Livinglies “Theory” Again Corroborated by 4th DCA in Florida: Proof of transaction IS required.

For Further information please call 954-495-9867 or 520-405-1688


see Murray vs. HSBC – 4D13-4316

Having exhausted all possible explanations for the fraudulent behavior of the banks, the 4th DCA has now come to the conclusion that the reason for robo-signing, fabrication, backdating, forgery etc. is that there was no transaction underlying the paperwork that the banks rely upon — at least in this case. In this case in particular, after all the cynics, critics and ridicule I confess my base instincts when I say “I told you so.” Of course the case is remanded, but there is no way HSBC is going to be able to prove anything required by this decision.

For legal practitioners the take away from this case and others being decided in Florida and around the country, is that you should not accept proclamations from either opposing counsel or the bench that the facial validity of a document is enough. In most cases there is no underlying transaction in which a purchase and sale of the loan was completed. So now, at least in the 4th DCA in Florida, foreclosing parties are being returned to the days when they had to prove the actual loan and prove that actual purchase of the loan through proof of payment for the transaction by the party seeking to enforce the loan. And when they don’t or can’t they should be subjected to sanctions against both the conspirators and their attorneys, plus punitive damages.

CAVEAT: THIS CASE DOES NOT APPLY TO ALL CASES. Check with an attorney licensed in the jurisdiction in which your property is located before you make any decisions or start celebrating. But if you check around you will see an increasing number of Florida and other state and Federal decisions, including bankruptcy court, where they found the original note and mortgage void or the transfers to have eviscerated the right to enforce the mortgage through foreclosure. In short, the tide has turned.

A nonholder in possession, however, cannot rely on possession of the instrument alone as a basis to enforce it. . . . The transferee does not enjoy the statutorily provided assumption of the right to enforce the instrument that accompanies a negotiated instrument, and so the transferee “must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.” Com. Law § 3–203 cmt. 2. If there are multiple prior transfers, the transferee must prove each prior transfer. Once the transferee establishes a successful transfer from a holder, he or she acquires the enforcement rights of that holder. See Com. Law § 3–203 cmt. 2. A transferee’s rights, however, can be no greater than his or her transferor’s because those rights are “purely derivative.”

Id. (emphasis added) (internal citations omitted).
HSBC had to prove the chain of transfers starting with Option One California as the first holder of the note. The only document admitted that purported to transfer the note was the PSA. Although the note was included in the PSA, the parties to the PSA were ACE, Option One Mortgage Corporation, Wells Fargo, and HSBC; not Option One California. The loan analyst testified that Option One California was acquired by AHMS, which rebranded to Homeward Residential, which was ultimately acquired by Ocwen. HSBC argues that since “Option One” is defined under the PSA as “Option One Mortgage Corporation or any successor thereto,” and Option One transferred its interest to HSBC through the PSA, HSBC had the rights of a holder. We disagree.

Appellate Court Wrestling with Inconsistent Facts in Foreclosure Cases

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It should come as no surprise that Judges have been confused since the dawning of the mortgage crisis launched by Wall Street. Wall Street was counting on it. And the problem they are having is that most courts, including appellate courts, are presuming the loans existed in the first place. You can’t blame for that because nearly everyone still makes that presumption. How could it not be true? What do you mean the loan came from someone else? Then why didn’t that third person  make sure they were made the payee on the note and the mortgagee on the mortgage? The real lenders didn’t know about the loan and would never have approved it? Preposterous!

Yes, I concede it all sounds like nonsense. But here is something that does NOT sound like nonsense. If the loan actually existed (between the named payee on the note and the named mortgagee or beneficiary on the mortgage) there is no circumstances under which a lawyer for the “lender” or “investor” would withhold proof of that transaction to the borrower, the Court or anyone else that was entitled to that information. If they had proof of payment on the loan they would rush to show it. If they had proof of payment on the alleged purchase of the loan, they would rush to show it — because that would make them a holder in due course (where the borrower has virtually no defenses).

The problem is that with the shell game of plaintiffs, servicers and trustees, Judges are getting distracted as they start picking at the foreclosure actions and entering some judgments in favor of the homeowners but failing to even consider the possibility that the entire scheme is fraudulent. Instead we see articles like the one below where the paperwork is considered “botched.” It isn’t botched. It is part of a fraudulent scheme. Look for any case where the underlying monetary transaction has been shown or proven. It isn’t there. 6-7 million foreclosures and still no money changing hands. What lender would endorse a note and assign a mortgage without receiving payment for it? (Unless of course they didn’t pay anything either at the loan closing table).

And why would anyone endorse a note or assign a mortgage without a sale of the loan and without receiving payment for it? The answer is very clear. They wouldn’t.

But the Courts are starting with the premise that the loan, and the transfer of the loan is presumptively legal and valid. And part of that presumption starts with the wrong question in the minds of judges — why would anyone file a foreclosure action if they were not the injured party whose legitimate interests were abridged when the borrower stopped paying? That slippery slope leads them to ratify unsigned, robo-signed, fabricated, forged paperwork in the belief that it really doesn’t matter how much is wrong with the paperwork.

Judges still assume that the underlying transactions must be real; hence judgment for the homeowner is necessary to avoid a windfall. It is circular reasoning to assume that the claim must be true if it was filed — that is what our constitution is all about preventing.

see The Fate of Foreclosure Cases

Will botched paperwork affect the outcome of foreclosure appeals? It depends on the judges.

The decisions in three cases came down to paperwork and procedure Wednesday before the Fourth District Court of Appeal.

For BAC Home Loans Servicing LP, botched documentation at the height of the robo-signing scandal cost it a foreclosure judgment when the court ruled the lender failed to prove standing to sue homeowner Rosanie Joseph.

The appeals court reversed a foreclosure judgment issued by Palm Beach Circuit Judge Diana Lewis since there was no evidence to show Taylor Bean & Whitaker Mortgage Corp. owned the mortgage when filing to foreclose on Joseph in July 2009.

The 2008 mortgage issued by Key Mortgage Associates was attached to the lawsuit, but no note or assignments accompanied the filing by Ocala-based Taylor Bean, a leading wholesale mortgage lender. The company reported the note was lost or stolen.

Taylor Bean, one of the spectacular bankruptcies of the housing crash, later assigned the note to BAC, which picked up the foreclosure ball.

In trial, BAC produced the original note and mortgage. The note offered two endorsements by the same person, Erica Carter-Shaw as a Key Mortgage attorney and Taylor Bean “E.V.P.” Neither endorsement was dated.

“A party must establish its standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint,” Judge Martha Warner wrote for the unanimous panel. Judges Carole Taylor and Mark Klingensmith concurred.

No File Review

A different panel split in similar litigation: Gafoor Jaffer and Nina Jaffer v. Chase Home Finance.

The homeowners claimed Chase attached a mortgage note payable to a third party without any proof of transfer and used an amended foreclosure complaint that failed to state a cause of action. However, the Jaffers waived the question of Chase’s standing by failing to respond to the lawsuit before default was entered.

Chase conceded some of its employees signed affidavits about the loan documents without first reviewing the loan file.

But the Fourth DCA upheld summary judgment issued by Broward Circuit Judge Sandra Perlman.

In the 2-1 unsigned decision, Judges Spencer Levine and Klingensmith concurred. Judge Burton Conner dissented, citing Chase’s failure to file an accurate copy of the mortgage note.

Deutsche Bank National Trust Co. wasn’t as lucky when it moved to overturn Broward Circuit Judge Kathleen Ireland’s ruling in favor of homeowner Theresa Boglioli.

Attorneys say the decisions may further complicate already-lengthy and expensive foreclosure litigation.

“Normally you see discrepancies of this nature within different circuits. But what we’re seeing in the Fourth is discrepancies among themselves,” said foreclosure defense attorney Roy Oppenheim of Weston. “It just makes this more complex. When there is cloudiness, it just creates more ambiguity and delays the conclusion of the foreclosure mess. In the end it doesn’t help anybody when you have inconsistent rules.”

“The judges themselves are coming up with different rationale based on the same facts, which makes for wildly different outcomes.”

What is Evidence or Proof of the Existence of the REAL Loan?

For additional information or assistance please call 954-495-9867 or 520-405-1688.


It is a complicated answer. The following is NOT a comprehensive answer which would the length of a treatise.

see also Fla 4th DCA Beauchamp v Bank of New York Mellon, J Shahood reversed — Beauchamp v BONY-Mellon

The Beauchamp case brings to the forefront the issue of redemptive rights which has long been ignored. In short the 4th DCA decided that the redemptive rights are important. They decided that evidence of actual losses or damages must be established without relying on inadmissible hearsay. This is where the rubber meets the road. In order to do so the Plaintiff foreclosing party is open in discovery at the very least to showing actual proof of payment and proof of loss of the actual owner of the debt and/or holder in due course. Presumptions won’t do them any good unless the homeowner’s attorney fails to object.

Thus the real transaction with real money, in a real purchase of the loan must be established by the foreclosing party. That is part of their prima facie case. And these are liquidated contract damages — not subject to anything other than mathematical calculation of net loss. I doubt if the appellate court meant to empower the judge to “estimate” or enter a finding that is “good enough.” The homeowner, like the AMGAR program, has every right to pay off the net debt once it is established and thus prevent the sale of the home. In turn the homeowner is entitled to the recovery of the original note and mortgage or deed of trust.

Be careful because it is evidently a normal practice, contrary to current case law, for the foreclosing party in non judicial states to publish and record a self serving statement of standing in the form of a substitution of trustee. That substitution of trustee must be nullified or else the rest of the theories advanced by the homeowner might be deemed irrelevant.

The interesting thing on remand is what happens when the foreclosing party cannot show proof of payment (proof of actual transaction ) and tries to get the judge to assume that the loss is the amount on the note. If that were the case the 4th DCA would not have remanded for further proceedings to determine damages so that the borrower’s redemption rights could be established. Without a completely transparent introduction of testimony and BEST evidence of original transaction documents, there is no proof of damages and the foreclosure judgment must be vacated.

In loan transactions there usually is no actual written contract that says the creditor will loan money and the debtor will pay it back. So common law and statutory law must make certain assumptions about the loan contract — which still must exist in order for the note or mortgage to be enforced. This is till basic contract law — the elements of which are offer, acceptance and consideration each to the other. The stumbling block for most judges is that the presence of money at the table is automatically construed as consideration for the contract that is sought to be enforced.

In olden times there was no problem in using this heuristic approach to loan contracts, because nobody thought of some third party funding the loan WITHOUT a note and mortgage made out in favor of the actual creditor. But Wall Street found a way to do it and conceal it.

The actual debt — i.e., the duty to pay — arises by operation of law when the debtor receives the money. It is presumed to be a loan and not a gift. The paperwork is intended to provide disclosures and terms and evidence upon which both parties can rely. In this context before Wall Street saw the vulnerability, there was no problem in using the words “debt”, “note”, “mortgage” and “loan” interchangeably — because they all essentially meant the same thing.

The genius of the Wall Street scheme is that their lawyers saw the possibilities in this informal system. The borrower could not claim lack of consideration when he received the money and thus the debt was presumed. And with enough layers of deception, non-disclosure and outright lies, neither the borrower nor even the closing agent actually realized that the money was coming from Party A but the paperwork was directed to Party B. Nobody realized that there was a debt created by operation of law PLUS another debt that might be presumed by virtue of signing a note and mortgage. Obviously the borrower was kept in the dark that for every $1 of “loan” he was exposing himself to $2 in liability.

If the creditor named as payee and mortgagee was not the source of the funds then there is no underlying debt. The rules of evidence are designed to help the court get tot eh truth of the matter asserted. The truth is that the holder of the paper is NOT the party who was the creditor at “closing.” The closing was fictitious. It really is that simple. And it is the reason for the snowstorm of fabricated, forged and robosigned documents to cover up the essential fact that there is not one shred of consideration in the origination or transfer of many loans.

Each assignment, endorsement, power of attorney or other document purporting to transfer control or ownership over the loan documents is corroboration of the lack of consideration. Working backwards from the Trust or whoever is claiming the right to enforce, you will see that they are alleging “holder” status but they fail to identify and prove their right to enforce on behalf of the holder in due course or owner of the debt (i.e., the creditor).

Close examination of the PSA shows that they never planned to have the Trust actually acquire the loans — because of the lack of any language showing how payment is being made to acquire the loans within the cutoff period. THAT was the point. By doing that the broker dealers were able to divert the proceeds of sale of Mortgage Backed Securities to their own use. And when you look at their pleading they never state they are a holder in due course. Why not? If they did, there would be no allowable defenses from the borrower. But if they alleged that they would need to come forward with evidence that the Trust purchased the debt for value, in good faith and without knowledge of the borrower’s defenses — elements present in every PSA but never named as “holder in due course.”

Since the good faith and lack of knowledge of borrower’s defenses is probably not in hot dispute, that leaves only one element — payment. The logical question is why would the assignor or endorser transfer a valuable debt without payment? The only reasonable conclusion is that there is no underlying debt — there is paper but the power of that paper is at very best highly speculative. “Underlying debt” means that the alleged borrower does not owe any money to the party named as payee on the note.
Traveling down the line, seeking for evidence of payment, you don’t find it. Even the originator does not get “paid” for the loan but assigns or endorses the paperwork anyway. No reasonable business explanation can be found for this free transfer of the paper except that the participants knew full well that the paper was worthless. And THAT in turn is presumptive proof that there was a lack of consideration for the paperwork — meaning that the debt was owed to an outside party who was never in privity with the “originator.”
If someone has possession of a note, it is an original and it complies with local statutes as to form and content, the note is accepted as evidence of the debt, and the terms of repayment. The person who signed the note is at risk of a judgment against him only if he defaults or the note falls into the hands of a holder indue course. Of course if the note IS evidence of a loan that WAS funded by the named payee, that is a different story. But looking a little further up the line, you will eventually find that one or more alleged transfers of the paperwork did not involve payment. And the reason is the same as the above. In the end, the money came from illegal diversion of investor funds that were intended to be deposited with a REMIC Trust.

If the signer of the note denies that the transaction was complete — i.e., there was no consideration and therefore there is no enforceable contract, then the burden switches back to the “holder” of the note to step into the shoes of the original lender to prove that the loan actually occurred, the original lender was the creditor and the signer was the debtor.

Is Fla AG Bondi Owned by the Banks?


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EDITOR’S COMMENT: Some of you may remember that when Nixon tried to get Richardson to fire the special prosecutor in the Watergate investigation, it was called the Saturday Massacre, as he fired Richardson, then U.S. AG, and replaced him with someone who would fire the prosecutor. It led directly to Nixon’s registration after being faced with virtually certain impeachment. Bondi made the same move when she fired the two lead prosecutors in the fraudulent foreclosures of fraudulent mortgages, with the Banks supporting and owning the foreclosure mills that routinely forged, fabricated and misrepresented documents and facts to the court.
AG Bondi Has a Lot of Explaining to do. Is she setting up a fraudulent win for LPS? She made it seem like she was making a 180 degree turn when she applied for review by the Supreme Court of a 4th DCA opinion that the lawyers in the foreclosure mills could not be prosecuted for crimes (like forging documents) because the lawyers were not involved in commerce. This is crazy stuff, but truth is stranger than fiction.
Bondi’s latest move might be too little too late — or much worse. The 4th DCA opinion creates “law” in their jurisdiction, thus giving immunity to lawyers who knowingly defrauded the Courts, borrowers and investors to whom some sort of obligation (not necessarily recited in the loan documentation) is owed. In the meanwhile the lawyers continue their illegal practices with immunity from prosecution. The most that can be done to them is revocation of their license, while thousands lose their homes in fraudulent foreclosures of fraudulent mortgages based upon fraudulent promissory notes that do not reveal the securitization chain and funding.
After reading the work done by Naked Capitalism (below), it appears that Bondi is not just friendly toward the Banks, she’s owned by them. Thus the recent attempt to appeal the second decision exonerating lawyers from criminal prosecution might be a ploy. In the first decision from the 4th DCA which said the same thing, she deliberately chose not to appeal, making that decision stand as legal precedent for all litigants in the jurisdiction of the 4 th DCA. But she caught an enormous amount of flack for that decision and where she fired the lead investigators in the case against the Banks and their lawyers.
Thus I can’t help but wonder whether my celebratory remarks about the AG appeal from the second decision might be wrong. This might be a ploy to lose by default or by conceding things that are just plain wrong. The Banks might be playing the system here to force the Florida Supreme Ct to issue a negative ruling either declining review or affirming the 4th DCA on technical procedural grounds. let’s see if the Supremes are smarter than the Banks. They have the power to correct the situation.


Hatchet Job by Florida Inspector General to Justify Firing of Two Lawyers for Foreclosure Fraud Investigations

by Yves Smith

The usual stereotype of corruption on the US state level is that, depending on the day, Louisiana or Mississippi tops the list. But the cesspool created by the widening foreclosure crisis in Florida puts anything in kudzu-land to shame.

The object lesson is a statement issued by the Florida Office of the Inspector General concerning its decision not to investigate the firing (or more accurately, resignation under duress) of two lawyers in the attorneys general’s office, June Clarkson and Theresa Edwards, who believe they were canned for political reasons, namely, for being too aggressive in investigating foreclosure abuses. Note that these firings came shortly after they received exemplary performance reviews.

Now narrowly, there may indeed be nothing to investigate relative to their firing, in that workers in the US have pretty close to zero rights and a boss can indeed fire someone simply for not sharing his sense of priories. But there is a more general question of public interest as to whether a firing in a public office was indeed politically motivated, particularly if the investigators were ruffling the feathers of parties that the AG did not want to annoy (and as the brief one page conclusion notes, Florida does have statutes against “misuse of a public position” but query how that is interpreted in practice).

As we will discuss further, this astonishingly shoddy document tries to bury the matter by publishing write-ups of long complaints by the parties immediately involved in the firing (Associate AG Richard Lawson, Assistant AGs Trish Conners and Carlos Muniz) and by one of the parties targeted, namely, a letter from Lender Processing Services. Regular readers of this blog will know LPS is engaged in questionable conduct and has been the subject of investigations by the US Trustee’s office, a branch of the Department of Justice. It is currently the target of a wide-ranging lawsuit by the Nevada State attorney general Catherine Cortez Masto, an investigation by the FDIC, has signed a consent decree with the OCC for questionable conduct, and is subject of private lawsuits, including one joined by the Chapter 13 trustees as a class, for impermissible legal fee sharing. (We’ve also described how LPS lied in SEC filings).

Effectively, this “review” is an effort at reputation/character assassination via the release of pretty much only one side of a “he said, she said” (Clarkson and Edwards were given a brief phone interview which was limited to two conversations Lawson had with them about their performance; they were given no opportunity to contest the allegations made in the subsequent interviews, which were not just with Lawson, Conners, and Muniz, but also five other members of the AG’s office).

To put it mildly, if you read the 85 page document and didn’t know the context (the extensive, widespread evidence of bad conduct and strained pleadings by the foreclosure mills and LPS, and the prior tip top reviews received by Clarkson and Edwards), you’d think they were fuckups of the first order and were lucky to have jobs. This is heresay presented as unvarished truth, and the unsupported (and as we will discuss later, often obviously untrue or at best misleading) charges extend to two Florida foreclosure fraud investigators, Lisa Epstein and Lynn Szymoniak.

To back up and give a bit more context first (and do read the very good overview by Dave Dayen), the Florida attorney’s general office recently underwent a regime change. The old AG, Bill McCollum, was a Republican but nevertheless launched some investigations into foreclosure abuses, specifically against the biggest foreclosure mills in the state. He left leave last January, replaced by Pam Bondi, who clearly has a much more conciliatory posture towards the mortgage industrial complex (she is on the executive committee of the now multi-state foreclosure settlement effort). In keeping, the old head of the economic crimes division was replace by the aforementioned Richard Lawson, who was in the business of defending white collar criminals, primarily banksters. And he made it clear that he wanted the fraud investigations to be treated “with great sensitivity.” I have to tell you, both in context and based on his actions, that means “go easy and do everything you can to protect the reputations of the parties charged.” Do you think this is even remotely the right priority for the head of an economic crimes unit?

The irony of this report are the repeated complaints about the “unprofessional” conduct of Clarkson and Edwards. Given that the IG considers a barely ordered document dump to be tantamount to a report, I find it hard to believe that the standard of professionalism among legal officers in the Florida government is measurable, let alone high enough for the two canned attorneys to fall short of it.

Similarly, for anyone who has been in the private sector (and that is where Lawson came from) the conduct of the firing was highly irregular. It’s normal for even routing firings to go through a process: the employee is given a warning and/or put on probation, with a witness present, they are told what concrete steps they need to take to improve performance, and notes of the conversation are entered into their personnel file. And most important, firings are always done with a witness present. Instead, Lawson had a one conversations with Edwards and Clarkson, and seems to conveyed his unhappiness primarily through their immediate boss, Robert Julian, who found Clarkson and Edwards to be “invaluable.” From what I can tell, assistant chief AG Robert Julian fired both Clarkson and Edwards verbally via Edwards alone, again a mind-boggling procedure. Lawson operated like a rank amateur, yet keeps harping on “professionalism.” More than a bit of projection at work?

There may be validity in the some substantive complaints. For instance, Lawson claims the duo mistakenly said the SEC was going after LPS when it was the FDIC who was probing LPS. They also called Fidelity a f/k/a (formerly known as) of LPS when it is the reverse (LPS was spun out of Fidelity). But these mistakes were in internal communications, and while they might be worrisome, what matters is what gets out the door. Another complaint is the case files being transferred from Clarkson and Edwards another attorney being in disorder. But we have no context. If Lawson made the assignment abruptly and didn’t give them Clarkson and Edwards time to organize them (and the state apparently lacks a document management system), it shouldn’t be a surprise that the materials were not well organized. In addition, at various points Lawson asked these investigators if they had evidence of allegations made against LPS, such as not being paid by the servicer, and Clarkson and Edwards saying “no”. Just because they did not have evidence in hand did not mean the allegations were untrue and not provable.

The reason I view even these complaints with skepticism is that much of what Lawson says that can be evaluated ranges from strained to embarrassing. Here are some examples.

In the “you cannot make this up” category, Lawson, a law enforcement official, defends forgeries:

Huh, is he SERIOUSLY trying to say that if, say, the janitor signs a corporate check he found lying around the office to pay the company electrical bill, it isn’t fraud? The knowledge in our culture that people sign documents only in their own name is so widely shared that it seems utterly implausible that ANYONE, let alone people in the business of preparing documents involved in legal procedures, could think forgeries are legitimate. The LPS filings by Masto have barely-above-minimum wage witnesses saying they were uncomfortable with “surrogate signing,” a recent Orwellianism for forgery, even after multiple management assurances that it was fine. Lawson’s formulation gets us into Humpty Dumpty “forgery is not forgery if I say it is not forgery” land. He is trying to wind the clock back to before the 1677 Statue of Frauds.

And we have this remark:

Gee, if that’s the case, why is this on the AG’s website now (note the last paragraph)?



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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.




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Florida – Plaintiff Must Prove Ownership at Time Foreclosure is Filed

by Chip Parker, Jacksonville Bankruptcy Attorney


In the latest foreclosure decision out of Florida,  the 4th District Court of Appeal, in the case of McLean v. JP Morgan Chase, ruled that the plaintiff in a foreclosure must prove it owns and holds the note at the time the foreclosure case is filed.

In the McLean case, the appellate court reversed the trial court’s entry of summary final judgment in favor of the bank because the bank failed to provide evidence that, at the time the case was filed, it “obtained its rights and standing to proceed in this cause” prior to the filing date.  Instead, it presented to the trial court an Assignment of Mortgage dated three days AFTER the case was filed.

The trial judge, apparently not understanding the basic concept of chronology, denied the homeowner’s motion to dismiss the case and granted the bank’s motion for summary judgment.  In reversing this decision, the 4th DCA said:

While it is true that standing to foreclose can be demonstrated by the filing of the original note with a special endorsement in favor of the plaintiff, this does not alter the rule that a party’s standing is determined at the time the lawsuit was filed. Stated another way, the plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed. Thus, a party is not permitted to establish the right to maintain an action retroactively by acquiring standing to file a lawsuit after the fact. [Cites omitted]

While this ruling may seemingly state the obvious that you can’t put the cart before the horse, please understand that many Florida trial judges treat foreclosure cases differently.  They tend to allow plaintiff lawyers to “dumb down” the practice of law.

I’m not saying plaintiff’s lawyers are stupid.  To the contrary, they are smart enough to know that most foreclosures are impossible to win by applying 150 years of Florida real estate law.  So, they have waged a campaign to convince trial judges to relax Florida Statutes, Florida case law, the Rules of Evidence and Rules of Procedure.   Because of the sheer volume of uncontested foreclosure cases winding their way through Florida’s courts, it is easier for these judges to “clear out the backlog” by forgetting the stuff they learned in their first year of law school.  Sadly, many lawyers defending homeowners allow the “dumbing down” because they, too, forgot (or never learned) how to litigate.  Many are converted real estate lawyers with little or no trial practice.

Just a couple of days ago, I attended a hearing where the judge accepted as evidence an unproved allegation in the plaintiff’s motion.  This essential factual element was just “presumed” because the plaintiff’s lawyer said so, even as I vigorously demanded that the plaintiff lawyer provide some piece of evidence to back up the assertion.  Call it “par for the course.”

Fortunately, albeit reluctantly at times, the appellate courts routinely reverse these horrid trial court decisions, but if the trial judges continue to ignore Florida appellate decisions favoring homeowners (and the 150 years of jurisprudence), who cares?

Many trial judges forget that their job is simply to interpret the laws on the books.  Instead, they often ignore the laws because they fear “giving a homeowner a free house.”  This is known a “legislating from the bench.”  Our American democracy is based upon the notion of “separation of powers,” wherein government is divided into the executive, legislative and judicial branches, each with separate and independent powers and areas of responsibility so that no one branch has more power than the other branches.  When a trial judge factors his social view into his decision, he has essentially stolen power from the state legislature.

Trawick on FLA 4th DCA Decision: “ROCK SOLID”


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“Orsini did not know who, how, or when the data entries were made into Home Loan Services’ computer system,” the decision states. “Orsini could state that the data was accurate only insofar as it replicated the numbers derived from the company’s computer system.”

EDITOR’S COMMENT: Those of you who have downloaded or received the Attorney’s Workbook will see the same reasoning and wording as contained in this decision. A competent witness satisfies four elements: OATH-PERSONAL KNOWLEDGE-MEMORY- COMMUNICATION. It’s basic law. Signing an affidavit is less credible than live testimony, so it is subject to more stringent adherence to the rules of evidence. The banks have tried to skate past the these requirements by adhering to common practice, hoping it would get by. It did, until now.

Thousands of Summary Judgments were granted based upon affidavits of people who knew nothing about the the status of the debt or anything else about the homeowner’s transactions with the pretender lender. They are all defective judgments and all subject to being reversed. It has taken a long time to get to this point, but we have turned the corner. While this decision doesn’t touch the core of the accounting problem for homeowner liability on mortgage obligations — the amounts paid and traded by third parties that should have been credited to the amount owed tot he investor/lenders — it paves the way for attorneys to seek and get the truth.

Most of the loans were not in default because the servicers and other parties were paying vast sums of money to the investment bankers who created the loans and the bogus mortgage bonds that funded the transactions. At the end of the day, when every dollar has been counted, the investors and the borrowers will have some interesting questions and claims for the intermediaries who inserted themselves as principals in a line of transactions in which they were only conduits.

This is about the truth and being heard in court on the merits, not on presumptions and innuendo about the character of borrowers. Even if the borrowers want a free house, that does not justify giving the house away to a pretender lender who has even less invested in the house than the borrower. And if the mortgage was defective and did not attach to the land as a lien, the debt is unsecured.

You can kick and scream all the way to the ideological house of horrors that brought us this mortgage mess; we are either a nation of laws or a nation of men. Our founders chose a nation of laws. Collateral damage and collateral benefit is a natural consequence of the application of general laws to specific situations. It usually works out better for those with the most money and the best lawyers. This time, maybe, the tables are turned. Attorney Ice, aptly named for this work, has brought home the bacon — establishing that just because you don’t like the result doesn’t mean you should abandon the rule of law.

Fla 4th DCA: Faking It Won’t Make It

By Kimberly MillerPalm Beach Post Staff Writer
In a decision that could have staggering implications on foreclosure proceedings statewide, an appeals court ruled Wednesday in favor of the owners of a Wellington home whose bank filed documents sworn to by employees with no personal knowledge of the case.

The ruling from the 4th District Court of Appeal reversed in part a 2010 Palm Beach County Circuit Court summary judgment that said homeowners Gary and Anita Glarum owed LaSalle Bank $422,677.

That amount was based on an affidavit of indebtedness signed by loan servicer employee Ralph Orsini, who pulled the information from a company computer ­– a move that appeals court judges said amounts to hearsay.

Orsini did not know who, how, or when the data entries were made into Home Loan Services’ computer system,” the decision states. “Orsini could state that the data was accurate only insofar as it replicated the numbers derived from the company’s computer system.”

The ruling means the home on Amesbury Court, which has been in foreclosure since September 2008, can’t go to a foreclosure sale until the bank either gets another summary judgment or goes to trial. The Glarums still live in the home.

Tom Ice, whose firm Ice Legal represents the homeowner, said Wednesday’s decision hits at the essence of the nation’s foreclosure robo-signing scandal in which tens of thousands of foreclosure court documents were signed by people swearing that they had personal knowledge of cases when they did not.

While some lenders called the document problem a technicality, foreclosure defense attorneys called it perjury and fraud.

Foreclosures came to a virtual standstill in the fall after the robo-signing revelations were made as banks worked to revamp their processes and redo paperwork where they could.

Between July 1, 2010, and June 30 of this year, 104,126 foreclosure cases were dismissed in Florida’s courts, often by lenders needing to refile pertinent paperwork.

“Bank officers cannot simply regurgitate what they read off computer printouts,” Ice said. “This has been a major battleground in foreclosure cases.”

A message left for the bank’s legal representative, Orlando-based Butler & Hosch, was not returned Wednesday.

The appeals court ruling was called “rock solid” by Sarasota-based attorney Henry Trawick, an expert on Florida’s judicial rules and author of Trawick’s Florida Practice and Procedure.

He said a valid affidavit of indebtedness would have to be sworn to by the person who actually entered the information into the computer system. He expects the decision to further snarl Florida’s courts.

“I think a whole lot of summary judgments on these foreclosures are not valid because of this,” said Trawick, who is also concerned about how allegedly bogus affidavits will affect getting clear title to homes. “The real problem ahead of us is years to come when all these properties are being sold.”

But not everyone is convinced of the magnitude of Wednesday’s decision.

Palm Beach County Chief Judge Peter Blanc said while it sets precedent for similar cases, it’s too early to tell what the implications will be.

Fort Lauderdale attorney Shari Olefson, who represents banks in foreclosure cases, said the ruling doesn’t change what’s been going on since the robo-signing scandal broke.

“The people I’ve been talking to have set aside affidavits and have to start all over again,” she said. “This is pretty consistent with the way things have been going.”

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