NM and Fla Judges Express Doubt Over Whether Loans Ever Made it Into trust

Judges are thinking the unthinkable — that none of the trusts ever acquired anything and that the foreclosures were and are a sham.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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It isn’t “theory. It is facts, or rather the absence of facts.

As shown in the two articles by Jeff Barnes below, we are obviously reaching the tipping point. First, the presentation of a Trust instrument means nothing if there is no proof the trust was active — and in particular actually purchased the subject loan. And Second, Judges will deny all objections to discovery and will rule for the borrower if the Trust did not acquire the loan.

In ruling this way the two Judges — thousands of miles apart — are obviously recognizing that the long standing bank objection to borrowers’ defenses based upon lack of legal standing absolutely do not apply. It is not a matter of whether the borrower has “standing” to bring up the PSA, it is a matter of whether the trust was party to any real transaction with relation to the subject mortgage. The answer is no. And no amount of extra paper, powers of attorney, assignments, or endorsements can change that.

Judges are thinking the unthinkable — that none of the trusts ever acquired anything and that the foreclosures were and are a sham.

It is probably worth re-publishing this portion from a long article by Adam Levitin written shortly after the Ibanez decision was reached in Massachusetts. Note how he points out that the vast majority of PSAs that are offered as evidence are neither executed nor do they have a mortgage loan schedule that is “reviewable.” The real problem — and the reason why the SEC-filed PSA documents do not have any signatures and why there is no mortgage loan schedule is that there was no transaction in which the Trust acquired the loans. Virtually all assignments are backdated and virtually none of the assignments relate back to any ACTUAL transaction in which the Trust was involved. The banks have been winning on fumes generated by legal inapplicable presumptions. —

It seems to me that any trust with Massachusetts loans that doesn’t have a publicly filed, executed PSA with a reviewable loan schedule should be on a downgrade watch. Very few publicly filed PSAs are executed and even fewer have publicly filed loan schedules. That doesn’t mean they don’t exist, but somewhere off-line, but if I ran a rating agency, I’d want trustees to show me that they’ve got those papers on at least a sample of deals. Of course should and would are quite different–the ratings agencies, like the regulators, are refusing to take the securitization fail issue as seriously as they should (and I understand that it is a complex legal issue), but I think they ignore it at their (and our) peril

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Excerpts from Barnes’ articles:

A Florida Circuit Judge has gone on the record requiring Wells Fargo, as the claimed “trustee” of a securitized mortgage loan trust, to show that the mortgage loan which WF is attempting to enforce actually went into the PSA, and if not, the standing requirement has not been met and the case will fall on summary judgment. The homeowner is represented by Jeff Barnes, Esq.

The Judge specifically stated as follows:

“…but what I want plaintiff’s counsel to understand, that what you submitted to me with regards to the pooling and servicing agreement still does not have the actual mortgages that went into that pooling and servicing agreement…So at some point you’re going to have to show that this mortgage and note certainly went into that pooling and servicing agreement, which is what I have requested before. …  So I’m just asking you that before we get too far out, please make sure that’s there, or its going to be taken out on summary judgment. … In other words, if you’re a trustee for that pooling and servicing agreement, and the mortgage and note are not in that pooling and servicing agreement, you don’t have standing.”

This ruling not only directly confirms the proof requirements for standing in a securitization case, but supports the production of discovery on the issue as well.


DISCOVERY IS KEY.

The borrower thus requested 53 categories of documents from BAC, including securitization documents. BAC filed a Motion for Protective Order which claimed that public information on the SEC website was “confidential”; that the securitization-related discovery was “irrelevant”; and that it was essentially entitled to withhold discovery because it “has the original note” and has moved for summary judgment on the “relevant” issues.

The Court disagreed, denying BAC’s Motion in its entirety and commanding full responses to the borrower’s discovery request (including production of all responsive documents) within 30 days. The Court found BAC’s Motion to be “sparse”; not in compliance with New Mexico court rules as to discovery; and against New Mexico’s case law which provides for liberal discovery in foreclosure actions so that all of the issues are fully developed and a fair trial is had.

 

A New Mexico District Judge yesterday denied BAC Home Loan Servicing’s Motion for Protective Order which it filed in an attempt to avoid producing documentary discovery to a homeowner who BAC has sued for foreclosure. The loan was originated by New Mexico Bank and Trust, was sold to Countrywide, and thereafter allegedly “assigned” first to MERS and then by MERS to BAC.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com

The Adam Levitin Article on Ibanez and Securitization fail:

Ibanez and Securitization Fail

posted by Adam Levitin

The Ibanez foreclosure decision by the Massachusetts Supreme Judicial Court has gotten a lot of attention since it came down on Friday. The case is, not surprisingly being taken to heart by both bulls and bears. While I don’t think Ibanez is a death blow to the securitization industry, at the very least it should make investors question the party line that’s been coming out of the American Securitization Forum. At the very least it shows that the ASF’s claims in its White Paper and Congressional testimony are wrong on some points, as I’ve argued elsewhere, including on this blog. I would argue that at the very least, Ibanez shows that there is previously undisclosed material risk in all private-label MBS.

The Ibanez case itself is actually very simple. The issue before the court was whether the two securitization trusts could prove a chain of title for the mortgages they were attempting to foreclose on.

There’s broad agreement that absent such a chain of title, they don’t have the right to foreclose–they’d have as much standing as I do relative to the homeowners. The trusts claimed three alternative bases for chain of title:

(1) that the mortgages were transferred via the pooling and servicing agreement (PSA)–basically a contract of sale of the mortgages

(2) that the mortgages were transferred via assignments in blank.

(3) that the mortgages follow the note and transferred via the transfers of the notes.

The Supreme Judicial Court (SJC) held that arguments #2 and #3 simply don’t work in Massachusetts. The reasoning here was heavily derived from Massachusetts being a title theory state, but I think a court in a lien theory state could easily reach the same result. It’s hard to predict if other states will adopt the SJC’s reasoning, but it is a unanimous verdict (with an even sharper concurrence) by one of the most highly regarded state courts in the country. The opinion is quite lucid and persuasive, particularly the point that if the wrong plaintiff is named is the foreclosure notice, the homeowner hasn’t received proper notice of the foreclosure.

Regarding #1, the SJC held that a PSA might suffice as a valid assignment of the mortgages, if the PSA is executed and contains a schedule that sufficiently identifies the mortgage in question, and if there is proof that the assignor in the PSA itself held the mortgage. (This last point is nothing more than the old rule of nemo dat–you can’t give what you don’t have. It shows that there has to be a complete chain of title going back to origination.)

On the facts, both mortgages in Ibanez failed these requirements. In one case, the PSA couldn’t even be located(!) and in the other, there was a non-executed copy and the purported loan schedule (not the actual schedule–see Marie McDonnell’s amicus brief to the SJC) didn’t sufficiently identify the loan. Moreover, there was no proof that the mortgage chain of title even got to the depositor (the assignor), without which the PSA is meaningless:

Even if there were an executed trust agreement with the required schedule, US Bank failed to furnish any evidence that the entity assigning the mortgage – Structured Asset Securities Corporation [the depositor] — ever held the mortgage to be assigned. The last assignment of the mortgage on record was from Rose Mortgage to Option One; nothing was submitted to the judge indicating that Option One ever assigned the mortgage to anyone before the foreclosure sale.

So Ibanez means that to foreclosure in Massachusetts, a securitization trust needs to prove:

(1) a complete and unbroken chain of title from origination to securitization trust
(2) an executed PSA
(3) a PSA loan schedule that unambiguously indicates that association of the defaulted mortgage loan with the PSA. Just having the ZIP code or city for the loan won’t suffice. (Lawyers: remember Raffles v. Wichelhaus, the Two Ships Peerless? This is also a Statute of Frauds issue–the banks lost on 1L contract issues!)

I don’t think this is a big victory for the securitization industry–I don’t know of anyone who argues that an executed PSA with sufficiently detailed schedules could not suffice to transfer a mortgage. That’s never been controversial. The real problem is that the schedules often can’t be found or aren’t sufficiently specific. In other words, deal design was fine, deal execution was terrible. Important point to note, however: the SJC did not say that an executed PSA plus valid schedules was sufficient for a transfer; the parties did not raise and the SJC did not address the question of whether there might be additional requirements, like those imposed by the PSA itself.

Now, the SJC did note that a “confirmatory assignment” could be valid, but (and this is s a HUGE but), it:

cannot confirm an assignment that was not validly made earlier or backdate an assignment being made for the first time. Where there is no prior valid assignment, a subsequent assignment by the mortgage holder to the note holder is not a confirmatory assignment because there is no earlier written assignment to confirm.”

In other words, a confirmatory assignment doesn’t get you anything unless you can show an original assignment. I’m afraid that the industry’s focus on the confirmatory assignment language just raises the possibility of fraudulent “confirmatory” assignments, much like the backdated assignments that emerged in the robosigning depositions.

So what does this mean? There’s still a valid mortgage and valid note. So in theory someone can enforce the mortgage and note. But no one can figure out who owns them. There were problems farther upstream in the chain of title in Ibanez (3 non-identical “true original copies” of the mortgage!) that the SJC declined to address because it wasn’t necessary for the outcome of the case. But even without those problems, I’m doubtful that these mortgages will ever be enforced. Actually going back and correcting the paperwork would be hard, neither the trustee nor the servicer has any incentive to do so, and it’s not clear that they can do so legally. Ibanez did not address any of the trust law issues revolving around securitization, but there might be problems assigning defaulted mortgages into REMIC trusts that specifically prohibit the acceptance of defaulted mortgages. Probably not worthwhile risking the REMIC status to try and fix bad paperwork (or at least that’s what I’d advise a trustee). I’m very curious to see how the trusts involved in this case account for the mortgages now.

The Street seemed heartened by a Maine Supreme Judicial Court decision that came out on FridayHarp v. JPM Chase. If they read the damn case, they wouldn’t put any stock in it.

In Harp, a pro se defendant took JPM all the way to the state supreme court. That alone should make investors nervous–there’s going to be a lot of delay from litigation. Harp also didn’t involve a securitized loan. But the critical difference between Harp and Ibanez is that Harp did not involve issues about the validity of chain of title. It was about the timing of the chain of title. Ibanez was about chain of title validity. In Harp JPM commenced a foreclosure and was subsequently assigned a loan. It then brought a summary judgment motion and prevailed. The Maine SJC stated that the foreclosure was improperly commenced, but it ruled for JPM on straightforward grounds: JPM had standing at the time it moved (and was granted) summary judgment. Given the procedural posture of the case, standing at the time of summary judgment, rather than at the commencement of the foreclosure was what mattered, and there was no prejudice to the defendant by the assignment occurring after the foreclosure action was brought, because the defendant had an opportunity to litigate against the real party in interest before judgment was rendered. The Maine Supreme Judicial Court also indicated that it might not be so charitable with improperly foreclosing lenders that were not in the future; JPM benefitted from the lack of clear law on the subject. In short, Harp says that if the title defects are cured before the foreclosure is completed, it’s ok. There’s a very limited cure possibility under Harp, which means that the law is basically what it was before: if you can’t show title, you can’t complete the foreclosure.

What about MERS?

The Ibanez mortgages didn’t involve MERS. MERS was created in part to fix the problem of unrecorded assignments gumming up foreclosures in the early 1990s (and also to avoid payment of local real estate recording fees). In theory, MERS should help, as it should provide a chain of title for the mortgages. Leaving aside the unresolved concerns about whether MERS recordings are valid and for what purposes, MERS only helps to the extent it’s accurate. And that’s a problem because MERS has lots of inaccuracies in the system. MERS does not always report the proper name of loan owners (e.g., “Bank of America,” instead of “Bank of America 2006-1 RMBS Trust”), and I’ve seen lots of cases where the info in the MERS system doesn’t remotely match with the name of either the servicer or the trust bringing the foreclosure. That might be because the mortgage was transferred out of the MERS system, but there’s still an outstanding record in the MERS system, which actually clouds the title. I’m guessing that on balance MERS should help on mortgage title issues, but it’s not a cure-all. And it is critical to note that MERS does nothing for chain of title issues involving notes.

Which brings me to a critical point: Ibanez and Harp involve mortgage chain of title issues, not note chain of title issues. There are plenty of problems with mortgage chain of title. But the note chain of title issues, which relate to trust law questions, are just as, if not more serious. We don’t have any legal rulings on the note chain of title issues. But even the rosiest reading of Ibanez cannot provide any comfort on note chain of title concerns.

So who loses here? In theory, these loans should be put-back to the seller. Will that happen? I’m skeptical. If not, that means that investors will be eating the loss. This case also means that foreclosures in MA (and probably elsewhere) will be harder, which means more delay, which again hurts investors because there will be more servicing advances to be repaid off the top. The servicer and the trustee aren’t necessarily getting off scot free, though. They might get hit with Fair Debt Collection Practices Act and Fair Credit Reporting Act suits from the homeowners (plus anything else a creative lawyer can scrape together). And mortgage insurers might start using this case as an excuse for denying coverage. REO purchasers and title insurers should be feeling a little nervous now, although I doubt that anyone who bought REO before Ibanez will get tossed out of their house if they are living in it. Going forward, though, I don’t think there’s a such thing as a good faith purchaser of REO in MA.

You can’t believe everything you read. Some of the materials coming out of the financial services sector are simply wrong. Three examples:

(1) JPMorgan Chase put out an analyst report this morning claiming the Massachusetts has not adopted the UCC. This is sourced to calls with two law firms. I sure hope JPM didn’t pay for that advice and that it didn’t come from anyone I know. It’s flat out wrong. Massachusetts has adopted the uniform version of Revised Article 9 of the UCC and a non-uniform version of Revised Article 1 of the UCC, but it has adopted the relevant language in Revised Article 1. There’s not a material divergence in the UCC here.
(2) One of my favorite MBS analysts (whom I will not name), put out a report this morning that stated that Ibanez said assignments in blank are fine. Wrong. It said that they are not and never have been valid in Massachusetts:

[In the banks’] reply briefs they conceded that the assignments in blank did not constitute a lawful assignment of the mortgages. Their concession is appropriate. We have long held that a conveyance of real property, such as a mortgage, that does not name the assignee conveys nothing and is void; we do not regard an assignment of land in blank as giving legal title in land to the bearer of the assignment.”

A similar line is coming out of ASF. Courtesy of the American Banker:

Perplexingly, the American Securitization Forum issued a press release hailing the court’s ruling as upholding the validity of assignments in blank. A spokesman for the organization could not be reached to explain its interpretation.

ASF’s credibility seems to really be crumbling here. It’s one thing to disagree with the Massachusetts SJC. It’s another thing to persist in blatant misstatements of black letter law.

(3) Wells and US Bank, the trustees in the Ibanez case, immediately put out statements that they had no liability. Really? I’m not so sure. Trustees certainly have very broad exculpation and very narrow duties. But an inability to produce deal documents strikes me as such a critical error that it might not be covered. Do they really want to litigate a case where the facts make them look like such buffoons? Do they really want daylight shed on the details of their operations? Indeed, absent an executed PSA, I don’t think the trustees have any proof of exculpation. They might be acting, unwittingly, as common law trustees and thus general fiduciaries. I think they’ll settle quickly and quietly with any investors who sue.
Finally, what are the ratings agencies going to do?

It seems to me that any trust with Massachusetts loans that doesn’t have a publicly filed, executed PSA with a reviewable loan schedule should be on a downgrade watch. Very few publicly filed PSAs are executed and even fewer have publicly filed loan schedules. That doesn’t mean they don’t exist, but somewhere off-line, but if I ran a rating agency, I’d want trustees to show me that they’ve got those papers on at least a sample of deals. Of course should and would are quite different–the ratings agencies, like the regulators, are refusing to take the securitization fail issue as seriously as they should (and I understand that it is a complex legal issue), but I think they ignore it at their (and our) peril

 

4th DCA Florida gets It!! Judgment Reversed for Borrower! HSBC Goes Down in Flames

For More Information please call 954-495-9867 or 520-405-1688

This is not a legal opinion on your case. Get a lawyer.

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This case is important for many reasons:

  1. It is short. While that seems inconsequential, it seems highly significant to me that the 4th DCA would reverse the trial judge and direct entry of judgment for the Borrower based upon the application of simple laws and rules that I have been advocating for 8 years.
  2. It does not remand for a new trial or further proceedings. it directs that judgment be entered for the borrower. End of story.
  3. Standing: If the foreclosing party lacks standing it doesn’t matter how many payments were allegedly “missed.” A party who has no injury or interest in the subject matter cannot bring the claim.
  4. The assignment and the note “endorsement” was after the suit was filed. Hence at the time of the filing of the foreclosure lawsuit, there could be no standing and therefore the lawsuit should have been dismissed. It is for that reason that the 4th DCA directs judgment for the borrower.
  5. The burden of proof is on the bank — not the borrower. IN order to sustain a complaint at trial, the burden of proof is on the alleged creditor to prove its standing. AND THAT MEANS that discovery demands, routinely rejected by judges, can be enforced.
  6. The alleged endorsement was undated: The Court found that an undated endorsement cannot prove standing. The witness at trial must testify that he/she knows everything relevant about the endorsement, who did it, when and why. Robo-witnesses don’t have that information because the bank won;t let them have it. If they did have that information they would either be required to reveal that there was no underlying transaction, or perjure themselves.
  7. The court completely accepts the fact that the banks are backdating documents and it says backdating an assignment does nothing to help the bank. In other words, lying about it doesn’t cure the bank’s case.
  8. EVIDENCE: The witness testified that he knew nothing other than what he could see on the face of the assignment. As I have said for 8 years, that is pure hearsay — simply reading a document into the record does not mean that the recitals in the document are true. The fact that it is a document doesn’t mean it is a business record. And the fact that it is a business record doesn’t mean it is a valid exception to the hearsay rule. Judges, by the thousands ruled in millions of cases that such a proffer was admissible evidence. They were and remain wrong for doing so. If the witness cannot testify from personal knowledge about the matters asserted in a document, then neither the witness nor the document can be admitted into evidence. The question is not whether the the witness correctly read aloud what was in the document (probably backdated and forged). The question is whether the information on the document is reliable and trustworthy and true. A document could have the appearance of reliability and trustworthiness but the recitals in the document might not be true. The homeowner cannot cross examine a document and a homeowner cannot cross examine a witness about the accuracy of the matters asserted in the document if the witness knows nothing except what is written on the document.

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JUNIOR A. HARRIS,
Appellant,

v.

HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee for NAAC Mortgage Pass-Through Certificates Series 2007-1,
Appellee.

No. 4D14-54

[September 9, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Cynthia G. Imperato, Judge; L.T. Case No. CACE08029493(11).

Kenneth V. Hemmerle, II, Fort Lauderdale, and Richard P. McCusker, Jr., Delray Beach, for appellant.

Donna L. Eng, Michael K. Winston, and Dean A. Morande of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee.

GERBER, J.

The borrower appeals from a final judgment of foreclosure entered for the bank after a trial. The borrower argues that the bank failed to prove it had standing when it filed the action. We agree and reverse for entry of judgment for the borrower.

The bank’s original complaint attached a copy of a note payable to another entity. The note did not contain an endorsement.

The bank later filed a second amended complaint. Attached were copies of the note and an assignment of the note. The note now contained an endorsement to the bank. However, the endorsement was undated. The assignment purported to transfer the note to the bank on an “effective” date before the bank filed its original complaint.

However, the assignment was executed after the bank filed its original complaint.

The borrower answered and raised lack of standing as an affirmative defense. The borrower argued that the endorsement was undated and the assignment was executed after the bank filed its original complaint.

At trial, the bank introduced into evidence the original note and the assignment. On the factual issue of whether the note was assigned to the bank before or after the bank filed the original complaint, the bank’s witness possessed no knowledge or information other than what the assignment’s face reflected.

After the close of all evidence, the trial court entered a final judgment of foreclosure for the bank.
This appeal followed. Our review is de novo. See Lloyd v. Bank of N.Y. Mellon, 160 So. 3d 513, 514 (Fla. 4th DCA 2015) (“We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.”) (citation omitted).

We agree with the borrower that the bank failed to prove it had standing when it filed the action. We reach this conclusion for three reasons.

First, the note’s endorsement to the bank was undated. See Matthews v. Fed. Nat’l Mortg. Ass’n, 160 So. 3d 131, 133 (Fla. 4th DCA 2015) (“[T]he note introduced at trial . . . did not establish standing when the suit was commenced. The blank endorsement was undated.”).

Second, the assignment was “backdated” after the bank filed the action. See id. (“Nor does the backdated assignment, standing alone, establish standing.”) (citation omitted); Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1277 n.1 (Fla. 4th DCA 2013) (“Allowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.”).

Third, on the factual issue of whether the note was assigned to the bank before or after the bank filed the original complaint, the bank’s witness possessed no knowledge or information other than what the assignment’s face reflected. See Lloyd, 160 So. 3d at 515 (“Plaintiff’s evidence supporting its claim that the assignment . . . ‘related back’ to before the suit commenced was also insufficient to prove standing in this case. The witness testified that he did not have any information, other than the document itself, to verify when the assignment took place.”).

Based on the foregoing, we reverse and remand for entry of judgment for the borrower.

Reversed and remanded.

GROSS and DAMOORGIAN, JJ., concur.

– See more at: http://stopforeclosurefraud.com/2015/09/09/harris-v-hsbc-bank-usa-na-notes-endorsement-to-the-bank-was-undated-the-assignment-was-backdated-factual-issue-of-whether-the-note-was-assigned-to-the-bank/#sthash.FLUGXD2A.ynDnEINB.dpuf

Livinglies “Theory” Again Corroborated by 4th DCA in Florida: Proof of transaction IS required.

For Further information please call 954-495-9867 or 520-405-1688

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see Murray vs. HSBC – 4D13-4316

Having exhausted all possible explanations for the fraudulent behavior of the banks, the 4th DCA has now come to the conclusion that the reason for robo-signing, fabrication, backdating, forgery etc. is that there was no transaction underlying the paperwork that the banks rely upon — at least in this case. In this case in particular, after all the cynics, critics and ridicule I confess my base instincts when I say “I told you so.” Of course the case is remanded, but there is no way HSBC is going to be able to prove anything required by this decision.

For legal practitioners the take away from this case and others being decided in Florida and around the country, is that you should not accept proclamations from either opposing counsel or the bench that the facial validity of a document is enough. In most cases there is no underlying transaction in which a purchase and sale of the loan was completed. So now, at least in the 4th DCA in Florida, foreclosing parties are being returned to the days when they had to prove the actual loan and prove that actual purchase of the loan through proof of payment for the transaction by the party seeking to enforce the loan. And when they don’t or can’t they should be subjected to sanctions against both the conspirators and their attorneys, plus punitive damages.

CAVEAT: THIS CASE DOES NOT APPLY TO ALL CASES. Check with an attorney licensed in the jurisdiction in which your property is located before you make any decisions or start celebrating. But if you check around you will see an increasing number of Florida and other state and Federal decisions, including bankruptcy court, where they found the original note and mortgage void or the transfers to have eviscerated the right to enforce the mortgage through foreclosure. In short, the tide has turned.

A nonholder in possession, however, cannot rely on possession of the instrument alone as a basis to enforce it. . . . The transferee does not enjoy the statutorily provided assumption of the right to enforce the instrument that accompanies a negotiated instrument, and so the transferee “must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.” Com. Law § 3–203 cmt. 2. If there are multiple prior transfers, the transferee must prove each prior transfer. Once the transferee establishes a successful transfer from a holder, he or she acquires the enforcement rights of that holder. See Com. Law § 3–203 cmt. 2. A transferee’s rights, however, can be no greater than his or her transferor’s because those rights are “purely derivative.”

Id. (emphasis added) (internal citations omitted).
HSBC had to prove the chain of transfers starting with Option One California as the first holder of the note. The only document admitted that purported to transfer the note was the PSA. Although the note was included in the PSA, the parties to the PSA were ACE, Option One Mortgage Corporation, Wells Fargo, and HSBC; not Option One California. The loan analyst testified that Option One California was acquired by AHMS, which rebranded to Homeward Residential, which was ultimately acquired by Ocwen. HSBC argues that since “Option One” is defined under the PSA as “Option One Mortgage Corporation or any successor thereto,” and Option One transferred its interest to HSBC through the PSA, HSBC had the rights of a holder. We disagree.

Appellate Court Wrestling with Inconsistent Facts in Foreclosure Cases

For further information please call 954-495-9867 or 520-405-1688

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IT ISN’T BOTCHED PAPERWORK. IT’S FAKE PAPERWORK

It should come as no surprise that Judges have been confused since the dawning of the mortgage crisis launched by Wall Street. Wall Street was counting on it. And the problem they are having is that most courts, including appellate courts, are presuming the loans existed in the first place. You can’t blame for that because nearly everyone still makes that presumption. How could it not be true? What do you mean the loan came from someone else? Then why didn’t that third person  make sure they were made the payee on the note and the mortgagee on the mortgage? The real lenders didn’t know about the loan and would never have approved it? Preposterous!

Yes, I concede it all sounds like nonsense. But here is something that does NOT sound like nonsense. If the loan actually existed (between the named payee on the note and the named mortgagee or beneficiary on the mortgage) there is no circumstances under which a lawyer for the “lender” or “investor” would withhold proof of that transaction to the borrower, the Court or anyone else that was entitled to that information. If they had proof of payment on the loan they would rush to show it. If they had proof of payment on the alleged purchase of the loan, they would rush to show it — because that would make them a holder in due course (where the borrower has virtually no defenses).

The problem is that with the shell game of plaintiffs, servicers and trustees, Judges are getting distracted as they start picking at the foreclosure actions and entering some judgments in favor of the homeowners but failing to even consider the possibility that the entire scheme is fraudulent. Instead we see articles like the one below where the paperwork is considered “botched.” It isn’t botched. It is part of a fraudulent scheme. Look for any case where the underlying monetary transaction has been shown or proven. It isn’t there. 6-7 million foreclosures and still no money changing hands. What lender would endorse a note and assign a mortgage without receiving payment for it? (Unless of course they didn’t pay anything either at the loan closing table).

And why would anyone endorse a note or assign a mortgage without a sale of the loan and without receiving payment for it? The answer is very clear. They wouldn’t.

But the Courts are starting with the premise that the loan, and the transfer of the loan is presumptively legal and valid. And part of that presumption starts with the wrong question in the minds of judges — why would anyone file a foreclosure action if they were not the injured party whose legitimate interests were abridged when the borrower stopped paying? That slippery slope leads them to ratify unsigned, robo-signed, fabricated, forged paperwork in the belief that it really doesn’t matter how much is wrong with the paperwork.

Judges still assume that the underlying transactions must be real; hence judgment for the homeowner is necessary to avoid a windfall. It is circular reasoning to assume that the claim must be true if it was filed — that is what our constitution is all about preventing.

see The Fate of Foreclosure Cases

Will botched paperwork affect the outcome of foreclosure appeals? It depends on the judges.

The decisions in three cases came down to paperwork and procedure Wednesday before the Fourth District Court of Appeal.

For BAC Home Loans Servicing LP, botched documentation at the height of the robo-signing scandal cost it a foreclosure judgment when the court ruled the lender failed to prove standing to sue homeowner Rosanie Joseph.

The appeals court reversed a foreclosure judgment issued by Palm Beach Circuit Judge Diana Lewis since there was no evidence to show Taylor Bean & Whitaker Mortgage Corp. owned the mortgage when filing to foreclose on Joseph in July 2009.

The 2008 mortgage issued by Key Mortgage Associates was attached to the lawsuit, but no note or assignments accompanied the filing by Ocala-based Taylor Bean, a leading wholesale mortgage lender. The company reported the note was lost or stolen.

Taylor Bean, one of the spectacular bankruptcies of the housing crash, later assigned the note to BAC, which picked up the foreclosure ball.

In trial, BAC produced the original note and mortgage. The note offered two endorsements by the same person, Erica Carter-Shaw as a Key Mortgage attorney and Taylor Bean “E.V.P.” Neither endorsement was dated.

“A party must establish its standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint,” Judge Martha Warner wrote for the unanimous panel. Judges Carole Taylor and Mark Klingensmith concurred.

No File Review

A different panel split in similar litigation: Gafoor Jaffer and Nina Jaffer v. Chase Home Finance.

The homeowners claimed Chase attached a mortgage note payable to a third party without any proof of transfer and used an amended foreclosure complaint that failed to state a cause of action. However, the Jaffers waived the question of Chase’s standing by failing to respond to the lawsuit before default was entered.

Chase conceded some of its employees signed affidavits about the loan documents without first reviewing the loan file.

But the Fourth DCA upheld summary judgment issued by Broward Circuit Judge Sandra Perlman.

In the 2-1 unsigned decision, Judges Spencer Levine and Klingensmith concurred. Judge Burton Conner dissented, citing Chase’s failure to file an accurate copy of the mortgage note.

Deutsche Bank National Trust Co. wasn’t as lucky when it moved to overturn Broward Circuit Judge Kathleen Ireland’s ruling in favor of homeowner Theresa Boglioli.

Attorneys say the decisions may further complicate already-lengthy and expensive foreclosure litigation.

“Normally you see discrepancies of this nature within different circuits. But what we’re seeing in the Fourth is discrepancies among themselves,” said foreclosure defense attorney Roy Oppenheim of Weston. “It just makes this more complex. When there is cloudiness, it just creates more ambiguity and delays the conclusion of the foreclosure mess. In the end it doesn’t help anybody when you have inconsistent rules.”

“The judges themselves are coming up with different rationale based on the same facts, which makes for wildly different outcomes.”

Florida Statute of Limitations in Chaos

I have written about it, but there is an article that succinctly makes the point. See http://www.jdsupra.com/legalnews/the-third-district-weighs-in-on-the-appl-27045/

My opinion is simple — keep things the way they were before this nonsense started. To lean toward the banks at this point adds insult to injury to the judicial system and the borrowers. Homeowners have been systematically steam-rolled on the premise that the need to get this behind us was paramount even over due process rights. So now courts are suggesting that the losing bank can still file on the same loan that was declared in default as to the entire balance due.

Hopefully the Florida Supreme Court will at least be consistent — opting for finality rather than allowing multiple suits regarding the same subject matter.

3rd DCA Florida Decides Statute of Limitations: Deutsch Loses

For further information please call 954-495-9867 or 520-405-1688

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see Third DCA – Beauvais Decision

In the Third District Court of Appeal, Florida, the Court decided Deutsch v Beauvais against the alleged “creditor” Deutsch.. Dozens of appellate decisions across the country are reversing a long-standing pattern of rubber stamping trial courts who exceeded their discretion, authority or even jurisdiction. This case affirms the trial court’s decision that the action was barred by the statute of limitations but reverses the trial court’s decision that the mortgage was null and void. How they reached this decision is going to be a matter in dispute and possibly the subject of a Florida Supreme Court decision soon.

The basic thrust of the decision is this: an unenforceable mortgage is not void. This seems counter-intuitive but it is probably correct. The effect is that the unenforceable mortgage remains as an encumbrance or cloud on title such that upon resale or refinance it might require payment to get a satisfaction or release of the mortgage, even though enforcement is barred by the statute of limitations. Other court decisions are struggling with the same issues. The effect on quiet title actions probably is that the declaration of the rights and duties of the parties includes the mortgage in the title chain and does not nullify the mortgage or remove it from the chain of title. Hence an action to nullify the mortgage would be necessary before it could be removed from the chain of title.

Using the logic from this and other cases, a homeowner cannot remove a mortgage from the chain of title by merely asserting that it is unenforceable. The flip side is that a homeowner could easily get the mortgage removed from the chain of title and to get a judgment in which title is declared free and clear of the mortgage encumbrance IF the homeowner proves that the initial transaction was a sham and that the mortgage should not have been signed or released much less recorded.

This is why the logic behind the “unfunded trust” may be crucial to removing the mortgage from the chain of title. If you can prove that there was no loan at the base of the documentary chain, then you are likely to succeed in nullifying the mortgage and then quieting title. Through discovery and deductive reasoning, it is possible to show that there was no loan of money, in FACT, at the base of the chain of documents. As a caveat, I should add that this issue is certainly not entirely resolved. There are competing decisions and views in Florida and across the country.

The basic thrust of this decision is whether the election to accelerate the entire amount due can be abandoned and thus allow future claims on future installments of the alleged loan.  The court cites AM. Bankers, 905 So. 2d 192. The hidden issue is that the association was successful in foreclosing against the homeowner and Deutsch — because there was no effort to withdraw the acceleration of the alleged loan. I think the decision ignores the doctrine of estoppel and prevents the alleged “creditor” from first exercising its “option” to accelerate and then withdrawing it when they lose the case or voluntary dismiss the case.

The court also makes a distinction between a voluntary dismissal and a judgment or involuntary dismissal with prejudice. In the first case, the court decided that the option to reinstate the later installments not barred by the statute of limitations could exist if the dismissal with prejudice, but does not exist where the option is not exercised. This adds wording to the mortgage contract and the applicable statutes. I think it is wrong.

The decision means that a “creditor” who loses or dismisses an action might be able to accelerate and foreclose multiple times until they finally win. It also introduces parole evidence into the recording process and chain of title. I agree that the mortgage is not automatically removed by losing the case. But I don’t agree that the loser can reinstate the action and sue again. It calls for the entire issue of the origination and transfer of the the alleged loan to be re-litigated. I think it conflicts with the doctrines of res judicata and collateral estoppel. The note, which is the only evidence of the debt, has been rendered unenforceable by the statute of limitations. To say that the mortgage survives as a potentially enforceable instrument on the issue of payment is illogical.

Here are some relevant quotes from the decision:

Where a lender files a foreclosure action upon a borrower’s default, and expressly exercises its contractual right to accelerate all payments, does an involuntary dismissal of that action without prejudice in and of itself negate, invalidate or otherwise “decelerate” the lender’s acceleration of the payments, thereby permitting a new cause of action to be filed based upon a new and subsequent default? [The 3rd DCA answers this question in the negative]

…because the installment nature of the loan payments was never reinstated following the acceleration, there were no “new” payments due and thus there could be no “new” default following the dismissal without prejudice of the initial action.

Smith v. F.D.I.C., 61 F.3d 1552, 1561 (11th Cir. 1995)(holding, “when the promissory note secured by a mortgage contains an optional acceleration clause, the foreclosure cause of action accrues, and the statute of limitations begins to run, on the date the acceleration clause is invoked.”).

The supreme court disapproved of the holding in Stadler and approved the Fourth District’s holding in Singleton:

We agree with the reasoning of the Fourth District that when a second and separate action for foreclosure is sought for a default that involves a separate period of default from the one alleged in the first action, the case is not necessarily barred by res judicata. [Editor’s Note: I think the court ignored the difference between the intention and effect of a statute of limitations and the doctrine of res judicata.]

In Singleton, the dismissal with prejudice disposed not only of every issue actually adjudicated, but every justiciable issue as well. Hinchee v. Fisher, 93 So. 2d 351, 353 (Fla. 1957), overruled in part on other grounds, May v. State ex rel. Ervin, 96 So. 2d 126 (Fla. 1957). In Hinchee, as in Singleton and Stadler, the trial court dismissed an initial action with prejudice. Hinchee, 93 So. 2d at 353. This operated as an adjudication on the merits and, as a general proposition for purposes of res judicata, “puts at rest and entombs in eternal quiescence every justiciable, as well as every actually adjudicated, issue.” Id. (quoting Gordon v. Gordon, 59 So. 2d 40, 43 (Fla. 1952)). As the Court observed in Hinchee:

A judgment on the merits does not require a determination of the controversy after a trial or hearing on controverted facts. It is sufficient if the record shows that the parties might have had their controversies determined according to their respective rights if they had presented all their evidence and the court applied the law.

Res judicata is not the issue in the instant case because the dismissal of the Initial Action was without prejudice, and therefore the borrower here (unlike the borrower in Singleton) did not “prevail in the foreclosure action by demonstrating that she was not in default” nor was there “an adjudication denying acceleration and foreclosure” such that the parties “are simply placed back in the same contractual relationship with the same continuing obligations.” Id.

the only subsequent cause of action which Deutsche Bank could file under the circumstances was an action on the accelerated debt— it could not thereafter sue upon an alleged “new” default because, without reinstating the installment terms of the repayment of the debt, there were no “new” payments due, [e.s.]

Without a new payment due, there could be no new default, and therefore no new cause of action. Because the Current Action was based upon the very same accelerated debt as the Initial Action, and because that Current Action was filed after the expiration of the five-year statute of limitations, it was barred.5

We acknowledge that Singleton has been applied to permit, as against an

asserted statute of limitations bar, the filing of a subsequent action following

dismissal with prejudice (i.e., an adjudication on the merits) of an earlier action.

See 2010-3 SFR Venture, LLC. v. Garcia, 149 So. 3d 123 (Fla. 4th DCA 2014);

Star Funding Solutions, LLC. V. Krondes, 101 So. 3d 403 (Fla. 4th DCA 2012); );

U.S. Bank Nat. Ass’n. v. Bartram, 140 So. 3d 1007 (Fla. 5th DCA 2014) review

granted, Bartram v. U.S. Bank Nat. Ass’n, Nos. SC14-1265, SC14-1266, SC14-

1305 (Fla. Sept. 11, 2014); PNC Bank, N.A., v. Neal, 147 So. 3d 32 (Fla. 1st DCA

2013). We believe our holding is not necessarily inconsistent with the strict

holdings of these cited cases, as each of them involved a dismissal of the earlier

action with prejudice, representing an adjudication on the merits and, at least

implicitly, a determination that there was no default and therefore no valid or

effectual acceleration. [ I think the court is struggling to justify its decision]

Business Records Exception — The Loophole That Needs Closing

For further information please call 954-495-9867 or 520-405-1688

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see AppellateOpinion Holt v Calchas 4th DCA decision

The clear assumption in this case is that Wells Fargo had stepped into the shoes of the lender and that if Wells Fargo did not win or if its surrogate did not win, it was assumed that the homeowner would be getting a free house, a free ride and a windfall at the expense of Wells Fargo Bank. Despite years of articles and treatises written on the subject, the courts have still not caught up with the basic fact that both the lenders and borrowers were victims of an illegal and fraudulent scheme. At the very least, the court owes it to our society and to all parties involved in foreclosure litigation, to enforce the laws that already exist —  especially the rules concerning the burden of proof in a foreclosure action.

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The Holt decision is a curious case. There are a number of unique factors that occurred in the trial court and again in the appellate court. The first judge recused herself shortly into the trial and was replaced by a senior judge. There is no transcript of the proceedings prior to the point where the senior judge took over. At the same time the homeowners attorney was also replaced. So my first question is how anyone could have reached any decision. In the absence of the transcript of the proceedings leading up to the recusal of the original judge I find it troublesome that either the judge or the attorney for the homeowner could come to a decision or develop any trial strategy or theory of the case for the defense of this foreclosure case.

The second thing that I have trouble with is that the homeowner filed the appeal based on three different theories, to wit:

(1) the proffered promissory note, mortgage, and assignment of mortgage should not have been admitted into evidence—  an argument that the appellate court rejects;

(2)  the homeowner’s motion to dismiss should have been granted for failure to prove compliance with paragraph 22 [default, reinstatement and acceleration] of the mortgage —  with which the appellate court agreed. Since the appellate court agreed with this point and reversed the trial court it would seem that the case should have been dismissed, but instead the 4th District Court of Appeal chose to remand the case for further proceedings thus giving a second bite of the apple to the party who was claiming the right to foreclose —  despite the finding that the trial was over and on appeal and the foreclosing party had failed to make its case. If the homeowner had failed to prove its defenses, would the appellate court have issued legal advice to the homeowner and remanded for another bite at the apple?

(3)  the payment history should not have been admitted into evidence over the hearsay objection raised by the homeowner. The court goes into great lengths essentially tying itself into knots over this one, but eventually sides with the homeowner. Instead of ordering the entry of judgment for the homeowner, the court remanded the action for further proceedings in which the foreclosing party, having received legal advice from the District Court of Appeal, is now permitted to retry the case to fill in the blanks that the appellate court had pointed out with great specificity and particularity.

While I agree with much of the reasoning that is stated in this appellate decision, I still find it very troublesome that there remains an assumption and perhaps even a bias in favor of the foreclosing party. This is directly contrary to the rules of court, common law, and statutory law. The party bringing a claim for affirmative relief (like foreclosure) must bear the burden of proving every element required in their cause of action. This is not a motion to dismiss where every allegation is taken as true. At trial, it is the opposite — there is no case for the homeowner to defend unless the foreclosing party establishes all elements of its right to foreclose. If they fail to do so, the other side wins. In the interest of justice as well as finality courts do not easily allow either side to have another trial unless there are exceptional circumstances.

(In non-judicial states, this is particularly perplexing — the homeowner is required to sue for a TRO (temporary restraining order). In actuality the homeowner probably should have sued immediately upon the notice of the purported “substitution of trustee.” But the point is that the homeowner is required to prove a negative as the non-judicial statutes are construed. What SHOULD happen is that if the homeowner sues for the TRO and objects to the notices filed, challenges the standing of the “new” beneficiary on the deed of trust, and otherwise denies the elements of a foreclosure action, then the parties should be realigned with the new beneficiary required to plead and prove its standing, ownership and ability to prove the default and the balance owed.)

The next thing I find potentially troublesome is that the tactic of inserting a new entity as plaintiff or as servicer in order to shield the actual perpetrator was clearly employed in this case, although it seems not to have been mentioned in the trial court or on appeal. In this case an entity called Consumer Solutions 3 LLC was substituted for Wells Fargo. Then Wells Fargo was substituted for Consumer Solutions. This is a game of three card monte in which everyone loses except for the dealer — Wells Fargo.

As long as they are going back to trial, it would seem that the homeowner would be well served to do some investigations into the parties, and to determine what transactions if any had actually occurred. If there were no transactions, which I think is the case, then any paperwork generated from those fictitious transactions would be completely worthless, lacking in any foundation and could never be enforced against anybody —  with the possible exception of a holder in due course.

 BUSINESS  RECORDS EXCEPTION:

I am continually frustrated by the fact that most people simply do not consider the elements of the business records exception to the hearsay rule within the context of why the hearsay rule exists. By its very nature hearsay tends to be untrustworthy, untested and usually self-serving. That is why the rule exists. It bars any document or testimony offered to prove the truth of the matter asserted unless the person who spoke or wrote the words is present in court to be cross examined as to their personal knowledge, whether they had an interest in creating one appearance or another,  or whether the entire statement could be impeached.

Instead most people on all sides of foreclosure litigation seem to think that the business record should be admitted into evidence unless there is a compelling reason to the contrary. This is incorrect. And if you just scratched the surface of any of these claims you will find that the party who is seeking to introduce these hearsay statements into evidence has a vested interest in the outcome of the case and absolutely no direct knowledge of any of the facts of the case.

Like Chase Bank does with SPS, Wells Fargo has inserted this entity that is essentially run by a hedge fund (Cargill) to prevent any employee or contract party from testifying on behalf of Wells Fargo, because Wells Fargo knows that it has already been sanctioned millions of dollars for telling lies in court.

So instead they have somebody else come in to tell the lies, and that witness is trying to say that they are familiar with the record-keeping of their own company which includes the record-keeping of the previous company, Wells Fargo. Consumer Solutions is a shame shell that never did anything but rent its name for foreclosures while its parent, Cargill, received compensation  (a piece of the pie) for doing nothing.

This obvious ploy has worked for nearly a decade but is coming under increasing scrutiny — with Judges musing out loud about the shuffling of “servicers” and “lenders” and creditors. In an effort to stifle any real challenge to foreclosures courts have often held that the securitization documents are “irrelevant.”

So the courts take jurisdiction over the action and the parties by virtue of claims of securitization, authority allegedly granted by a pooling and servicing agreement, and ownership “proven” merely by claiming it on the basis of self-serving fabricated documents not subject to scrutiny, and a default and balance that excludes the payments received by the creditors from servicer advances and other third party payments paid without right of subrogation.

Then the courts limit discovery, overrule objections and allow the party initiating foreclosure to “prove” its case by using dubious legal “presumptions” instead of facts, most of which were denied by the homeowner.

And now that the Wall Street banks perceive a risk in having real people with real knowledge testify, because they might admit or testify to things that might hurt them, they insert a complete stranger to the process and double down on “business record exception” to get paperwork into evidence, much of which is completely fabricated and nearly all of which contains errors in computation by exclusion of (a) the fact that the creditors were paid every payment despite the declaration of default by the “servicer” and (b) deducting those payments from the original debt owed to those investors who advanced funds for the origination or acquisition of “loans.”

In the Holt decision the 4th DCA declares that the assignment was properly allowed into evidence because it was a “verbal act” and not offered to prove the truth of the matter asserted. Once in evidence however, the contents were taken as true shifting the burden of proof to the homeowner who was stone walled in discovery. The homeowner in many cases is not allowed to compel the production of evidence of payment or consideration for the assignment — without which the assignment is merely an empty document conferring no rights greater than the assignor had at the time of the alleged “assignment”. Most often the assignor did not require payment for the simple reason that they too had no money in the deal.

PAYMENT  HISTORY HEARSAY OBJECTION

The court inserts Florida Statute 90.803(6)(a), which is part of the evidence code, providing for exceptions to the hearsay rule for business records. In that statute is the general wording for the types of records that might qualify for the exception. But the court completely ignores the last words of that statute — “unless the sources of information or other circumstances show lack of trustworthiness.” (e.s.)

The question is why should we trust a servicer or its “professional witness”? The witness is there and was often hired for the sole purpose of testifying in foreclosure trials. If they lose, they risk their jobs. The “servicer” whether they are designated in the PSA or have been slipped in as another layer of obfuscation, has an interest that is in conflict with the the actual creditors — recovery of “servicer advances” (which were paid from funds provided by the Master Servicer — often the underwriter and seller of mortgage bonds to investors) and to make more money because they are allowed to collect a vast amount of “fees” for enforcement of a “non-performing” loan.

The fact is that the servicer advances negates the default and might give rise to a new cause of action for unjust enrichment against the homeowner but that claim would not be secured. This in turn leads to the unnatural conclusion of aggravating the the alleged damages by forced sale of the property as opposed to modification and reformation of the loan documents to (a) name the true creditor and (b) use the true balance owed to the creditors.

Thus both the specific witness and the company he or she represents have a vested interest in seeing to it that the foreclosure results in a forced sale for their own benefit and contrary to creditors who have no notice of the pending action. At the very least, this certainly raises the question of trustworthiness. Add to that the fraudulent servicing practices, the lies told during the “modification” process, and I would argue that the source and circumstances raise a presumption that the testimony and business records not trustworthy.

Quoting Florida Statute 90.803(6)(a) the court goes not to set forth the elements of the business records exception — the issue being that ALL elements must be met, not just some or even most of them:

  1. The record was made at or near the time of the event [so in many cases where SPS was inserted as the “servicer” when in fact it was merely an enforcer without knowledge of prior events, it is impossible for the records of SPS  to contain entries that were made at or near the time of any relevant event].
  2.  the record was made by or from information transmitted by a person with knowledge [ if the court permitted proper discovery, voir dire, and cross examination is doubtful that any witness would be able to testify that the record was made by a particular person who had actual knowledge]
  3.  the record was kept in the ordinary course of a regularly conducted business activity [ while it might be true that the actual servicer could claim that it’s records were in the ordinary course of a regularly conducted business activity, it is not true where the witness is a representative of a “new” servicer for plaintiff —  neither of whom were processing any data concerning the loan from the moment of origination through the date that the foreclosure was filed]
  4.  that the record was a regular practice of that business to make such a record [ here is where the courts are in my opinion making a singular error —  by accepting proof of only the fourth element required for the business records exception, trial court and appellate courts are ignoring the other elements and therefore allowing untrustworthy documents into evidence.  “While it is not necessary to call the individual who prepared a document, the witness to open a document is being offered must be able to show each of the requirements for establishing a proper foundation.” Hunter v  or Aurora loan services LLC, 137 S 3d 570 (Fla 1st DCA 2014).

The Holt Court then goes on to analyze several cases:

  1. Yisrael v State 993 So 2d 952, 956 (FLA 2008) — a Florida Supreme Court decision quoting the elements of the business records exception. see sc07-1030
  2. Glarum v LaSalle Bank, N.A. 83 So 3d (Fla 4th DCA 2011) — where the witness was unable to lay the proper foundation for the business records exception  because the witness testified that he “did not know who, how, or when the data entries were made into [ the previous mortgage holders’] system and he could not stated the records were made in the regular course of business.” ( My only objection to this is the wording that was used. The predecessors in the document chain are referred to as “mortgage holders” —  indicating an assumption which is probably not true). see Glarum v. LaSalle
  3. Weisenberg v Deutsch Bank N.A. 89 So 3d 1111 (FLA 4th DCA 2012) — Where the court held that “the deposition excerpts show that [the witness] knew how the data was produced and her testimony demonstrated that she was familiar with the bank’s record-keeping system and had knowledge about data is uploaded into the system.” (My problem with the Weisenberg decision is that the word “familiar” is used generically so that the witness is allowed to testify about the business records — without any personal knowledge about the trustworthiness of the data in those records — again with the apparent assumption that the foreclosing party SHOULD win and the second assumption being that the homeowner should not be allowed to take advantage of hairsplitting technicalities to get a free house.  In fact it is the servicer that is taking advantage of such technicalities by getting business records into evidence without verification that those are all the business records. For example, the question I often ask is who did the servicer pay after receiving payment from the borrower or anyone else? The records don’t show that — thus how can the court determine the balance on the creditor’s books and records? The underlying false assumption here is that the servicer records ARE the creditor’s records even though the creditors have not even been identified.)
  4. WAMCO v Integrated Electronic Environments 903 So 2d 230 (Fla 2d DCA 2005) —  Where another appellate court held that “a document which contains the amount of money owed on the loan was admissible under the business records exception even where the testimony as to the amount owed was based on information from a bank that previously held the loan.” (I think this decision was at least partially wrong. The witness testified that it was part of his duties to oversee the collection of loans that the bank urges and the initial members he used his calculations were provided by the previous bank.  In my opinion the court properly concluded that the witness to testify —  that he should have been limited to the business records of the company that employed him. Witness knew nothing about the previous bank practices and did not employ any verification processes. see 2D04-2717
  5. Hunter v Aurora Loan Services 137 So 3d 570 (Fla 1st DCA 2014) — where the witness was incompetent to testify and could not lay a proper foundation for the business records exception and in which the HOLT Court quotes from the Hunter decision with obvious approval:  “At trial, a witness who works for the current note holder, but never worked for the initial note holder, attempted to lay the foundation for the introduction of records pertaining to prior ownership and transfer of the note and mortgage as business records. The witness testified that based on his dealings with the original note holder, the original note holders business practice regarding the transfer of ownership of loans was standard across the industry. He could not testify, based on personal knowledge, who generated the information. He also testified, in general fashion and without any specifics, that some of the documents sought to be introduced were generated by a computer program used across the industry  and that records custodian for the loan servicer was the person who usually it puts the information obtained in the documents. The trial court admitted the documents into evidence.” see hunter-v-aurora-loan-servs-llc

The most interesting quote from the Hunter decision is “absent such personal knowledge, the witness was unable to substantiate when the records were made, whether the information they contain derived from a person with knowledge, whether the original note holder regularly make such records, or indeed, whether the records belong to the original note holder in the first place. The testimony about standard mortgage industry practice only arguably established that such records are generated and kept in the ordinary course of mortgage loan servicing.” 

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