Fla 2d DCA: HELOC Instrument Not Self-Authenticating Article 3 Note

Just because an instrument is not self-authenticating doesn’t mean it can’t be authenticated. Here the Plaintiff could not authenticate the note without the legal presumption of self-authentication and all the legal presumptions that follow.  And that is the point here. They came to court without evidence and in this case the court turned them away.

Florida courts, along with courts around the country, are gradually inching their way to the application of existing law, thus eroding the dominant premise that if the Plaintiff is a bank, they should win, regardless of law.


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see HELOC Not Negotiable Instrument and Therefore Not Self Authenticating

This decision is neither novel nor complicated. A note can be admitted into evidence as self-authenticating without extrinsic evidence (parol evidence) IF it is a negotiable instrument under the State adoption of the UCC as State Law.

The inquiry as to whether a promissory note is a negotiable instrument is simple:

  • Does the body of the note claim to memorialize an unconditional promise
  • to pay a fixed amount
  • (editor’s addition) to an identified Payee? [This part is assumed since the status of the “lender” depends upon how and why it came into possession of the note.]

A note memorializing a line of credit is. by definition, not a fixed amount. Case closed, the “lender” lost and it was affirmed in this decision. There was no other choice.

The only reason why this became an issue was because counsel for the homeowner timely raised a clearly worded objection to the note as not being a negotiable instrument and therefore not being self-authenticating. And without the note, the mortgage, which is not a negotiable instrument, is meaningless anyway.

This left the foreclosing party with the requirement that they prove their case with real evidence and not be allowed to avoid that burden of proof using legal presumptions arising from the facial validity of  a negotiable instrument.

The typical response from the foreclosing party essentially boils down to this: “Come on Judge we all know the note was signed, we all know the payments stopped, we all know that the loan is in default. Why should we clog up the court system using legal technicalities.”

What is important about this case is the court’s position on that “argument” (to ignore the law and just get on with it). “This distinction is not esoteric legalese. Florida law is clear that a “negotiable instrument” is “an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order.”§ 673.1041(1), Fla. Stat. (2012) (emphasis added).”

So THAT means that if the trial court is acting properly it will apply the laws of the state and THAT requires the court to rule based upon the UCC and cases involving
negotiable instruments.

But none of that invalidated the note or mortgage, nor should it. THAT is where it gets interesting. By denying the note as a self authenticating instrument the court was merely requiring the foreclosing party to proffer actual evidence regarding the terms of the note, including the manner in which it was acquired and how the foreclosing party is an injured party — a presumption that is no longer present when the note is denied admission into evidence as a self authenticating negotiable instrument.

The foreclosing party was unable to produce any testimony or exhibits demonstrating the prima facie case. Why? Because they are not and never were a creditor nor are they agent or representative of the actual party to whom the subject underlying DEBT was owed.


Florida law requires the authentication of a document prior to its admission into evidence. See § 90.901, Fla. Stat. (2012) (“Authentication or identification of evidence is required as a condition precedent to its admissibility.”); Mills v. Baker, 664 So. 2d 1054, 1057 (Fla. 2d DCA 1995); see, e.g., DiSalvo v. SunTrust Mortg., Inc., 115 So. 3d 438, 439-40 (Fla. 2d DCA 2013) (holding that unauthenticated default letters from lender could not be considered in mortgage foreclosure summary judgment). Proffered evidence is authenticated when its proponent introduces sufficient evidence “to support a finding that the matter in question is what its proponent claims.” § 90.901; Coday v. State, 946 So. 2d 988, 1000 (Fla. 2006) (“While section 90.901 requires the authentication or identification of a document prior to its admission into evidence, the requirements of this section are satisfied by evidence sufficient to support a finding that the document in question is what its proponent claims.”).

There are a number of recognized exceptions to the authentication requirement. One, as relevant here, relates to commercial paper under the Uniform Commercial Code, codified in chapters 678 to 680 of the Florida Statutes. “Commercial papers and signatures thereon and documents relating to them [are self-authenticating], to the extent provided in the Uniform Commercial Code.” § 90.902(8); see, e.g., U.S. Bank Nat’l Ass’n for BAFC 2007-4 v. Roseman, 214 So. 3d 728, 733 (Fla 4th DCA 2017) (reversing the trial court’s denial of the admission of the original note in part because the note was self-authenticating); Hidden Ridge Condo. Homeowners Ass’n v. Onewest Bank, N.A., 183 So. 3d 1266, 1269 n.3 (Fla. 5th DCA 2016) (stating that because the endorsed note was self-authenticating as a commercial paper, extrinsic evidence of authenticity was not required as a condition precedent…

We cannot bicker with the proposition that “for over a century . . . the Florida Supreme Court has held [promissory notes secured by a mortgage] are negotiable instruments. And every District Court of Appeal in Florida has affirmed this principle.” HSBC Bank USA, Nat’l Ass’n v. Buset, 43 Fla. L. Weekly D305, 306 (Fla. 3d DCA Feb. 7, 2018) (citation omitted). That is as far as we can travel with Third Federal.

The HELOC note is not a self-authenticating negotiable instrument. By its own terms, the note established a “credit limit” of up to $40,000 from which the Koulouvarises could “request an advance . . . at any time.” Further, the note provided that “[a]ll advances and other obligations . . . will reduce your available credit.” The HELOC note was not an unconditional promise to pay a fixed amount of money. Rather, it established “[t]he maximum amount of borrowing power extended to a borrower by a given lender, to be drawn upon by the borrower as needed.” See Line of Credit, Black’s Law Dictionary, 949 (8th ed. 1999).

This distinction is not esoteric legalese. Florida law is clear that a “negotiable instrument” is “an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order.”§ 673.1041(1), Fla. Stat. (2012) (emphasis added).

STANDING: Fla. 4th DCA Rules PSA Hearsay and Therefore Not Admissible — Case Dismissed

The Pooling and Servicing Agreement MIGHT be self-authenticating under F.S. 90.902 but still inadmissible as hearsay. Thus the PSA is NOT a substitute for evidence of an actual transfer of the loan to a purported REMIC trust.

PLUS: PRESUMPTION OF STANDING DOES NOT APPLY IF THE NOTE AT TRIAL IS DIFFERENT FROM THE NOTE ATTACHED TO THE FORECLOSURE COMPLAINT. “The note attached to the complaint was not in the same condition as the original produced at trial.”

NO PRESUMPTION: “where the copy [attached to the complaint] differs from the original, the copy could have been made at a significantly earlier time and does not carry the same inference of possession at the filing of the complaint.”

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See Fla 4th DCA Case PSA Hearsay and Diffferent Note
Friedle v BONY as successor in interest to JPM Chase, as Trustee
“the PSA purportedly establishes a trust of pooled mortgages.[e.s.].. [this] particular mortgage  was not referenced in the documents filed with the SEC … [the Plaintiff] did not present sufficient evidence through its witness to admit this unsigned document [e.s.] as its business record. While the witness testified that a mortgage loan schedule, which listed the subject mortgage, was part of the Bank’s business records, the mortgage loan schedule itself does not purport to show that the actual loan was physically transferred.” [e.s.]
Here we have a court openly questioning whether claims of securitization are real or false. But they limit their opinion to the specific defects that arise from fatally defective evidence. And THAT is the way to win — i.e., to successfully defend an attempt at foreclosure.
Those who follow my work here know that I have long said that the Trusts are empty and that the use of the name of the Trust is a fraud upon the court, since the Trust does not exist and the Trustee has no apparent or actual authority over any loans. If the Trustee has not received a particular loan to hold in trust, there is no trust — at least not as to that particular loan.
You may also recall that I have repeatedly said starting in 2007, that there is no evidence that the notes exist after the alleged loan closings. As Katherine Ann Porter found when she did her study at the University of Iowa, the original notes were destroyed. Hence it has been my opinion that the “original” notes had to be fabricated and forged. Porter is the same Katie Porter who is now running for Congress in California. She wants to hold the banks accountable for their fraud.
Interestingly enough the trial judge in this case was the same Senior Judge (Kathleen Ireland) as in a case I won with Patrick Giunta back in 2014 in which she said on record that the evidence was not real and dismissed the foreclosure case in that instance. Here she received the PSA as a self authenticating document. While I think that point is arguable, this case turns on the hearsay objection timely made by counsel for the homeowner. The point that has been missed and is missed across the country is that just because a document is authenticated — by any means — does not mean it is admissible into evidence. It is not admissible in evidence if it is excluded by other rules of evidence.
The words on the PSA introduced at trial were plainly hearsay — just as the words in any document are hearsay. Apparently, as I have seen in other cases, the document as also unsigned. The words on the PSA are not admissible unless there is a qualifying exception to the hearsay rule. As such the appellate court ruled that the PSA had to be excluded from evidence. Since the Plaintiff was attempting to foreclose based upon authority granted in the PSA, Plaintiff was left standing naked in the wind because for purposes of this case, there was no PSA and therefore no authority.
Plaintiff tried to make a case for the business records exclusion. But that cornered them.

In this case, the foreclosing bank’s witness could not testify that the Bank had possession of the note prior to filing the complaint. The Bank conceded that it presented no testimony that its present servicer or its prior servicer had possession of the note at the inception of the foreclosure action.

And at trial, Plaintiff attempted to prove possession by introduction of the PSA. Without possession there is no legal standing.

The Bank did not present sufficient evidence through its witness to admit this unsigned document as its business record.


And there is the problem. The “servicer” (who also derives its purported authority ultimately from the PSA) cannot claim that the PSA is part of its business records without opening a door that the banks want to avoid. Even if the “servicer” had a copy of the PSA it could not state that this was a business record of the servicer nor that it was a copy of the original. If they did say that, then they would be opening the door for discovery, so far denied in most instances, into who gave the “servicer” the copy and why. it would also open up discovery into the business records of the trust, which would reveal a “hologram of an empty paper bag” as I put it 10 years ago.


No PSA, no trust, = no plaintiff or beneficiary. Note that the testimony from the robo-witness employed by the subservicer scrupulously avoids saying that the “business records” are the records of the Plaintiff. That is implied but never stated because they are not business records of the Plaintiff Trust. That trust has no business, no assets and no existence as to any loan. The trust has no business records. That implication  should be attacked in cross examination. The foreclosing party will attempt to use circular reasoning to defeat your attack. But in the end they are relying upon the PSA which must be excluded from evidence.


Lastly, this decision corroborates another thing I have been saying for years — that even minor changes on the face of an original instrument must be explained and reconciled. There is nothing wrong with putting annotations on the face of a note but you do so at your own risk. Whatever you have written or stamped on the note is an alteration. That doesn’t invalidate the note; but in order for the note to be received in evidence as proving the debt, the markings or alterations must be explained and reconciled by a witness with personal knowledge. None of the robo-witnesses have sufficient knowledge (or room in their memorized script) to explain all the markings.


The mistake made by trial lawyers for homeowners is the failure to make a timely objection. The appellate court specifically addresses this in a footnote as it reconciles this opinion which is vastly different from its other opinions:

1 We have held in past cases that the PSA together with a mortgage loan schedule are sufficient to prove standing, but in those cases the witness offering the evidence appears to have been able to testify to the relationship of the various documents and their workings, or that the documents were admitted into evidence without objection. See, e.g., Boulous v. U.S. Bank Nat’l Ass’n., 210 So. 3d 691 (Fla. 4th DCA 2016).


The court is pointing defense lawyers in the right direction without actually giving legal advice. They are saying that had cross examination been more proficient and a timely objection made they would have ruled this before. That may or may not be true. But the point is that they have now issued this ruling and it is law in the 4th DCA of Florida.

PRACTICE NOTE: I think the objections in this case could have been any or all of the following:
  1. OBJECTION! From the face-off the document there are no identifying stamps or marks that could be used to authenticate the PSA. Hence the document is not self-authenticating.
  2. OBJECTION! The document is unsigned, Hence the document is irrelevant.
  3. OBJECTION! The unsigned copy of a document is not the best evidence of the PSA as a trust instrument, if indeed one exists. 
  4. OBJECTION! Lack of foundation. If the Plaintiff is attempting to use the document anyway, counsel must elicit testimony and documents that provide an alternate foundation for admission of the PSA and an alternate foundation for authority that, so far, they claim arises from the PSA that cannot be admitted into evidence.
  5. OBJECTION! Hearsay! The document is and contains hearsay. There is no foundation for any exception to hearsay.

If the objection(s) is sustained, this should be followed by a Motion to Strike the testimony of the witness and all documents introduced as evidence except for his name and address. If you don’t do this your objection is sustained but the offending testimony and documents stay in the court record.

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