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Mortgage Foreclosure—Standing: Florida Appellate Court reverses trial court’s final judgment of foreclosure for lack of standing.

By gedlaw50486353, Apr 11 2016 06:22PM

The Fifth District Court of Appeal of Florida (“5th DCA”) recently reversed a trial court’s final judgment of foreclosure where Plaintiff bank failed to establish evidence it was the holder of the note prior to filing the complaint.

In May 2006, the Defendant homeowner executed a note and mortgage in the amount of $168,000. Upon defaulting on the loan, the Plaintiff, HSBC (“the Bank”), filed a complaint on April 1, 2009 to reestablish the note and foreclose the mortgage. In December 2009, the bank filed the original mortgage and the original note. The note filed at that time differed from the note attached to the complaint because it contained an undated special endorsement to HSBC from Quicken.

Throughout both discovery and pretrial motions, the homeowner continued to challenge the bank’s standing to foreclose the mortgage. At trial, the bank offered the endorsed note and mortgage into evidence without any additional testimony. The homeowner objected to the admissibility of the endorsed note, stating that it differed from the note that was attached to the complaint. The trial court overruled the homeowner’s objection and allowed the endorsed note into evidence.

Under Florida law, “a crucial element in any mortgage foreclosing proceeding is that the party seeking foreclosure demonstrate that it has standing to foreclose,” Schmidt v. Deutsche Bank, 170 So. 3d 938, 940 (Fla. 5th DCA 2015). This burden is on the party bringing the foreclosure action and must be proven by substantial competent evidence. Id. Further, a party’s standing to foreclose must be shown “at the time the lawsuit was filed.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). F.S. §673.2051(1) defines a special indorsement as an endorsement which is made by the holder of an instrument, whether payable to an identified person or to the bearer, and the indorsement identifies a person to whom it makes the instrument payable. An instrument which is specially indorsed becomes payable to the identified person and may be negotiated only by the indorsement of that person. Id. “The endorsement must have occurred before the filing of the complaint because it is axiomatic that standing must be shown as of the filing of the complaint.” Schmidt, 170 So. 3d at 41.

In this case, the bank attempted to show standing at trial by offering additional evidence including a loan transfer history and reference to a pooling and servicing agreement. This evidence failed to show that the bank became holder of the note through a special endorsement prior to filing the complaint. The Court held that this evidence was insufficient to show that the bank was holder of the note at the time the complaint was filed and thus ruled that the bank had failed to establish standing. Therefore, the Court reversed and remanded the case and ordered the entry of an involuntary dismissal.

See Elsman v. HSBC Bank, USA, 182 So. 3d 770, (Fla. 5th DCA, 2015). (pf)

Click here to read full opinion.

http://www.5dca.org/Opinions/Opin2015/122815/5D14-1753.op.pdf

The information you obtain through this article is not, nor is it intended to be, legal advice. This article intended to provide general legal updates. Information is current only as of the date indicated. Changes occur frequently and often the laws and statutes are complex and/or are difficult to follow and therefore we cannot be held responsible for any errors or misstatements or for any misunderstanding on your part. Thus, you are cautioned to use this information at your own risk. You should consult an attorney for advice regarding your individual situation. The proper answers to your legal problems will turn on your particular circumstances and thus you need to have competent legal advice tailored to those circumstances. Consult a lawyer if you have a legal matter which needs attention. All potential clients are urged to make their own independent investigation and evaluation of any lawyer being considered. This article is not intended to be advertising and David S. Ged, PA does not wish to represent anyone based solely upon the reading/viewing of this article.

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