FLORIDA APPEALS COURT: LANDMARK RULING REQUIRING PROOF OF LEGAL STANDING

FLORIDA APPEALS COURT ISSUES LANDMARK RULING REQUIRING PROOF OF LEGAL STANDING IN ALL MORTGAGE FORECLOSURE ACTIONS, REVERSING SUMMARY JUDGMENT OBTAINED BY US BANK NATIONAL ASSOCIATION AS TRUSTEE FOR SECURITIZED MORTGAGE LOAN TRUST

March 12, 2010

For years, Florida borrowers and attorneys have been waiting for a Florida appellate court decision on the issues of legal standing to foreclose in actions filed by the “trustee” of a securitized mortgage loan trust. This decision finally came on February 12, 2010 in the matter of BAC Funding Consortium, Inc. v. Jean-Jacques et al, Florida 2d DCA Case No. 2D08-3553. The Court reversed a summary judgment of foreclosure which had been obtained by US Bank as Trustee of a securitized mortgage loan trust for “mortgage loan asset backed certificates series 2006-CB5″. The decision finally confirmed what those of us in this business have been advancing in the courts since day one.

The Court held that US Bank failed to meet its burden for summary judgment because the record revealed a genuine issue of material fact as to US Bank’s standing to foreclose. The Court stated, with numerous citations to Florida case law, that the proper party with standing to foreclose a note and mortgage is the holder of the note and mortgage or the holder’s representative. The Court found that while US Bank alleged in its unverified Complaint that it held the note and mortgage, the copy of the mortgage attached to the Complaint listed Fremont Investment and Loan as the lender and MERS as the “mortgagee”. The Court concluded that the exhibits to the Complaint conflicted with the allegations of the Complaint and that, pursuant to well-established Florida law, the exhibits control.

The Court further found that while US Bank subsequently filed the original note, that note did not identify US Bank as the lender or holder and that US Bank did not attach any assignment or other evidence to establish that it had purchased the note and mortgage or file any supporting affidavits or deposition testimony to establish such ownership. The Court went on to hold that regardless of whether BAC had answered the Complaint, “US Bank was required to establish, through admissible evidence, that it held the note and mortgage and so had standing to foreclose the mortgage before it would be entitled to summary judgment in its favor”. Even more significantly, the Court held that whether US Bank did provide such evidence through a valid assignment, proof of purchase of the debt, or evidence of an effective transfer, US Bank would still be required to prove that it validly held the note and mortgage it sought to foreclose.

The Court finally held that the “incomplete, unsigned, and unauthenticated assignment attached as an exhibit to US Bank’s response to BAC’s motion to dismiss did not constitute admissible evidence establishing US Bank’s standing to foreclose the note and mortgage”.

This ruling is heralded as a sign that the Florida courts will no longer tolerate the mass-processing of foreclosure actions by the foreclosure mills with missing or defective assignments and lack of proof of legal standing. As we have also published on this date in a separate article, the Supreme Court of Florida required, as of February 11, 2010, that all residential mortgage foreclosure Complaints be verified.

The Courts of Florida are thus leading the way toward insuring that borrowers have due process when they are sued for foreclosure, and are holding the likes of clients of the Law Offices of David J. Stern, Florida Default Law Group, The Law Offices of Marshall C. Watson P.A., Butler & Hosch P.A., Van Ness Law Group, Gladstone Law Group, and other foreclosure mills in Florida to their responsibililties under the law. We hope that other states who have not yet spoken on these issues in appellate decisions will follow Florida’s lead.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com