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FORECLOSURE DEFENSE - JUDGE SAYS SHOW ME EVIDENCE YOU ARE THE LENDER!

By
Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

A Florida appellate court decided earlier this week that merely stating that the Plaintiff loan servicer has the authority to foreclose the mortgage is not enough.  In Elston vs. CW Capital Management, decided April 4, 2012, CW Capital stated that it “has been and is duly authorized by the Trust to prosecute this action as agent and special servicer for the (mortgage and promissory note holding) Trust.”

It just so happened that I was in court yesterday morning, April 5th, and although I did not have the case just decided by the appellate court, the trial judge did!  My argument was precisely the issue that the complaint was deficient in tying the mortgage and promissory note to the plaintiff that was foreclosing on my clients’ property.  The judge pulled out the case, asked the bank’s attorney to read it and comply with it before they amended their complaint and if they could not comply with it, the matter would be dismissed again.

The ultimate issue is “evidence”.  Most people with a bit of knowledge always ask me about if the lender can’t find the note, they can’t foreclose.  That argument is predominately garbage as I have pointed out in several previous articles. (FORECLOSURE DEFENSE FALLACY ;  The fact is that most states have several statutory methods of proving up debt even though the promissory note is lost, destroyed or missing)   What is the main issue is evidence – can the plaintiff suing the borrower PROVE that they have the authority to sue on the promissory note and mortgage?  To prove the case they have to present credible, admissible evidence.  That brings in the Rules of Evidence, and if you ever watched any of the television courtroom dramas that are fictional, you really don’t have a clue.  Watch Count-TV for the real life drama of a drawn out trial with lots of documents and testimony and you will understand that getting a document or fact into evidence is not a walk in the park.  This Elston case points that out.

So, my combination of being right – AND being lucky the judge had just read and copied the case – probably at breakfast that very day – got me the win!

The language of the case is very important and although I suggest you read the entire case at the hyperlink above, the crux is contained on the last page and says,

Here, the caption of the verified complaint states that the underlying action is brought by CW “solely in its capacity as special servicer on behalf of U.S. Bank, N.A.” In the complaint, CW alleges, and verifies as true, that it “has been and is duly authorized by the Trust to prosecute this action as agent and special servicer for the Trust.” However, CW did not file any evidence, affidavits or other documents, supporting its allegation that it was authorized to prosecute the action on behalf of the trust, as was done in Kumar, Juega and Chicago Properties. Although CW’s complaint is verified, it is verified by the “SVP” for CW – not by the real party in interest, the trust. CW relies on nothing more than its own allegations and affidavit to support its argument that it has standing to sue on behalf of the trust. This is insufficient evidence to prove that it is authorized to sue on the trust’s behalf.

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Copyright 2012 by Richard P. Zaretsky, Esq.

 

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader. Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com

 

See our easy to find articles at TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES.

 

 

 

Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

First robo signing and there in Florida the banks are having to do the job correctly.

Apr 05, 2012 11:44 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

Richard,

This is a lesson for me, as I did not really understand before that not having the original Note does ot mean that the Lender can't get the property foreclosed. But does it mean that they will have to file some documents to correct the situation and have the authority given by the Trust, and not merely self-proclaimed and they can come back to the judge and file a Motion for Summary judgment and get it foreclosed?

Is it more tactical and buying time?

Apr 05, 2012 02:09 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

HOORAY!  when I go to an eviction trial, I have documentation that I am the authorized property manager and authorized to file the eviction action...lenders need to show the documents allowing them to displace property owners!

Apr 05, 2012 07:57 PM
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Wallace - EXACTLY WHAT THE COURT IS SAYING!

Jon - Good Morning! In my case the judge essentially told the attorney that when they file the amended complaint it better have with it sufficient admissible evidence that the plaintiff has the legal authority to actually file the lawsuit.

Happy Passover and Easter to you all - Richard

Apr 05, 2012 09:12 PM
Gary L. Waters Broker Associate, Bucci Realty
Bucci Realty, Inc. - Melbourne, FL
Eighteen Years Experience in Brevard County

Thanks, Mr. Z. Although I am not involved in many tranactions like these it is good to have the general knowledge you so often provide.

Apr 05, 2012 11:53 PM
Anonymous
Ericka Davis

Mr. Zarestky does an assignment of mortgage prove ownership? What weight does it have is it equal to a mortgage note?

Apr 21, 2012 02:32 AM
#6
Richard Zaretsky
THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL
Florida Real Estate Attorney

Assignment of a mortgage usually contains language that the promissory note along with the mortgage (like, the mortgage along with the promissory note secured thereby), so yes, the assignment is sufficient proof of ownership if both the note and mortgage.  However if the note is endorsed to a party other than the assignee, then the party proving ownership must prove up ownership of both the note and the mortgage.  Physical possession of the promissory note is generally sufficient to show ownership, even if there is a conflict in the endorsement.

Apr 21, 2012 05:35 AM