Standing is established when the party pursuing foreclosure can “demonstrate that it had the right to enforce the note and the right to foreclose the mortgage at the time the foreclosure suit was filed.” PNC Mortg. v. Romero, 2016-NMCA-064, ¶ 19, 377 P.3d 461 (alteration, internal quotation marks, and citation omitted). Third parties seeking to enforce a promissory note underlying a mortgage establish standing by “prov[ing] both physical possession and the right to enforcement through either a proper indorsement or a transfer by negotiation.” Bank of N.Y. v. Romero, 2014-NMSC-007, ¶ 21, 320 P.3d 1.
LSF9 Master Participation Tr. v. Dickinson, No. A-1-CA-37364, at *4 (N.M. Ct. App. Feb. 8, 2022)
LSF9 Master Participation Tr. v. Dickinson, No. A-1-CA-37364, at *4-5 (N.M. Ct. App. Feb. 8, 2022) (“If, at the time a lawsuit is filed, the plaintiff produces a note indorsed in blank, the plaintiff is “entitled to a presumption that it could enforce the note at the time of filing and thereby establish standing.” Johnston, 2016-NMSC-013, ¶ 25.”)[e.s.]
Trust maintains that the documentary and testimonial evidence offered, in the aggregate, established “constructive possession of the note” on the date the complaint was filed. But our review of the record established that testimony was offered concerning the absence of documentary evidence showing the note’s physical location on the complaint’s filing date. Specifically, Fannie Mae’s testifying agent admitted that none of the exhibits about which she had testified addressed the note’s physical location at the time of filing. Therefore, viewing the facts in the light most favorable to the decision below we cannot hold that the district court erred by concluding that Fannie Mae failed to demonstrate standing, as we are satisfied that its finding that Fannie Mae did not show physical possession of the note on the date the complaint was filed is supported by substantial evidence.
Hat tip to our friend and colleague Bill Paatalo, private investigator whose tireless efforts, paid and unpaid, have led to numerous discoveries and results favorable to homeowners who have successfully defended false foreclosure claims.
The devil is in the details. The moral of the story is that homeowners and their lawyers should stop assuming there is a valid, legally recognized claim against the homeowner.
This case highlights the standard I have been writing about for 16 years, which most lawyers and judges have completely ignored. First, the claim of possession of the original note is usually false. In the affidavit, the signatory doesn’t actually identify or state the physical location of the original note. Second, possession of the original note is irrelevant in the absence of a foundation, establishing the authority to enforce the note.
Ultimately and logically, that authority can only come from the creditor to which the alleged unpaid account is owed.
Lastly, a proper endorsement can be used to raise a legal presumption that the authority exists. But the homeowner should make every effort to rebut that presumption. This is normally done in the discovery process. But the same issues can be raised in a qualified written request, or a debt validation letter.
The refusal or failure to provide an answer to such basic questions and title for the homeowner to ask the court to rule that a negative inference can be raised. Having failed to corroborate the alleged legal presumption, the argument should center on the fact that the court lacks the authority to consider any evidence of the existence of an unpaid loan account due to the named plaintiff or beneficiary.
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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Filed under: foreclosure, foreclosure mill, jurisdiction, legal standing | Tagged: LSF9, McCRTHY AND HOLTHUS |
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