FL 2nd DCA: Focht v. Wells Fargo Bank, N.A. – Foreclosure Judgment Reversed Based on Genuine Issue of Material Fact of Wells Fargo’ s Standing
Editor’s Comment: The Court clearly states that if the bank does not meet the prerequisites of standing at the commencement of the action, the case must be dismissed. But as stated in the concurring opinion it is doing so while at the same time holding its nose, which means that eventually they are going to NOT rule in favor of the borrower.
The reason is simple, and stated in the concurring opinion — if the real facts are that BNC loaned the homeowner money and the homeowner did not pay BNC, technicalities like standing should be overlooked if it can be cured before judgment. I don’t agree because it opens up a Pandora’s box of moral hazards which the banks have shown quite plainly they will jump at if given the chance. But the fact remains that reasonable people can disagree on this point and the courts are NOT enthusiastic about ruling for borrowers who clearly owe the money to the plaintiff and just got off Scot free or bought another two years without making a single payment.
This sis the moment, that fork in the road I have been harping on fro years. In the end the reality of the transaction is what will govern even if it takes the courts to come around to sound legal theory to back up what they really want to do, which is to rule in favor of an unpaid creditor.
It is for this reason that I say that you must immediately attack and learn the reality of the transactions in order to make the Judge feel OK about ruling for you. The reality of the transaction is MONEY. If you first follow the MONEY trail and the compare it to the documentary trail then your defense sounds very different than the one currently being used out in the trenches. Instead of saying that the bank did not conform with this rule or that rule, you are saying that BNC, in this case never loaned a dime to the homeowner, which on discovery can be shown with very little difficulty.
The second hurdle is to show that the money that ended up on closing table and applied to the “BNC Loan” did not arrive there through any real connection or privity between BNC and the source of funds.
NOW you can say that not only doesn’t the Plaintiff have no technical standing, it has no relationship to the homeowner at all except that it deceived the homeowner into signing papers that referred to a transaction that never occurred. And you can say, Judge, we are not seeking a free ride here, we are seeking reality justice. If you let BNC proceed here or any of its alleged “Successors” you are stripping the collection and lien right of the true lenders as part of the Plaintiffs’ PONZI scheme.
You can say that BNC is interfering with your rights under the various state and federal programs to seek settlement or modification with the actual creditor, who would obviously want to mitigate damages as much as possible and who does not need to mitigate liability more than they need to mitigate damages. (see previous post)
When BNC is unable to show a wire transfer or canceled check for the origination of the loan, when each assignee is unable to show a wire transfer or canceled check for the “sale” of the loan, the house of cards falls apart. And THAT is why condo and homeowners associations are going to win their priority claims against the alleged 1st and 2nd mortgage holders, and why the cases are going to be dismissed with prejudice or judgment entered for the homeowner — not because the paperwork wasn’t technically correct, but because the loan (unknown to the borrower) never came from the pretender lender and the real lender’s identity was concealed from the borrower. Whether a cause of action exists against the closing agent for applying proceeds received from a stranger to the transaction remains to be seen.
At the end of the day, the court’s are going to find the reality of these transactions and enforce the obvious real terms of real transactions. If you received a loan from BNC, you won’t be able to escape from the liability although you might be able to attack the balance they are claiming and therefore the the note (but those are set off against eh original liability, not negation of the original liability). If you didn’t receive a loan from BNC, then you should be able to get the information on who DID loan you the money because the one thing everyone agrees is that money was put on the closing table at the time of the loan.
Whether the lender is secured is going to get tricky but it looks to me that there is no airtight theory to create an equitable lien without opening up a box of moral hazards that will interrupt commerce in the marketplace. But on the flip side, most of my interviews with homeowners indicates they would be happy to to execute a new, clean mortgage in favor of the real lender for fair market value. So the real lenders clearly have some right of action in unjust enrichment or some common law claim to recover the real money that was really received by the homeowner — and in fairness, most homeowners even under no legal compulsion to do so, are willing to secure that liability by executing a real mortgage lien that creates a perfected encumbrance on the property.
The balance of he money is coming from the banks, which is only right. They sold junk bonds masquerading as triple A insured bonds. And the issuer of the bonds never got the money from the investor. The investors are suing but settling on terms that are absurdly favorable to the banks that defrauded them, which is why there is an Article 77 hearing pending in New York for an $8.5 billion settlement with AIG et al, for claims of more than $100 Billion.
As I have said more than a hundred times on this blog — the investors and the homeowners (i.e., the lenders and the borrowers) need to get together, compare notes and file actions together, taking away the curtain behind which the the banks are dodging bullets and questions about what really happened to the investors’ money and what is really being done to mitigate damages from loans that were not worth the paper they were written on from the very beginning.