Discovery In Foreclosure Cases: Is The Bank Hiding The Ball? Part I
Foreclosure filings remain steady in Southwest Florida. Many foreclosure defendants who try to fight these foreclosure actions are no doubt becoming frustrated with the process – and who can blame them?
Nobody wants to be dragged into a lawsuit, especially when one’s home is on the line. But aside from the stakes, what makes recent mortgage foreclosure lawsuits particularly daunting is the fact that almost every mortgage currently being foreclosed on has been transferred so many times that it becomes difficult – if not downright impossible – to figure out who owns the mortgage!
Because of this, defendants attempting to challenge a bank’s standing to foreclose may have good reason to do so. Unfortunately, the rule on standing seems to be heavily in favor of the foreclosing entity.
The rule in Florida is that an entity has standing to foreclose on a mortgage if they hold the promissory note associated with the mortgage.
This is a major challenge for defendants who are attempting to prove the foreclosing entity lacks standing because the bank almost always holds the note. What’s worse, the bank doesn’t have to show how it acquired the note, just that they have it. This means that even if the bank acquired the note wrongfully, they still possess the note, which gives them standing to foreclose.
And to add insult to injury, plaintiffs who had the note and then lost it can still foreclose on the mortgage if they can show that the note was in their possession when it became lost! So how does a defendant attack standing?
Banks obviously love the foreclosure standing rule in Florida. However, there’s another rule they clearly don’t like as much. A recent 4th DCA case reiterated that “[w]hile it is true that standing to foreclose can be demonstrated by the filing of the original note . . . this does not alter the rule that a party’s standing is determined at the time the lawsuit was filed.” McLean v. JP Morgan Chase Bank Nat. Ass’n, ___ So.3d ___ (Fla. 4th DCA 2011), citing Progressive Exp. Ins. v. McGrath Community Chiropractic, 913 So.2d 1281, 1286 (Fla. 2d DCA 2005).
This rule gives the foreclosure defendant a glimmer of hope. The banks will fervently argue that their standing is conclusively demonstrated by their possession of the original note, but notes rarely – if ever – indicate when the bank actually acquired the note. In order to prove they were legally capable of foreclosing on the mortgage at the time they filed the foreclosure action, they need some kind of documentation, usually an assignment of mortgage. The note alone won’t cut it.
Continued at Part II
This Blog was written by Joe LoTempio, Esq. of The Dellutri Law Group, P.A. Mr. LoTempio is a litigation attorney in the firm's consumer defense department.
