Bank of New York Fails Test for Business Records – Fla. 1st DCA

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It is becoming apparent that courts across the country are getting more than curious. They appear to be getting angry because they were used a vehicles of fraud by the banks. see

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The Burdeshaws appeal the final judgment of foreclosure in favor of The Bank of New York Mellon (“BNYM”), contending that the evidence to support the amount of indebtedness was inadmissible hearsay and thus, no admissible evidence supported the trial court’s determination of the amount due. In addition to reversal of the final judgment, the Burdeshaws seek remand of this case with instructions to dismiss, based on a meritorious motion pursuant to rule 1.420(e), Florida Rules of Civil Procedure, taken under advisement by the trial judge and denied de facto when the court eventually conducted a bench trial and issued a final judgment. We agree on both points, reverse the final judgment of foreclosure, and remand for dismissal of the action.

The Burdeshaws filed their notice of inactivity, pursuant to rule 1.420(e), on July 20, 2010. After sixty more days with no record activity, on September 20, 2010, the Burdeshaws filed their motion to dismiss. Other than this notice and motion, no paper was filed in the court file by either party or the court between September 16, 2009 and October 4, 2010.
Suntrust did not file a response to the motion to dismiss for lack of prosecution but did file other papers in the record on October 4, 2010, and thereafter. A motion hearing was held on November 8, 2010, and one of the motions considered by the court was the Burdeshaws’ motion to dismiss under rule 1.420(e). The record does not contain a transcript of this hearing and Suntrust did not file a written assertion of good cause why the action should have remained pending. In the order entered November 29, 2010, the court stated that it was taking the rule 1.420 motion to dismiss “under advisement.”

BNYM was substituted as party plaintiff on January 25, 2013, and a bench trial took place on May 13, 2013. In support of its documentary evidence, BNYM presented the testimony of Nancy Johnson, twenty-two year Suntrust employee currently in the position of “default proceedings officer.” She testified that Suntrust was servicing the loan and that she had reviewed Suntrust’s records in preparation for the trial. Counsel for BNYM inquired about the documents it sought to admit into evidence, including the letter notifying the Burdeshaws of the default, the note and mortgage, and a “computer printout from Fidelity system” purporting to show the transactions on the account and the balance owed. Counsel for the Burdeshaws objected to Ms. Johnson’s testimony regarding each document in turn, stating that there was no predicate for Johnson’s testimony, that BNYM had not established any of the elements to qualify her as the custodian of the records, and that BNYM had not otherwise qualified Ms. Johnson to authenticate the computer-generated records. The trial court overruled each objection until eventually, counsel requested “a standing objection, so I don’t keep making it,” which was granted.

On cross examination, Ms. Johnson explained that her knowledge of the amounts owed came from her review of the printout and that the printout was “on our system.” When asked by whom or how fees and expenses were posted to the account, Johnson testified that “everyone” was using the Fidelity system and “they would input any transactions, any adjustments.” Ms. Johnson stated that she had reviewed the numbers on the printout the Thursday of the week prior to trial and that the initial principle balance of the loan “would have been input by someone handling the origination of the loan.”

It is true that defense counsel did not use the words “hearsay” or “section 90.803(6), Florida Statutes” in his objections. However, he did challenge BNYM’s failure to establish “the steps to make her a records custodian,” the “complete lack of predicate to establish her bona fides at least to authenticate the document,” and he offered “to provide the court with some law on what a records custodian has to establish.” The context of the objections to the witness’ testimony about the records in this case made it clear to the court and to opposing counsel that the objection was directed towards the admission of computer-generated hearsay documents due to the plaintiff’s failure to establish any of the grounds required for the business records exception to the hearsay rule under section 90.803(6).
Furthermore, because Ms. Johnson was the only witness to authenticate the only documentary evidence to support the amount owed at a bench trial, rule 1.530(e), Florida Rules of Civil Procedure, allows Appellants to challenge the sufficiency of the evidence on appeal even without the repeated objections made by counsel. Although a failure to object is not a prudent or advisable practice, Appellants’ challenge to the sufficiency of the evidence to support the judgment is cognizable on appeal pursuant to rule 1.530(e) regardless of the specificity of defense counsel’s numerous objections during the bench trial. The rule provides:
When an action has been tried by the court without a jury, the sufficiency of the evidence to support the judgment may be raised on appeal whether or not the party raising the question has made any objection thereto in the trial court or made a motion for rehearing, for new trial, or to alter or amend the judgment.
See also Wolkoff v. Am. Home Mtg. Servicing, Inc., 39 Fla. L. Weekly D1159, 2014 WL 2378662, at *1 (Fla. 2d DCA May 30, 2014) (“The Wolkoffs were not required to make a contemporaneous objection to the sufficiency of the evidence in order to preserve the issue for appeal.”). Accordingly, Appellants’ challenge to the sufficiency of the evidence to support the final judgment of foreclosure, due to the failure of BNYM to establish the business records exception to the hearsay rule for the documents upon which the judgment is based, is properly before this Court.

if not properly authenticated, loan payment history printouts and other evidence of the amount due on a loan are inadmissible hearsay. For example, in Glarum, the court reversed summary judgment for the bank because the bank’s sole witness testified from a bank printout without first establishing the hearsay exception for business records. There, the witness/affiant was a “specialist” for the loan servicer and his affidavit stated that he obtained the amount of indebtedness from “his company’s computer system.” Id. at 782. However, the specialist “did not know who, how, or when the data entries were made into [the servicer’s] computer system” and “could not state if the records were made in the regular course of business.” Id. The specialist had even less knowledge about the business practices of the prior loan servicer, the apparent source of the data upon which his own company relied to open the file. Accordingly, both the witness’ testimony and the affidavit containing the data for the amount owing were inadmissible hearsay, unqualified for the business records exception under section 90.803(6)(a). Because there was no other competent evidence to prove the amount due and owing, summary judgment was reversed.
This Court reversed the final judegment of foreclosure in Mazine v. M & I Bank, 67 So. 3d 1129 (Fla. 1st DCA 2011), due to the erroneous admission of an affidavit of the amounts due and owning. The bank’s witness at the bench trial was “the regional security officer” for the bank, who “candidly admitted that he had no knowledge as to the preparation or maintenance of the documents offered by the bank,” “did not know if the source of the information contained” in the record was correct, and “did not know if the amounts reported in the affidavit were accurate.” Mazine, 67 So. 3d at 1132. Because the affidavit was the only evidence supporting the amount of defendants’ default, admission of the document was harmful error requiring reversal of the judgment of foreclosure.
The final judgments of lien foreclosure were reversed in Yang v. Sebastian Lakes Condo. Ass’n Inc., 123 So. 3d 617 (Fla. 4th DCA 2013), because the current management company’s witness had no knowledge of the starting balance of the loan, never worked with the original accountant, and had no knowledge of how the original figures were entered into the ledgers. Over objection to the hearsay account ledgers as not properly authenticated via the business records exception, the trial court admitted the ledgers. These documents were the only support for the amounts owed. Finding that the foundation for admitting the ledgers into evidence was lacking, the appellate court reversed the final judgment of foreclosure.

While this appeal is not based on a challenge to BNYM’s standing to foreclose, the business records exception to the hearsay rule as set out in section 90.803(6)(a) was applied to proof of standing in Hunter v. Aurora Loan Services, LLC, 137 So. 3d 570 (Fla. 1st DCA 2014). There, Aurora offered into evidence “certain computer-generated records” pertaining to transfers of the note and mortgage. Hunter, 137 So. 3d at 571. The printouts contained no indication that they were prepared by the original lender, MortgageIT, and Aurora attempted to authenticate the documents through the testimony of Mr. Martin, an employee of the servicer of the loan at the time of trial.

Regarding notations on the computer printouts, Mr. Martin “had no knowledge about who generated the notations, or how and where that individual obtained the information. Neither did he have such knowledge about the Account Balance Report.” Id. at 572. He could not testify from personal knowledge that either document belonged to or was generated by the original lender but he did testify that the computer program from which the notes log originated was “used across the industry, that a records custodian for the loan servicer is the person who usually inputs such notes, and that normal industry practice is for a lender’s accounts payable department to create an account balance report reflecting a zero balance on the loan when it is sold to another entity.” Id.
This Court found that Mr. Martin’s testimony was insufficient to “establish the necessary foundation for admitting the Account Balance Report” and the other documents under the business records exception. Hunter at 573. The witness was never employed by the original lender and lacked “particular knowledge of MortgageIT’s record-keeping procedures.” Id. “Absent such personal knowledge, he was unable to substantiate when the records were made, whether the information they contain derived from a person with knowledge, whether MortgageIT regularly made such records, or, indeed, whether the records belonged to MortgageIT in the first place. His testimony about standard mortgage industry practice only arguably established that such records are generated and kept in the ordinary course of mortgage loan servicing.” Id.
In this case, BNYM failed to establish any foundation qualifying the printout Ms. Johnson read as a business record and failed to establish any foundation qualifying Ms. Johnson as a records custodian or person with knowledge of the four elements required for the business records exception. See Yisrael, 993 So. 2d at 956. Accordingly, the admission of Ms. Johnson’s testimony about the loan balance and the admission of the computer printouts she was called to authenticate, over the objections of opposing counsel, constituted reversible error. Johnson’s only knowledge about the amount due and owing came from her review of the computer printouts and she had no information about how and when those records had been prepared or where the data came from. Her testimony that “everyone” was using the Fidelity system and “they would input any transactions, any adjustments” is comparable to the witness’ testimony in Hunter about general mortgage industry practices. Ms. Johnson’s assumption that the original loan amounts “would have been input by someone handling the origination of the loan” was merely supposition, based on her general knowledge of ordinary mortgage industry practices, not any specific knowledge about this debt or the transaction of the information between the original lender and subsequent servicers, including Suntrust. She was thus unable to show any of the requirements for establishing a proper foundation for the amounts or the documents she relied on.
Under these circumstances and considering the testimony elicited from the witness in this case, the admission of BNYM’s composite exhibit 3 was reversible error and no other evidence was presented to support the amount owed on the note. Because there is no evidence to support the amounts contained in the final judgment, reversal is required.
Finally, although it might be appropriate to remand for further proceedings under other circumstances, this case does not present a reason to afford BNYM additional time and another opportunity to prove its case. As the Second District has held “[a]ppellate courts do not generally provide parties with an opportunity to retry their case upon a failure of proof.” Wolkoff, 2014 WL 2378662, at *3. The complaint initiating this action was filed in 2009. The defendants’ motion to dismiss for lack of prosecution, filed in 2010, was supported by the absence in the record of any activity in the file for the time periods set out in rule 1.420(e), and by the absence of an assertion by the plaintiff of good cause, or any cause, prior to the hearing on the motion, for the action to remain pending. As noted in Wilson v. Salamon, 923 So. 2d 363, 368 (Fla. 2005), and Metro. Dade Cnty. v. Hall, 784 So. 2d 1087 (Fla. 2001), the mandatory language of the rule — “the action shall be dismissed” — leaves the trial court with no discretion in the matter. “There is either activity on the face of the record or there is not.” Metro. Dade Cnty v. Hall, 784 So. 2d at 1090.
Accordingly, the final judgment of foreclosure is reversed and this cause is remanded for entry of an order of dismissal of the case. (VAN NORTWICK and ROBERTS, JJ., CONCUR.)

23 Responses

  1. @ Ian

    Cannot tell…as this information came to me, when bombarding them for QWR’s (keep asking for them over and over and they vary each time, clerks are not so bright) and limited discovery. But I would bet if anyone dug around enough, you could find this behavior pervasive. Took 5 years to gather…digging from the closing to the “supposed servicer” paperwork threats. Went into court filings also…sorry, how widespread is not verifiable at this time.

    Oh, it does depend too on what “thief” we are talking about….my reference is New Century and Ocwen….if that’s the case, keep digging…widespread!

  2. Poppy- was that default peculiar to your case? Or was it widespread, or standard? Thx

  3. Documents provided prove the “note” was defaulted “before” the payments were due. January 2007 default, loan papers signed on February 27, 2007, payment due April 01, 2007…Dah?

  4. @Poppy, you are right about the lawyers being prosecuted. Attys also own and run title companies. The title companies are also up to their eyeballs in fraud. If you are an atty and you know that the documents are fraudulent, then you are also committing fraud on the court. I am also seeing a wave of attys being sued for malpractice. What does that tell you?

  5. Lets not forget, as per ANONYMOUS’ posts for several years:
    If the “mortgage” went into defaault after the 31st day (regardless of what your bank/servicer told you), it was kicked out of the trust and sold to the servicer for <10%. This triggered insurance payments, guarantees, cross-collateralization payments, fees etc.
    But when you went to refinance your 200k mortgage, you weren't told that it had been charged off, full payment made by others, and you "mortgage" had been sold for say 2% or $4000.
    So you are still making payments on the 200k mortgage ( more like 225 k w fees, points Etc) even thoughthe purported balance is now $4000.00.
    But PHEW! You saved your home, and were told you can refinance to a lower rate in 6 months.

  6. I think more lawyers need to be prosecuted…they are up to their eyeballs in this. Never have I seen this brazen type of theft.

    Sheer insanity!

  7. @Poppy, the servicers are similar to unsecured debt collectors in that they operate in a parallel universe of illegal debt collection. The note/mortgage never made it into the trust and certainly not in a timely manner. The trusts do not have any notes in them. The notes were shredded after being entered into database on a computer. Possibly, there was no debt in the first place. They said XYZ lender lent money via wire transfer at closing, then cancelled the wire transfer, and the homeowner was indebted but no debt or lending of money occurred. IMHO, that is one scenario. Remember, if you are a crook, the sky’s the limit. We know now that the notes were sold multiple times and did not wind up in the trust I sincerely believe that the debt does not exist, and we are up to our eyeballs in invisible debt according to a computer.

    After my closing, I found out that there were two transactions (house flipped) that had not had a satisfaction of mortgage filed, so my entire closing and the documents generated were fraudulent from day one. The Title company was in on the scam so was the mortgage broker, seller, atty and the “lender”. The atty at my closing did 3 years in the fed pen for wire fraud related to real estate transactions, and you know that was only the tip of the iceberg.

  8. @Ian, there has to be a notice to consumers on the corres or other documents sent via mail to consumers that clearly states that they are a debt collector, and they are attempting to collect a debt. It is a mandatory notice under federal law. Look closely at any document that comes from your mortgage servicer.

  9. I’ll throw my opinion in here: debt collectors and servicers are different, non-lawyer here. I am finding the term “servicer” is being used frequently to define “all things” to collect money on any type of loan. Again, it is only my opinion that, a REMIC Trust servicer is NOT the same as a debt collection or someone who services a debt, very different meanings…they are twisting the language.

    And this business of hearsay: I have an argument dating back from July 2014, with similar language and a request to the court to adjudicate the “books and records” contesting all of it.

    My example comes with Ocwen….they say they are collecting for THEE trust, a REMIC, when the trust is closed seven years ago, paperwork has been assigned a dozen times (no exaggeration), ledgers have a zero balance, and they threaten FC with payments and fees calculated on the servicer basis, while designating themselves a “debt collector”? I am really struggling here, as after reading the PSA which is the bible on all things in a REMIC…”the prospectus”, with no conformity to the language stated in that document! Everything contractually is absent…

  10. Louise- why can’t the term “debt collector’ be used on correspondence- are you talking about loan servicers? Or? Thx

  11. Thanks Ian and louise. I think all these monthly payments and such are bogus too….big reach with a “debt collection”…I am contesting the fraud, for sure.

  12. @Poppy, they are all in violation of the FDCPA if they list themselves on any of their documents or letters to you as debt collectors. Every document since day one with your blue ink signature up to today that has anything to do with the debt must be produced to prove they own the debt and have the right to receive money from anyone for it.

  13. Poppy- bad, not bast. And the FDCRA deals only with unsecured debt, believe it or not. Maybe someone can look up that portion and post it here.

  14. Poppy- it is my understanding that “you can’t collect on the same debt twice”. With that in mind, if a “bank” has “written off, charged off, taken a loss, charged to zero on their balance sheet etc.”, then, on their IRS return they get an allowance for bast debt, dollar -for-dollar, against earnings. At the same time, FASB 140 or 143 mandates “derecognition of assets”, meaning the bank can’t carry that debt (asset) as an asset any more. They have gotten “credit” for the bad debt. (I.e. a mortgage) Not to mention insurance payments, PMI, lenders policy, CDS, AMBAC, MBIA etc.
    Rather than go after the banks who were carrying worthless “assets” on their books, the regulators changed the relevant portions of accepted accounting standards.
    And there you are.

  15. I have a question here for anyone who “may” know the answer: Under the FDCPA rules, debt collectors even with a mortgage have restrictions on collections fees with statute of limitations, etc…does anyone here know if it after a debt has been written-off, charged-off, written down, consigned, or sold can they legally, under the guise of “the trust” keep accruing monthly payments and legal fees? I am thinking this could be a big point to contest…if they fall under true “debt collectors”.

  16. Doesn’t this provide a good example of the unbelievable arrogance of the banks offering testimony, it’s paper thin and best they can offer.

  17. Don’t mean to get off on tangent this is a nice piece of news Neil.

  18. Enter counterfeiting, I’ve challenged debt collectors whom I do not even recognize as ever doing business with them, I ask for verification I get documents with my signature- or rather what appears to be and I never signed such documents ! A whole heap of counterfeiting us going on they are totally running amuck with signatures. It’s a scary environment.

  19. Sign here.., and here…and here

  20. Its all identity theft bottom line

  21. This may be a bit far out but since I’ve been critiquing my credit reports and have fraud alert on them it’s no different what us on my reports is hearsay too, the amounts are wrong the parties are wrong! If they a creditors they are going to have show more than hearsay, so here we go with the credit reporting – it’s all intertwined. I’m not credit ” worthy” after their fabulous frauds

  22. They are ALL doing criminal things….hearsay evidence and the lawyers are committing “perjury” presenting it with no authentication, it prejudices the homeowners’…IMHO

  23. Reblogged this on patrickainsworth and commented:
    BNYM is criminal!

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