive with the dismissal w/out prejudice ruling, if in fact they can re-assign in an attempt at acquiring standing. It’s a conundrum, kinda’ like the going back and killing your grandfather deal. If you didn’t have standing, and can’t go back and get it after the fact, what does prejudice matter? And how can they re-file, as Mr. Stopa said? Get in your DeLorean and answer that one, will you?

  47. Sorry, I meant to say “The judge accused the bank of trying to pull one over him…”

  48. E.Toile and Joan,

    If the case is dismissed without prejudice, the plaintiff (the bank trying to foreclose) must eat the legal expenses and attorney fees. If it wants to refile, it must repay for filing fee, service, etc.

    Banks spend an inordinate amount of money in legal fees. it is not uncommon for them to shell out $500, $800 or even $1200/hr for attorney fees. At some point, they have to make an economic decision: knowing that everything in the dismissed case is public record, and knowing that it cost the bank $20,000 (or $30,000 or $40,000) the first time around, what is the likelihood that it will prevail the next time, considering that the documents already produced have serious irregularities and that anything it produces now will be put under a magnifying glass?

    As far as I know, nothing stops the foreclosure defense attorney from using depositions and discovery from the dismissed case in order to prove that any subsequent filing/refiling is as fraudulent (or even more) than the previously dismissed case. I will defer to an attorney to confirm it but that is my understanding. (A dismissed case is NOT a mistrial, where when you refile, you start from scratch, as though there had never been any previous case before the court). From what I understand, a number of cases dismissed without prejudice end up not being refiled simply because the risks and the costs to the plaintiff are too high and might largely exceed whatever the bank could have made from foreclosing. If I recall too, a few judges have become irrate (I don’t have the cases in mind but I know there are quite a few and a recent one in Maine comes to mind) when a case had been dismissed without prejudice on the basis of faulty documents and lack of standing and was refiled with even more faulty ones in an attempt to circumvent the issue. The judge got pissed, accused the bank to try to pull over him and dismissed… with prejudice!!!

    Personally, I would not consider a case dismissed without prejudice in defendant’s favor to be a bitter-sweet or hollow victory. It is one battle won in the overall war between the bank (I know, Carie. I know) and the homeowner. What I’ve noticed, when searching the pending court cases, is that, oftentimes, Wells may have filed the first time around, the judge dismissed without prejudice on the grounds of standing, the banks pow wow’ed to get their shit together and, a few months later, BofA might be the entity refiling.

    Again, this is what I have observed. i have been known to misunderstand. So you might want to verify with an attorney.

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  50. For years we have heard about the bank’s lack of standing problem. In many cases, the court allows the bank to redo its forged paperwork and try again, and the fact that the bank willfully filed false statements and faked paperwork with the court seems to evaporate.

    When this happens, my first question is very basic: If the bank did NOT own the property and did NOT have standing to bring the action, where did it “data-mine the data” from before it tried to foreclose on a home it obviously did not own? And why aren’t sanctions imposed automatically?

    I have never seen that question raised by a court or an attorney.

  51. My case (I’m a homeowner) is in Florida — does a 4th DCA ruling apply to the 2nd as well? I think the 4th is Jacksonville, 2nd is in central / southwest, I think.

  52. I share Tyzao’s concern. What good is it if in fact the ruling is without prejudice? Having said that, and I’d like to hear an attorney pipe in on this for a little explanation, Mark Stopa writes in one of the other cases he linked to in the above, the following:

    “One note – notice how the Second District emphasized the bank’s lack of standing “when it filed its lawsuit”? This is no coincidence. There is a well-established line of cases holding that a plaintiff cannot acquire standing to foreclose after filing suit. Hence, if the plaintiff obtained an indorsement/assignment after the suit was filed, and did not have the indorsement/assignment beforehand, dismissal is still required, even if the original note is in the court file. The Second District did not explicitly say dismissal is required even if the original note is in the file, but that’s what they mean when they talk about the bank not having standing “when it filed the lawsuit.” It doesn’t matter if the note shows up afterwards – it matters if the bank had the note when it filed suit.”

    The question becomes, what specific “well-established line of cases” is Mr. Stopa referring to here, and how do they fit in? In my own case, I have a lender who has bogus assignment attempting the pillage without standing. But I’m convinced they’ll just keep coming back after the first attempt until they’ve gotten it right. As a matter of fact, further down in the comments section, someone addresses this point, and Mr. Stopa says, “A dismissal without prejudice means the plaintiff can re-file the suit (presuming it is still within the statute of limitations period). So, isn’t this a hollow victory?

    The confusion arises from saying one moment that the plaintiff can’t acquire standing after the fact, and then the next moment saying that they can re-file. Anyone?

  53. Who pays the plaintiff’s attorney fees when the case is dismissed for no standing? Do legal fees keep running on into the second filing, or do the legal costs start over and the plaintiff has to eat the first go around?

  54. @Tyzao,

    From what I’ve seen, it depends on several factors. Does your state have specific regulations concerning the grounds on which a case should be dismissed with or without prejudice? Was it the first time the action was dismissed? (In some states, it can be refiled for up to three times). Was the judge very ticked off at the plaintiff’s attorney? In somme cases, the same bank pulled the same stunt four or five times within an hour and the judge became so pissed that he dismissed with prejudice.

    This is the kind of question that you need to ask to an attorney in your own state since laws are different.

  55. Is the motion to dismiss “with prejudice”? If not, can the bank file a second foreclosure action against the homeowner?

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