H/T Alina

Some snippets:

We agree with that conclusion. Due diligence does not mean that borrowers must presume their bank is lying or dissembling and therefore that further investigation is needed. Reading the blizzard of paper that sweeps before them is ample diligence in itself. In short, a borrower ought to be able to rely on the documents provided by a financial institution. Indeed, RESPA and TILA/HOEPA were passed, in large part, because Congress recognized that the average borrower is incapable of detecting many unfair lending practices, including fraud. “[W]hile the law of fraud does not endorse a ‘hear no evil, see no evil approach,’ neither does it require that an aggrieved party have proceeded from the outset as though he were dealing with thieves.” Jones v. Childers, 18 F.3d 899, 907 (11th Cir.1994) (additional quotation marks omitted). “A plaintiff ? cannot be expected to exercise diligence unless there is some reason to awaken inquiry and direct diligence in the channel in which it would be successful. This is what is meant by reasonable diligence.” Sheet Metal Workers, Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1282 (3d Cir.1991) (internal quotation marks omitted). The Complaint here does not allege any facts disclosed on the face of the HUD–1s or that were otherwise provided to the Plaintiffs that should have awakened inquiry and demanded some further diligence. We conclude, therefore, that the Plaintiffs’ allegation that the class fully participated in all aspects of the mortgage loan transactions by “reviewing their loan documentation” is sufficient to satisfy the reasonable diligence requirement for equitable tolling in this case. (App. at 307, ¶ 409.) Cf. White, 2014 WL 4063344, at *5–6. In addition, proving that class members did, in fact, fully participate in the loan process in that fashion does not cause the issue of equitable tolling to predominate over issues common to the whole class.

____________

First, it asserts that, to litigate the RESPA claims, the putative class will be required to demonstrate on a loan-by-loan basis that no services were provided in exchange for the alleged kickbacks. But the Complaint alleges that Equity Plus performed absolutely no services to earn the transferred (i.e., kicked-back) portion of the fees, which is at least plausible in light of the contractual arrangement between Equity Plus and CBNV.23 While that allegation places a potentially onerous evidentiary burden on the Plaintiffs, it also leads us to conclude that, on the present record and at this stage of the case, PNC’s arguments fail to show that the District Court abused its discretion.

Second, PNC asserts that “there are several different types of [fees] that Plaintiffs are complaining about, and not all putative class members paid every such fee.” (Opening Br. at 48.) PNC contends that, as a result, the fact-finder will be required to determine what fees were assessed to each individual class member and whether Equity Plus performed services in exchange for each fee, and that such individual determinations would predominate in the litigation. That argument is also unpersuasive because, again, Equity Plus—the recipient of the settlement fees at issue in this case—allegedly performed no mortgage broker services in exchange for the fees and was contractually precluded from providing any services.

PNC’s third and fourth arguments can be addressed simultaneously. The third argument is that any claims premised on alleged violations of the affiliated business arrangement (“ABA”) disclosure requirements of RESPA would require loan-by-loan analysis of the ABA disclosures.24 The fourth argument is that any claims premised on CBNV’s alleged practice of charging “discount fees” without providing a discount interest rate in exchange would require an examination of each individual loan to see whether the borrower was charged a discount fee, and if so, whether the borrower obtained a discount or some other benefit as consideration for the fee. We need not address the merits of either of those arguments, however, because the alleged violations of the ABA disclosure requirements and the alleged discount fee practice are not essential to the Plaintiffs’ RESPA claims. The elements of the Plaintiffs’ RESPA claims that are “essential”—namely violations of the anti-kickback and unearned fee provisions of RESPA—can potentially be proven with common evidence. Hayes, 725 F.3d at 359 (“[T]he predominance requirement focuses on whether essential elements of the class’s claims can be proven at trial with common, as opposed to individualized, evidence.”).

_______________________

Residential Credit Solutions to Pay $1.5 Million for Servicing Wrongs

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) took action against Residential Credit Solutions, Inc. for blocking consumers’ attempts to save their homes from foreclosure. The mortgage servicer failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they weren’t, sent consumers escrow statements falsely claiming they were due a refund, and forced consumers to waive their rights in order to get a repayment plan. Residential Credit Solutions has agreed to pay $1.5 million in restitution to victims and a $100,000 civil money penalty for its illegal actions.

“By failing to honor loan modifications already in place, Residential Credit Solutions put consumers through more headaches but in some cases cost consumers their homes,” said CFPB Director Richard Cordray. “Residential Credit Solutions must now compensate its victims $1.5 million as a result of our action.”

Residential Credit Solutions, headquartered in Fort Worth, Texas, is a national mortgage servicing company with about $95 million in total assets. Since 2009, approximately 75,000 borrowers have had their loans transferred to Residential Credit Solutions. The company specializes in servicing delinquent loans and “credit-sensitive” residential mortgage loans, where the borrower is at high risk for default. As a servicer, it is responsible for, among other things, creating and sending monthly statements to borrowers, and collecting and processing payments. For troubled borrowers, it administers short sale and foreclosure relief programs provided by the owner of the loan. These “loss mitigation” programs provide alternatives to foreclosure.

According to today’s order, Residential Credit Solutions engaged in illegal practices when servicing loans that it acquired from other servicers. On a number of occasions, the company failed to honor trial loan modifications that consumers had entered into with their prior servicers. Instead, it insisted that the consumer re-prove that they qualified. This effectively set consumers back as though they had not received a trial modification. It also prolonged many people’s loss mitigation plans. The company put consumers in loan modification trial period purgatory and confused consumers about the status of their modifications, making it difficult for them to take appropriate action. In many cases, the company delayed or deprived borrowers of the opportunity to save or sell their homes.

Residential Credit Solutions’ failures as a mortgage servicer hurt homeowners. In many cases, the company deprived borrowers of the ability to make an informed choice about how to save or sell their home, caused borrowers to drop out from the loss mitigation process entirely, and drove borrowers into foreclosure. The company violated the Consumer Financial Protection Act. Specifically, since January 2009, the company has:

• Failed to honor in-process modifications: Some of the borrowers who had their mortgage loans transferred to Residential Credit Solutions were already in trial modifications where they were making reduced payments. Residential Credit Solutions’ practice from at least 2009 to 2013 was to not honor those agreements. Instead, the company insisted that consumers re-qualify for the modifications. The company treated these consumers as if they were still in default, subjecting them to collection calls, late fees, and default and delinquency notices. Many consumers had their loans referred to foreclosure, and some eventually lost their homes.

• Provided incorrect information: For the in-process modifications that Residential Credit Solutions failed to recognize, the company gave incorrect information to certain consumers about their unpaid balances, payment due dates, interest rates, monthly payment amounts, and delinquency statuses.

• Misrepresented to consumers that they had extra money in escrow and were due a refund: Servicers are required, with certain exceptions, to provide annual escrow account statements to consumers. These statements include the amount of any surplus funds, which must be refunded to a consumer whose loan payments are current. Many of the escrow statements that Residential Credit Solutions sent to delinquent consumers incorrectly stated that they had an escrow surplus of between $80 and $10,000.

• Forced consumers to waive certain rights to get a payment plan: Sometimes, the company offered a payment plan to consumers who fell behind in their payments. It allowed the consumer to make additional payments over a defined period of time; these were often a consumer’s last opportunity to avoid default or foreclosure. But the company illegally required consumers to surrender certain legal rights in future foreclosures and bankruptcy protections as a condition of receiving the payment plan.

This enforcement action covers Residential Credit Solutions’ illegal practices prior to the January 2014 effective date of the CFPB’s new mortgage servicing rules.

Enforcement Action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Today’s order requires Residential Credit Solutions to, among other things:

• Pay $1.5 million in redress to victims: The company must pay $1.5 million to the hundreds of consumers whose in-process loan modifications were not honored. Borrowers who receive payments will not be prevented from taking individual action on their claims as a result of this settlement.

• Engage in efforts to help affected borrowers preserve their home: For certain borrowers affected by its unlawful practices who were not foreclosed on, Residential Credit Solutions must convert in-process loan modifications into permanent modifications. And it must engage in outreach, including telephone and mail campaigns and translation services to contact borrowers and offer them loss mitigation options. It must stop foreclosure processes for certain borrowers, if those are happening.

• Honor prior loss mitigation agreements: Residential Credit Solutions must honor loss mitigation agreements entered by prior servicers, including in-process modifications, continue processing pending loss mitigation requests received in transfers, and review and evaluate pending loss mitigation applications.

• End all mortgage servicing violations: In addition to being subject to the loss mitigation provisions of the CFPB’s new mortgage servicing rules, Residential Credit Solutions is prohibited from making misrepresentations to consumers regarding loss mitigation, such as false statements about how much is owed.

• Adhere to rigorous servicing transfer requirements: The company must create a detailed data integrity program that tests, identifies, and corrects errors in loans transferred to it to ensure that it has accurate information about consumers’ loans. Residential Credit Solutions may not transfer loans in loss mitigation, in or out, unless all account-level documents and data relating to loss mitigation are provided to the new servicer by the date of transfer.

• Make loss mitigation applications readily available: Residential Credit Solutions must make its loss mitigation application available to consumers at no cost by making it readily accessible on its website and providing it upon request to consumers. The application must identify all required documentation and information necessary to complete a loss mitigation application. It must also adequately train its personnel in loss mitigation procedures.

• Pay $100,000 civil penalty: The company will make a $100,000 penalty payment to the CFPB’s Civil Penalty Fund.

A copy of the consent order is available at:
http://files.consumerfinance.gov/f/201507_cfpb_consent-order_residential-credit-solutions.pdf

Decided on July 29, 2015 SUPREME COURT OF THE STATE OF NEW YORK Appellate Division, Second Judicial Department
PETER B. SKELOS, J.P.
L. PRISCILLA HALL
SANDRA L. SGROI
BETSY BARROS, JJ.

2013-09197
(Index No. 22274/09)

Hogan Lovells US, LLP, New York, N.Y. (David Dunn, Chava Brandriss, and Heather R. Gushue of counsel), for appellant.

Law Office of Alan J. Sasson, P.C., Brooklyn, N.Y. (Yitzchak Zelman of counsel), for respondents.

DECISION & ORDER

In an action to foreclose a mortgage, the plaintiff appeals from an order of the Supreme Court, Kings County (Saitta, J.), dated June 11, 2013, which granted the motion of the defendants Svetlana Roumiantseva and Iouri Roumiantsev to dismiss the complaint for lack of standing.

ORDERED that the order is affirmed, with costs.

Where the issue of standing is raised by a defendant, a plaintiff must prove its standing in order to be entitled to relief (see HSBC Bank USA, N.A. v Calderon, 115 AD3d 708, 709; Bank of N.Y. v Silverberg, 86 AD3d 274, 279; U.S. Bank, N.A. v Collymore, 68 AD3d 752, 753). A plaintiff establishes its standing in a mortgage foreclosure action by demonstrating that it is either the holder or assignee of the underlying note at the time the action is commenced (see Aurora Loan Servs., LLC v Taylor, ____ NY3d ____, ____, 2015 NY Slip Op 04872, * 3-4 [2015]; see Kondaur Capital Corp. v McCary, 115 AD3d 649, 650; Bank of N.Y. v Silverberg, 86 AD3d at 279). “The plaintiff may demonstrate that it is the holder or assignee of the underlying note by showing either a written assignment of the underlying note or the physical delivery of the note” (U.S. Bank Na. v Guy, 125 AD3d 845, 846-847; Kondaur Capital Corp. v McCary, 115 AD3d at 650). “As a general matter, once a promissory note is tendered to and accepted by an assignee, the mortgage passes as an incident to the note. However, the transfer of the mortgage without the debt is a nullity, and no interest is acquired by it because a mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation” (Deutsche Bank Natl. Trust Co. v Spanos, 102 AD3d 909, 911; see Citibank, N.A. v Herman, 125 AD3d 587, 588; see Aurora Loan Servs., LLC v Taylor, ____ NY3d ____, ____, 2015 NY Slip Op 04872 at * 4; Bank of N.Y. v Silverberg, 86 AD3d at 280).

On a defendant’s motion to dismiss the complaint based upon a plaintiff’s alleged lack of standing, the burden is on the defendant to establish, prima facie, the plaintiff’s lack of standing as a matter of law (see U.S. Bank N.A. v Guy, 125 AD3d at 847; HSBC Mtge. Corp. [USA] v MacPherson, 89 AD3d 1061, 1062). “To defeat the motion, a plaintiff must submit evidence which raises a question of fact as to its standing” (U.S. Bank N.A. v Guy, 125 AD3d at 847; US Bank N.A. v Faruque, 120 AD3d 575, 578; Deutsche Bank Natl. Trust Co. v Haller, 100 AD3d 680, 683).

Here, in support of their motion to dismiss the complaint, the defendants Svetlana Roumiantseva and Iouri Roumiantsev (hereinafter together the defendants) submitted the plaintiff’s response to their demand for documents supporting the plaintiff’s purported basis for standing set forth in the complaint. The plaintiff allegedly obtained its right to foreclose by way of an assignment of the mortgage and note from Mortgage Electronic Registration Systems, Inc. (hereinafter MERS), acting as nominee for the original lender. However, the documents showed that MERS was never the holder of the note and, therefore, was without authority to assign the note (see Citibank, N.A. v Herman, 125 AD3d 587, 589). As a result, the defendants demonstrated, prima facie, that the plaintiff’s purported basis for standing was not valid.

In opposition, the plaintiff submitted, among other things, a copy of an endorsement in blank dated December 7, 2006. Thereafter, the Supreme Court directed the plaintiff to produce the original note and the endorsement (see CPLR 3212[c]). The endorsement was attached to the original note by only a paperclip. UCC 3-202 provides that “an indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof.” Here, the purported endorsement, attached by a paperclip, was not so firmly affixed to the note as to become a part thereof (see UCC 3-202[2], Comment 3; Slutsky v Blooming Grove Inn, 147 AD2d 208, 212; cf. U.S. Bank N.A. v Guy, 125 AD3d at 847; Deutsche Bank Trust Co. Ams. v Codio, 94 AD3d 1040, 1041). As such, the purported endorsement did not constitute a valid transfer of the underlying note to the plaintiff.

The affidavit of the plaintiff’s servicing agent, which was improperly submitted for the first time in sur-reply, should not have been considered by the Supreme Court (see CPLR 2214; McMullin v Walker, 68 AD3d 943, 944; Flores v Stankiewicz, 35 AD3d 804).

Accordingly, the Supreme Court properly granted the defendants’ motion to dismiss the complaint for lack of standing.

SKELOS, J.P., HALL, SGROI and BARROS, JJ., concur.

ENTER:

Aprilanne Agostino

Clerk of the Court

Via JDSUPRA –

In Stern v. Bank of Am. Corp., No. 2:15-CV-153-FTM-29CM, 2015 WL 3991058 (M.D. Fla. June 30, 2015) United States District Court Judge John Steele became the third consecutive United States District Court Judge in Florida to reject the Third DCA’s ruling in Beauvais, describing Beavais as “contrary to the overwhelming weight of authority  which holds that even where a mortgagee initiates a foreclosure action and invokes its right of acceleration, if the mortgagee’s foreclosure action is unsuccessful for whatever reason, the mortgagee still has the right to file later foreclosure actions . . . so long as they are based on separate defaults.” (internal quotation marks omitted).

Via CaseText–

• UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION
• ·
• Case No: 2:15-cv-153-FtM-29CM (M.D. Fla. Jun 30, 2015)

STERN V. BANK OF AM. CORP.

.

“We also report that 70% of homeowners who applied for HAMP got turned down, with JP Morgan Chase, Bank of America, and Citi, each turning down 80% or more and Ocwen denying more than 70% of the homeowners.”

SIGTARP for the Troubled Asset Relief Program Advancing Economic Stability Through Transparency, Coordinated Oversight, and Robust Enforcement
Quarterly Report to Congress
July 29, 2015

ONLY 30% OF HOMEOWNERS WHO APPLIED FOR
HAMP GOT IN, 70% WERE TURNED DOWN BY
THEIR SERVICER

At the start of TARP, our nation was in a foreclosure crisis. More than two million
homeowners had foreclosures commenced against them in 2008.1 TARP is not
supposed to be just a bailout of the largest financial firms, but was always supposed
to include a bailout of homeowners at risk of foreclosure. Congress rejected
Treasury’s initial proposal that TARP just be a bailout of some of the largest
financial firms. Instead, in recognition of the foreclosure crisis, Congress made
foreclosure mitigation an express part of the law authorizing TARP. Among other
things, preserving homeownership is an explicit purpose of that law, and “the need
to help families keep their homes” is one of the considerations that the Secretary of
Treasury is required by law to consider in exercising his authorities under TARP.2
As SIGTARP reported in its March 25, 2010, audit report,i a working group of
officials from Treasury, the Department of Housing and Urban Development, and
the White House developed the outlines of a mortgage modification program that
was intended to “have a scale that can have a real impact on turning the housing
problems around in this country.”

In February 2009, the Administration announced its signature TARP housing
program known as the Home Affordable Modification Program (“HAMP”) to
“enable as many as 3 to 4 million at-risk homeowners to modify the terms of their
mortgage to avoid foreclosure.”3

Treasury designed HAMP to encourage mortgage servicers, on a voluntary
basis, to modify eligible mortgages so that the monthly payments of homeowners
who are in default or at imminent risk of default will be reduced to affordable,
sustainable levels. To encourage participation, Treasury pays incentives using
TARP funds. HAMP was initially a $75 billion program: $50 billion to be funded
by TARP funds for Treasury’s part of HAMP (to modify mortgages not owned by
the Government–sponsored enterprises Fannie Mae and Freddie Mac), plus $25
billion for GSE-owned mortgages.4 Although this allocation was reduced to $29.8,
approximately $18.5 billion in TARP funds remains unspent and available for
HAMP as of June 30, 2015.5

Although participation in HAMP is voluntary, servicers who agree to participate
are required to offer HAMP modifications to all eligible homeowners. The actual
execution of HAMP lies in large part with participating mortgage servicers, whose
employees are responsible for reviewing homeowner HAMP applications and
deciding whether a homeowner gets into HAMP or not. A servicer must follow the
HAMP rules in making its decision, and Treasury has an oversight responsibility to
ensure that servicers follow Treasury’s HAMP rules.ii

[…]

Philly-

Financial decisions can have consequences that outlive the people who make them.

In the case of three women, two in South Philadelphia and one in Delaware County, the decision to take out a reverse mortgage – a special kind of loan that allows borrowers 62 and older to convert a portion of their home’s equity into cash – has made their lives a nightmare.

All three were younger than their spouses and not yet 62, which meant they did not qualify for these mortgages and could not be co-borrowers. Their names were removed from the deeds so their husbands could qualify.

Read more at http://www.philly.com/philly/business/real_estate/20150728_Reverse-mortgage_nightmare_can_start_after_borrower_dies.html#H7fubeYSvvqgkz0C.99

 image: CNN Money

The State of the Nation’s Housing

Source: http://www.jchs.harvard.edu/research/state_nations_housing

NATACHA PEUGUERO and ANGELO PEUGUERO, Appellants,
v.
BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP, FKA COUNTRYWIDE HOME LOANS SERVICING, LP, Appellee.

J. Randolph Liebler, Tricia J. Duthiers, Adam M. Topel, and Kristen Tajak of Liebler Gonzalez & Portuondo, Miami, and Lisa J. Geiger and Matt Mitchell of Burr & Forman, LLP, Orlando, for appellee.

FORST, J.

Appellants Natacha and Angelo Peuguero appeal the entry of a final judgment of foreclosure in favor of Appellee Bank of America (“the Bank”). While we disagree with Appellants’ argument that the foreclosing bank failed to prove standing, we agree that the Bank failed to provide sufficient evidence to support the judgment amount. Therefore, we affirm the trial court’s entry of judgment, but we reverse and remand for a determination of the correct amounts owed.

Background

Appellants executed a note and mortgage in favor of Diversified Mortgage in August 2007. By 2009, Appellants were no longer able to make payments on the loan. Countrywide Bank filed a complaint to foreclose on the loan in August 2009, alleging that it was the owner and holder of the note. The complaint included a count to reestablish a lost note. Attached to the complaint was an unendorsed copy of the note.

In April 2011, Countrywide moved to amend the name of the plaintiff in the action to the Bank, as Countrywide and the Bank had merged. An amended complaint was filed by the Bank in December 2011. A copy of the note, now including an allonge, was attached to the Amended Complaint. The allonge contained endorsements from Diversified Mortgage (the original lender) to Countrywide FSB, from Countrywide FSB to Countrywide Home Loans, then back to Countrywide FSB, and finally a blank endorsement. None of the endorsements were dated.

At trial, the Bank called one of its employees to testify. This witness testified that she was familiar with the record-keeping practices of both the Bank and Countrywide and that the payment history for this loan was kept in the ordinary course of business. On the strength of this testimony, the trial court admitted the payment history into evidence.

The witness was also asked to confirm the amount owed by Appellants to the Bank. Relying on a proposed judgment drafted by the Bank, but not entered into evidence, the witness testified to both the principal and interest owed on the loan.

The trial court entered a final judgment of foreclosure in favor of the Bank in the amount of $697,807.36. Appellants now appeal the judgment against them, arguing the Bank’s witness was not qualified to testify, that the original plaintiff in this action, Countrywide, did not have standing when it filed the complaint, and that the trial court erred by allowing the witness to testify from the proposed judgment. While we hold that the Bank adequately proved Countrywide had standing to file the initial complaint, we agree with Appellants’ challenge to the calculation of the interest due as part of the judgment award.

Admissibility of Payment History

Appellants initially argue that testimony by the Bank’s witness concerning Appellants’ loan payment history should have been deemed inadmissible hearsay and not as an exception to the hearsay rule. The business records exception, found in section 90.803(6), Florida Statutes (2013), allows a party to introduce evidence that would normally be inadmissible hearsay if:

(1) the record was made at or near the time of the event; (2) was made by or from information transmitted by a person with knowledge; (3) was kept in the ordinary course of a regularly conducted business activity; and (4) that it was a regular practice of that business to make such a record.

Yisrael v. State, 993 So. 2d 952, 956 (Fla. 2008). Here, the witness provided enough testimony to meet these requirements.

We have previously addressed a similar situation in Cayea v. CitiMortgage, Inc., 138 So. 3d 1214 (Fla. 4th DCA 2014). There, a foreclosing bank introduced a printout of a loan payment history as a business record. Id. at 1217. The bank called a witness, who testified that other bank employees routinely input payments into the bank’s computer system and that the record presented at trial was simply a printout of the bank’s records that was printed specifically for trial. Id. at 1216. We affirmed the trial court’s admission of this document, holding that the records were admissible, even if the printouts were not kept in the ordinary course of business, “so long as a qualified witness testifies as to the manner of preparation, reliability, and trustworthiness.” Id. at 1217. Relying on Weisenberg v. Deutsche Bank National Trust Co., 89 So. 3d 1111, 1113 (Fla. 4th DCA 2012), we held that the witness had sufficient knowledge where he “demonstrated his familiarity with [the bank]’s record-keeping system and the process for uploading payment information.” Cayea, 38 So. 3d at 1218.

Likewise, the witness in this case testified that even though she was not responsible for maintaining or updating the records, she was familiar with the Bank’s procedures for inputting payment information into the proper computer systems. Although she was unable to give the precise name for each group in the Bank’s structural hierarchy that was responsible for entering various events into the computerized records, she knew that events/transactions were processed at the time of their occurrence and placed into the Bank’s systems, as per the standard business practice of the Bank. Furthermore, the trial court did not find any indication that the witness’s testimony was unreliable. Therefore, based on our precedent in Cayea, we find that the witness was qualified to lay the foundation for the admission of the business records.

“The law is . . . clear there is no per se rule precluding the admission of computerized business records acquired from a prior loan servicer.” Glarum v. LaSalle Bank Nat’l Ass’n, 83 So. 3d 780, 782 n.2 (Fla. 4th DCA 2011). The records from a prior servicer must, of course, have some indicia of accuracy, either through personal knowledge of a witness, as discussed in Holt v. Calchas, LLC, 155 So. 3d 499, 504 (Fla. 4th DCA 2015), or a showing of some contractual relationship between the current and prior servicers. Bank of N.Y. v. Calloway, 157 So. 3d 1064, 1072 (Fla. 4th DCA 2015). For example, in WAMCO XXVIII, Ltd. v. Integrated Electronic Environments, Inc., 903 So. 2d 230, 232-33 (Fla. 2d DCA 2005), the court held that a document detailing amounts owed was admissible as a business record even where the witness’s testimony was based on information from a previous holder of the note. The witness testified that he knew how the prior holder’s accounting systems worked and that “the procedures were `bank-acceptable accounting systems.'” Id. at 233. Further, the witness testified that the current holder verified the records for accuracy when it obtained them. Id. In the instant case, the witness testified that she was familiar with the record-keeping practices of the prior holder of the note, Countrywide. She testified that, based on her training, Countrywide and the Bank had identical procedures and record-keeping systems in place.

A trial court’s ruling on the admissibility of evidence under the business records hearsay exception is reviewed for an abuse of discretion. See Cayea, 138 So. 3d at 1216; LEA Indus., Inc. v. Raelyn Int’l Inc., 363 So. 2d 49, 52 (Fla. 3d DCA 1978) (“[I]t lies within the trial court’s discretion to determine whether admission of . . . business records is justified.”). In the instant case, based on the weight afforded by the trial court to the testimony of the Bank’s witness, the admission of the business records of the prior note holder to establish the loan payment history was not an abuse of discretion.

Standing

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose. Standing may be established by either an assignment or an equitable transfer of the mortgage prior to the filing of the complaint.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012) (internal citations omitted). “[A] party’s standing is determined at the time the lawsuit was filed.” Id.

In this case, the original plaintiff, Countrywide, had standing at the time it filed suit. At trial, the Bank offered the note, mortgage, allonge, and notice-of-default letter into evidence. Although the witness was unable to specify exactly when Countrywide first held the note, the loan payment history reveals that Countrywide began receiving payments from Appellants shortly after the closing date for the loan. Additionally, the loan payment history indicates that Countrywide paid taxes and other fees associated with the mortgaged property in the time prior to the filing of the original complaint. This is a noteworthy factor in determining standing, as financial institutions are not known to incur expenses on behalf of properties for which they do not hold an interest.

The undated allonge, in combination with the testimony of the Bank’s witness, indicates that Countrywide, in various corporate forms, was a holder of the note prior to the endorsement in blank. Where holder status is based on an endorsement in blank, the plaintiff must prove that the endorsement was effectuated before the lawsuit was filed. Feltus v. U.S. Bank Nat’l Ass’n, 80 So. 3d 375, 377 n.2 (Fla. 2d DCA 2012). A plaintiff need not prove the exact date of a necessary endorsement to show standing at the inception of the foreclosure action—testimony that the endorsement was effectuated before the filing of the complaint will suffice. See McLean, 79 So. 3d at 173 (concluding an affidavit of ownership is sufficient to prove standing).

Here, the witness responded in the affirmative to a cross-examination inquiry as to whether the endorsements on the allonge were “definitely put on before the filing of the complaint.” She testified that Countrywide owned and held the note when the complaint was filed and that its policy and procedure is to have notes endorsed before foreclosure complaints are filed. “Evidence of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is admissible to prove that the conduct of the organization on a particular occasion was in conformity with the routine practice.” § 90.406, Fla. Stat. (2013); People’s Trust Ins. Co. v. Roddy, 134 So. 3d 1071, 1073 (Fla. 4th DCA 2013); Shands Teaching Hosp. & Clinics, Inc. v. Dunn, 977 So. 2d 594, 599 (Fla. 1st DCA 2007) (“The existence of a routine practice creates an inference that an agent or employee of the organization acted according to the practice. In the absence of contrary evidence, jurors may properly assume that an employee has adhered to established procedures.” (citation omitted)).

The Bank, successor in interest to Countrywide, furnished sufficient admissible testimony and evidence from which the trier of fact could conclude that all endorsements on the allonge were made before the filing of the complaint and that Countrywide was a holder with standing to foreclose at the time of filing the original complaint.

Calculation of Interest Owed

Despite our agreement with the trial court that the Bank adequately proved standing, we are compelled to partially reverse the trial court’s ruling on the issue of damages. At trial, the only evidence of the amount of interest owed by Appellants came from the witness, who merely testified that the amount written on a proposed final judgment was correct. However, this proposed judgment was never admitted into evidence. While the loan payment history, which was submitted into evidence, reflects the amount of principal owed on the loan, there are no entries that indicate the accrual of the almost $200,000 in interest the trial court granted to the Bank.

“A document that was identified but never admitted into evidence as an exhibit is not competent evidence to support a judgment.” Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So. 3d 280, 281-82 (Fla. 2d DCA 2014). In Wolkoff, the Second District reversed a judgment of foreclosure where the plaintiff’s witness “merely confirmed that the totals given to him on a proposed final judgment `seemed accurate'” and never actually stated the total amount owed. Id. at 281. Similarly, in Sas v. Federal National Mortgage Ass’n, 112 So. 3d 778, 779 (Fla. 2d DCA 2013), the plaintiff presented witness testimony of the specific amount owed, but failed to produce the business records upon which the witness relied.

While the court in Wolkoff remanded that case to the trial court with instructions to enter an involuntary dismissal, 153 So. 3d at 283, the Sas court remanded the case for further proceedings to establish the amounts owed. 112 So. 3d at 780. We addressed the Wolkoff/Sas dichotomy in Beauchamp v. Bank of New York, 150 So. 3d 827 (Fla. 4th DCA 2014). In choosing remand rather than reversal, we noted

[t]he facts of the instant case are more similar to Sas than Wolkoff because here, like the plaintiff in Sas, the Bank established the amount of indebtedness through witness testimony, even though that testimony concededly was inadmissible hearsay. This is unlike Wolkoff, where the plaintiff failed to produce any evidence, admissible or not, supporting the amount of indebtedness.

Id. at 829 n.2.

The instant case, like Beauchamp and Sas, featured a witness who testified to an exact amount of damages, but relied on evidence not in the record. Furthermore, unlike Wolkoff, the loan payment history here was submitted into evidence. Therefore, the proper remedy in this case is to remand for further proceedings to properly establish the damages owed. See also Mazine v. M & I Bank, 67 So. 3d 1129, 1131 (Fla. 1st DCA 2011) (remanding for new damages determination where documentary evidence necessary to establish damage amount was erroneously admitted without foundation).

Conclusion

The trial court properly admitted the loan payment history under the business records exception. Likewise, the Bank was able to show the original plaintiff had standing at the time it filed suit. However, the trial court erred by basing the amount of the final judgment on a document not in evidence. Therefore, we reverse and remand for determination of the amounts owed.

Affirmed in part, reversed in part.

WARNER and GROSS, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

Bloomberg-

Utah’s attorney general revived a potential billion-dollar battle with Bank of America Corp. over foreclosure practices after two of his predecessors were charged with corruption for abandoning the fight.

The lawsuit is deja vu for U.S. District Judge Bruce Jenkins, who last week allowed Utah Attorney General Sean Reyes to join a homeowner’s case accusing Bank of America unit ReconTrust Co. of illegally foreclosing on Utahans’ homes.

Jenkins expressed puzzlement when outgoing Attorney General Mark Shurtleff bowed out of a similar case two years ago — just months after the judge ruled the suit could head to trial.

[BLOOMBERG]

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT

JANOS FARKAS,
Appellant,

v.

U.S. BANK, NATIONAL ASSOCIATION, as Trustee for WAMU Mortgage Pass Through Certificate for WMALT Series 2007-OA4,
Appellee.

No. 4D13-3006
[May 27, 2015]

Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Diana Lewis, Judge; L.T. Case No. 2009CA035912(AW).

Janos Farkas, Austin, pro se.
Joseph D. Wargo and Susan Capote of Wargo & French, LLP, Miami, for appellee.

MAY, J.

A borrower appeals a final judgment of foreclosure, raising four issues. We find merit in the standing argument and reverse.

The borrower executed a promissory note and mortgage in favor of ComUnity Lending, Incorporated, a California Corporation. The note attached to the complaint did not contain a blank endorsement, but the note introduced at trial did.

The loan was securitized pursuant to a pooling and servicing agreement and assigned to the loan trust Washington Mutual Mortgage Pass-Through Certificates for WMALT Series 2007-OA4 (“Trust”). Washington Mutual Bank (“WaMu”) then became the servicer of the loan. The Federal Deposit Insurance Corporation acquired some of WaMu’s assets and liabilities and sold them to JPMorgan Chase Bank, N.A. (“Chase”). Chase then became the servicer.
The borrower defaulted. WaMu sent the borrower a “Notice of Collection Activity” letter (“acceleration letter”), advising of thirty days to cure the default or the loan would be accelerated. The borrower failed to cure the default.

On October 19, 2009, U.S. Bank (“bank”) filed a foreclosure action and attached the mortgage, note, and a lis pendens. At the non-jury trial, the borrower and bank stipulated to the note and mortgage attached to the complaint and the borrower’s receipt of the acceleration letter.

The bank called a research officer from Chase, who testified over the borrower’s objection,1 that the Trust obtained the loan on May 1, 2007. WaMu serviced the loan on behalf of the Trust until Chase acquired servicing rights in September 2008. The bank also presented a document custodian, who testified that the bank’s law firm received the original note, but lost it. A copy of the note was introduced as a true and correct copy of the original. On cross-examination, the borrower introduced an assignment of mortgage, dated October 20, 2009, the day after the bank filed its complaint.

The borrower argues the bank lacks standing because it was not the owner or holder of the note when the suit was filed. The bank responds that the testimony sufficiently established standing. We agree with the borrower and reverse.

“‘Whether a party is the proper party with standing to bring an action is a question of law to be reviewed de novo.’” LaFrance v. U.S. Bank Nat’l Ass’n, 141 So. 3d 754, 755 (Fla. 4th DCA 2014) (quoting Elston/Leetsdale, LLC v. CWCapital Asset Mgmt. LLC, 87 So. 3d 14, 16 (Fla. 4th DCA 2012)).
“[T]he party seeking foreclosure must demonstrate that it has standing to foreclose.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012). “‘A party must have standing to file suit at its inception and may not remedy this defect by subsequently obtaining standing.’” Matthews v. Fed. Nat’l Mortg. Ass’n, 160 So. 3d 131, 133 (Fla. 4th DCA 2015) (quoting Venture Holdings & Acquisitions Grp., LLC v. A.I.M. Funding Grp., LLC, 75 So. 3d 773, 776 (Fla. 4th DCA 2011)).

In a similar case, the Second District reversed a summary judgment of foreclosure because the bank did not have standing. Focht v. Wells Fargo Bank, N.A., 124 So. 3d 308, 309 (Fla. 2d DCA 2013). There, the loan was transferred from the original lender, BNC Mortgage, Inc., into a trust with
1The borrower objected to the witness because she was not identified by name on the witness list, although the witness list included a bank representative to testify concerning business records.

Wells Fargo as trustee. Id. Wells Fargo filed a foreclosure complaint. Id.
The original note had a blank endorsement on the back of the note, but was not in the record, so it was unknown whether the endorsement was dated. Id. at 311. The trial court entered summary judgment for the bank, and the borrower appealed. Id.

The Second District reversed. Id. at 309. Nothing in the record established that Wells Fargo had possession of the note. Id. at 311. And, the bank could not prove standing at the time it filed the complaint. Id.

Here, the note filed with the complaint did not contain a blank endorsement. The blank endorsement on the copy filed at trial was undated, and no one was able to testify to when the endorsement occurred. The bank’s witnesses established only that the bank had standing at the time of trial, but not at the time it filed its complaint. In addition, the borrower introduced the assignment of mortgage, dated the day after the complaint was filed. Like Focht, the bank failed to prove standing.

For this reason, we reverse.
Reversed.

CIKLIN and LEVINE, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing

Robert Reich-

Hillary Clinton won’t propose reinstating a bank break-up law known as the Glass-Steagall Act – at least according to Alan Blinder, an economist who has been advising Clinton’s campaign. “You’re not going to see Glass-Steagall,” Blinder said after her economic speech Monday in which she failed to mention it. Blinder said he had spoken to Clinton directly about Glass-Steagall.

This is a big mistake.

It’s a mistake politically because people who believe Hillary Clinton is still too close to Wall Street will not be reassured by her position on Glass-Steagall. Many will recall that her husband led the way to repealing Glass Steagall in 1999 at the request of the big Wall Street banks.

[ROBERT REICH]

Special Thanks to Heroes Dave Krieger & DK CONSULTANTS LLC for this report!

Clouded Titles-

SAN ANTONIO, TEXAS — As of this date and time, approval has been given by the attorneys representing the Osceola County, Florida Clerk of the Circuit Court, Hon. Armando Ramirez, to release the Forensic Examination conducted of his real property and court records in Kissimmee, Florida (this is a 8.3MB pdf file, make sure your hard drive will allow you to download it). For a further explanation of the information contained in the report, click on the link below:

OSCEOLA COUNTY REAL PROPERTY RECORDS FORENSIC EXAMINATION

The local Orlando and Osceola County media appear to be divided as to exactly where their support lies for the information contained in the Osceola County, Florida Forensic Examination of the official property records and related court records involving numerous foreclosure actions.

As many of you know, I have been assisting (as a paralegal and consultant) distressed property owners’ attorneys in foreclosure defense issues through the contribution of chain of title assessments. Anyone who has read Clouded Titles knows what my position is in all of this foreclosure mess. I also teach chain of title assessment and quiet title workshops around the country to homeowners and their attorneys who wish to acquire and evaluate my research for their own purposes. I have been doing this since I launched the first version of my book in December of 2010. This report, should you dare to explore it, will certainly enlighten you and you will walk away with many questions. Your questions will probably be extremely valid, more valid than the questions that were posited to me by Sheriff’s Economic Crimes Unit’s detectives in Osceola County when I met with them, along with two of the examination team examiners.

 [CLOUDED TITLES]

SHERMAN BALCH and ANNMARIE BALCH, Appellants,

v.

LASALLE BANK N.A., as Trustee for Washington Mutual Mortgage Pass-through Certificates WMART Series 2006-5 Trust, Appellee.

Jeffrey T. Kuntz and Thomas H. Loffredo of Gray Robinson, P.A., Fort Lauderdale, and Maureen A. Vitucci and John M. Brennan, Jr., of GrayRobinson, P.A., Tallahassee, for appellee.

STEVENSON, J.

Sherman and AnnMarie Balch (collectively, “Homeowners”) appeal a final judgment of foreclosure entered in favor of LaSalle Bank N.A. (“LaSalle Bank”). We find the trial court erred in finding LaSalle Bank had standing at the time it initiated the foreclosure complaint, and accordingly reverse and remand for further proceedings.

Facts

LaSalle Bank filed its complaint in March of 2008. It sought to foreclose on the mortgage and to re-establish a lost note. LaSalle Bank attached to this complaint a copy of the mortgage and a copy of the note. The note listed American Home Mortgage as the lender and contained no indorsements. Close to three months later, LaSalle Bank filed the original note. The original note contained an undated special indorsement from American Home Mortgage to Washington Mutual Bank.

LaSalle Bank called one witness at trial. The witness worked for JP Morgan Chase Bank, the servicer for Homeowners’ loan. He explained that Homeowners’ loan was part of a pooling and servicing agreement (“PSA”) that came into existence in June of 2006. The PSA listed WaMu Acceptance Corporation as the depositor, Washington Mutual Bank as the servicer, and LaSalle Bank National Association as the trustee for the trust. Relying on the cut-off date for the trust, the witness testified that Homeowners’ loan was transferred into the trust on or around June 29, 2006.

As it pertains to the note, the witness never specified when the special indorsement was placed onto the original note. LaSalle Bank also introduced into evidence a copy of an assignment, dated April 3, 2008, which assigned MERS’ interest in the mortgage and note to LaSalle Bank. MERS was not a party to the PSA.

Homeowners moved for an involuntary dismissal, arguing LaSalle failed to prove standing. The trial court denied the motion and entered final judgment of foreclosure in favor of LaSalle Bank.

Analysis

“We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.” Lloyd v. Bank of New York Mellon, 160 So. 3d 513, 514 (Fla. 4th DCA 2015). Here, LaSalle Bank did not provide sufficient evidence that it had standing at the time it filed the foreclosure complaint.

First, there was no evidence indicating when the special indorsement in favor of Washington Mutual Bank was placed onto the note. See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 174 (Fla. 4th DCA 2012) (“Where the plaintiff contends that its standing to foreclose derives from an endorsement of the note, the plaintiff must show that the endorsement occurred prior to the inception of the lawsuit.”). Secondly, the assignment is insufficient to establish standing, as the assignment was executed after the complaint was filed. See Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1195-96 (Fla. 4th DCA 2012) (reversing entry of final summary judgment because the bank failed to establish it had standing to foreclose when the evidence showed the assignment was dated one day after the complaint was filed). Finally, evidence that the note was transferred into the PSA prior to the foreclosure action is insufficient by itself to confer standing because there was no evidence that the depositor under the PSA had the intent to transfer any interest to the trustee. See Jelic v. LaSalle Bank, Nat’l Ass’n, 160 So. 3d 127, 130 (Fla. 4th DCA 2015) (reversing a final judgment of foreclosure, in part because there was no evidence that the party transferring the note into a PSA had any intent to transfer an interest to the trustee).

Based on the foregoing, we reverse and remand for entry of an order of involuntary dismissal of the action. See Sosa v. U.S. Bank Nat’l Ass’n, 153 So. 3d 950, 952 (Fla. 4th DCA 2014) (reversing and remanding for entry of an order of involuntary dismissal when the bank failed to provide sufficient evidence of its standing).

Reversed and remanded.

GERBER and LEVINE, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

District Court of Appeal of Florida,Third District.

BANK OF AMERICA, N.A., etc., Appellant,

v.

Brian D. DELGADO, et al., Appellee.

No. 3D13–910.

Decided: May 6, 2015

Before SHEPHERD, C.J., and EMAS and SCALES, JJ. Liebler, Gonzalez & Portuondo, and Alan Pierce, J. Randolph Liebler, Tricia J. Duthiers, Jeremy Roth and Mary J. Walter, for appellant. Graham Legal, P.A., and H. Dillon Graham, III, for appellee.

In this foreclosure action, Bank of America (“the Bank”) appeals a final judgment entered in favor of the Appellees, Mr. and Mrs. Delgado (“the Borrowers”), on the basis that the Bank failed to prove the amount due on the note.1 The Bank argues that it was thwarted from proving the amount of indebtedness because the trial court improperly excluded the loan payment history from evidence. For the reasons stated below, we agree with the Bank, reverse the final judgment, and remand for a new trial.

I. Factual Background

On July 25, 2005, the Borrowers executed a mortgage and promissory note in the amount of $247,000. On January 13, 2010, the Bank filed a complaint to foreclose on the mortgage. The complaint alleged that the Borrowers defaulted on June 1, 2009, and made no subsequent loan payments.

The matter proceeded to a nonjury trial on March 7, 2013. The trial court received the original note and mortgage into evidence, without objection. The Borrowers objected, however, when the Bank sought to lay a foundation for admission of the loan payment history as a business record.

The Bank called Mary Davis as a witness; Davis is a mortgage resolution associate with the Bank who began working for the Bank in 2012. Prior to trial, Davis reviewed the mortgage, the note, the loan payment history, and the breach letter the Bank sent to the Borrowers in July 2009.

Davis testified that the Bank began servicing the loan in August 2005, when it received the collateral file. According to Davis, pursuant to the Bank’s policies and procedures, the person with the most knowledge of the subject loan payments recorded the loan payment entries in the system at or near the time the payments occurred. Davis explained that this type of loan payment information is kept and maintained in the Bank’s ordinary course of business. Further, Davis testified that she reviewed the loan payment history for the Borrowers’ loan and was able to confirm the accuracy of the payment entries appearing on the proffered loan payment history.

After laying this foundation, the Bank attempted to introduce the loan payment history into evidence. The Borrowers objected on the basis that Davis was not qualified to testify as to the policies and procedures of the Bank dating back to 2005, because Davis did not begin working for the Bank until 2012. The trial court sustained the Borrowers’ objection, and did not allow the payment history into evidence.

The Bank then called Mr. Delgado to the stand. Mr. Delgado admitted that he last made a mortgage payment to the Bank in June of 2009. When asked whether he owed $228,004.26 on the loan, Mr. Delgado answered, “I’m sure it is in that vicinity, I just don’t know exactly.”

At the close of the Bank’s case, the trial court entered final judgment for the Borrowers. The Bank filed the instant appeal.

II. Analysis

A. Elements of the Bank’s Case

Foreclosure plaintiffs must show: (1) an agreement; (2) a default; (3) an acceleration of debt to maturity; and (4) the amount due. Kelsey v. SunTrust Mortg., Inc., 131 So.3d 825, 826 (Fla. 3d DCA 2014) (citing Ernest v. Carter, 368 So.2d 428, 429 (Fla. 2d DCA 1979)). The trial court determined that the Bank had not established the fourth element required to make its prime facie foreclosure case.2

“It is axiomatic that the party seeking foreclosure must present sufficient evidence to prove the amount owed on the note.” Wolkoff v. Am. Home Mortg. Servicing, Inc., 153 So.3d 280, 281 (Fla. 2d DCA 2014). Generally, “a foreclosure plaintiff proves the amount of indebtedness through the testimony of a competent witness who can authenticate the mortgagee’s business records and confirm that they accurately reflect the amount owed on the mortgage.” Id .

B. Loan Payment History as a Business Record

Under section 90.803(6), Florida Statutes, business records may be admitted if the proponent of the evidence demonstrates the following through a records custodian or other qualified person:

(1) the record was made at or near the time of the event; (2) was made by or from information transmitted by a person with knowledge; (3) was kept in the ordinary course of a regularly conducted business activity; and (4) that it was a regular practice of that business to make such a record.

Weisenberg v. Deutsche Bank Nat’l Trust Co., 89 So.3d 1111, 1112 (Fla. 4th DCA 2012) (quoting Yisrael v. State, 993 So.2d 952, 956 (Fla.2008)). “While it is not necessary to call the individual who prepared the document, the witness through whom a document is being offered must be able to show each of the requirements for establishing a proper foundation.” Mazine v. M & I Bank, 67 So.3d 1129, 1132 (Fla. 1st DCA 2011).

With regard to the requirements for admitting the loan payment history into evidence, Davis testified:

[O]ur policies and procedures are the person with the most knowledge creates these [loan payment] entries at or near the time that the events [of payment or nonpayment] occur. If someone makes a payment the person with the most knowledge puts the information into our system and that person is supervised and trained. Our policies and procedures require that person to put the information in at or near the time the events occur.

Davis testified that this information is kept and maintained in the ordinary course of business. Additionally, Davis explained, “the Department who handles the payment process inputs the payments that are received and updates the system with those entries.”

Davis reviewed the history of the loan prior to testifying in court. By reviewing the system and database, Davis was able to see all the correspondence regarding the loan. Davis was able to confirm that the entries were made at the time the events occurred because they corresponded with the date stamps of the entries. Davis could not identify any reason to believe the entries in the payment history were inaccurate.

C. Trial Court’s Ruling

When asked whether Davis knew if the Bank’s policies and procedures have changed since 2005, Davis answered, “I do not know.” Since Davis did not begin working for the Bank until 2012, the trial court effectively disqualified Davis as a foundational witness, and determined that the Bank had not met the requirements for admission into evidence of the loan payment history as a business record.3

D. Standard of Review

Generally, appellate courts review a trial court’s ruling on the admissibility of evidence under an abuse of discretion standard. See, e.g., Sas v. Fed. Nat’l Mortg. Ass’n, 112 So.3d 778, 779 (Fla. 2d DCA 2013). However, a “[trial] court’s discretion is limited by the evidence code and applicable case law. A [trial] court’s erroneous interpretation of these authorities is subject to de novo review.” Olesky ex rel. Estate of Olesky v. Stapleton, 123 So.3d 592, 594 (Fla. 2d DCA 2013) (quoting Sottilaro v. Figueroa, 86 So.3d 505, 507 (Fla. 2d DCA 2012), review denied, 103 So.3d 139 (Fla.2012)).

Here, we are called upon to review the trial court’s application of the hearsay rule’s business records exception, i.e., the trial court’s interpretation of the law. Hence, we review the trial court’s interpretation of the law de novo.

E. Our Holding

Contrary to the trial court’s interpretation of the business records exception, the exception does not contain a requirement that the foundational witness be “in the employ of the business to which it relates at the time of its making, so long as he understands the system.” 34 Am.Jur. Proof of Facts 2d 509 (1983) (citing 4 Weinstein’s Evidence ¶ 803(6)[02] )). Although Davis was not “in the employ” of the Bank “at the time” all of the entries were made on the loan payment history, Davis’s testimony showed that she had personal knowledge of, and understood, the Bank’s record-keeping system.

Davis was able to establish: (1) when the records were made; (2) that the information contained in the records was derived from a person with knowledge of such information; (3) that such records were kept in the Bank’s ordinary course of business; and (4) that it was the regular practice of the Bank to make such records. See, e.g., Weisenberg, 89 So.3d at 1112 (finding business records exception satisfied where bank’s witness was a supervisor at bank’s servicing agent with personal knowledge of bank’s internal process for applying loan payments and calculating balances, and who was familiar with bank’s record-keeping system, and knew how payment data was uploaded from bank’s computer system to servicing agent’s system).

III. Conclusion

We thus conclude that Davis’s testimony established the necessary foundation for admitting the loan payment history into evidence as the Bank’s business record. As such, the trial court reversibly erred when it excluded the loan payment history.

Reversed and remanded for a new trial consistent with this opinion.

FOOTNOTES

1. At the conclusion of the Bank’s case, the trial court entered a final judgment for the Borrowers, stating, “[i]f the evidence before the court is not sufficient to sustain the plaintiff’s case, then I have no alternative but to do something different.” Borrowers’ counsel responded, “[i]f the plaintiff rests we ask the court to enter a judgment for the defendant.” The trial court replied, “I’ll do it.”Hence, the trial court’s final judgment was entered consistent with, and pursuant to, Florida Rule of Civil Procedure 1.420(b), and constitutes an involuntary dismissal with prejudice of the Bank’s case.

2. The Bank introduced the original note and mortgage into evidence without objection (element 1). Mr. Delgado admitted on the stand that at some point he stopped making payments (element 2). The Bank accelerated repayment of the loan by filing the complaint (element 3).

3. Borrowers’ counsel: “We object? She’s [Davis] testified that she doesn’t know what the policy was before 2012.” The trial court: “Exactly. Exactly. That’s your problem. That’s your problem right there.”

SCALES, J.

TruthOut-

Well, well, well. Eric Holder is returning to his cushy job at Covington & Burling where he reportedly pulled in $2.5 million the last year he was there. Holder didn’t think it was strange he was returning to one of Wall Street’s most highly regarded defense firms after all the bankers he let breezily carry on with fraud, bribery, money laundering, tax evasion and plenty of other very prosecutable offenses during his tenure as US attorney general.

Holder explained simply: “The firm’s emphasis on pro bono work and being engaged in the civic life of this country is consistent with my worldview that lawyers need to be socially active.” Yeah, and what about the $2.5 million, Mr. Holder? That’s got nothing to do with it surely.

Holder had just spent six years in Washington handing out slaps on the wrist to financial institutions that claimed they were “too big to fail” while secretly receiving government assistance. His help almost certainly amounted to billions of dollars of aid to Wall Street. Now he’s trotting back on his high horse to go collect millions for his top position in the firm.

 [TRUTHOUT]

Gibson Dunn-

2015 came in like a lion, bringing with it remarkable policy changes regarding corporate non-prosecution agreements (“NPA”) and deferred prosecution agreements (“DPA”).  The Department of Justice’s (“DOJ”) leadership has articulated new bright-line approaches to post-resolution conduct, including the unprecedented step of revoking an NPA.  The judiciary has edged further toward a more interventionist role in DPA oversight.  Finally, as we previously predicted, the first of dozens of anticipated NPA resolutions have emerged from the DOJ Tax Division’s August 2013 “Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks” (the “DOJ Tax Swiss Bank Program”).

This client alert, the fourteenth in our series of biannual updates on NPAs and DPAs (available here), (1) summarizes highlights from the NPAs and DPAs of the first half of 2015; (2) addresses shifts in the treatment of NPAs and DPAs by all three branches of government; (3) spotlights trends in the arena of trade sanctions; (4) touches upon DOJ’s revocation of an NPA and its extension of another in the course of investigating several major global financial institutions; (5) overviews the DOJ Tax Swiss Bank Program and the NPAs emerging from it; (6) discusses recent developments regarding the level of confidentiality afforded NPAs and DPAs and the work product flowing from them; and (7) provides an update on recent international developments regarding NPAs and DPAs.  As in previous updates in this series, the appendix lists all agreements announced to date in 2015.

[…]

Discover’s Illegal Servicing Practices Affected Private Student Loan Borrowers Transferred from Citibank

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) took action against Discover Bank and its affiliates for illegal private student loan servicing practices. The CFPB found that Discover overstated the minimum amounts due on billing statements and denied consumers information they needed to obtain federal income tax benefits. The company also engaged in illegal debt collection tactics, including calling consumers early in the morning and late at night. The CFPB’s order requires Discover to refund $16 million to consumers, pay a $2.5 million penalty, and improve its billing, student loan interest reporting, and collection practices.

“Discover created student debt stress for borrowers by inflating their bills and misleading them about important benefits,” said CFPB Director Richard Cordray. “Illegal servicing and debt collection practices add insult to injury for borrowers struggling to pay back their loans. Today’s action is an important step in the Bureau’s work to clean up the student loan servicing market.”

Discover Bank is an Illinois-based depository institution. Its student loan affiliates – The Student Loan Corporation and Discover Products, Inc. – are also charged in today’s action. Beginning in 2010, Discover expanded its private student loan portfolio by acquiring more than 800,000 accounts from Citibank. As a loan servicer, Discover is responsible for providing basic services to borrowers, including accurate periodic account statements, supplying year-end tax information, and contacting borrowers regarding overdue amounts.

Student loans make up the nation’s second largest consumer debt market. The market has grown rapidly in the last decade. Today there are more than 40 million federal and private student loan borrowers and collectively these consumers owe more than $1.2 trillion. The market is now facing an increasing number of borrowers who are struggling to stay current on their loans. Earlier this year, the Bureau revealed that more than 8 million borrowers were in default on more than $110 billion in student loans, a problem that may be driven by breakdowns in student loan servicing. While private student loans are a small portion of the overall market, they are generally used by borrowers with high levels of debt who also have federal loans.

Today’s action demonstrates how Discover failed at providing the most basic functions of adequate student loan servicing for a portion of the loans that were transferred from Citibank. Thousands of consumers encountered problems as soon as their loans became due and Discover gave them account statements that overstated their minimum payment. Discover denied consumers information that they would have needed to obtain tax benefits and called consumers’ mobile phones at inappropriate times to contact them about their debts. The CFPB concluded that the company and its affiliates violated the Dodd-Frank Wall Street Reform and Consumer Protection Act’s prohibitions against unfair and deceptive acts and practices, and also the Fair Debt Collection Practices Act. Specifically, the CFPB found that the company:

• Overstated the minimum amount due in billing statements: Discover overstated the minimum amount due for certain borrowers who were just starting to pay off their student loan debts. The minimum payment due incorrectly included interest on loans that were still in deferment and were not required to be paid. For some borrowers this overpayment meant diverting payments from other expenses; for others it meant not paying at all because they thought they could not come close to making the full payment and instead accrued associated penalties.

• Misrepresented on its website the amount of student loan interest paid: The tax code permits taxpayers to deduct student loan interest paid during the year under certain conditions. Servicers are required to provide borrowers with a statement specifying how much the borrower paid in interest, if it was more than $600. Discover did not provide the Citibank private student loan borrowers with the customary tax information form it provided to its other borrowers, unless those borrowers submitted certain paperwork. For those borrowers who did not submit that additional form, their online interest statements on Discover’s website in 2011 and 2012 reflected $0.00 in interest paid. Discover did not explain that the borrowers were required to fill out a form to get the correct amount of interest they paid. This zero interest statement was likely to mislead consumers into believing that they did not qualify for the student loan tax deduction, potentially causing consumers to not seek important tax benefits.

• Illegally called consumers early in the morning and late at night, often excessively: Discover placed more than 150,000 calls to student loan borrowers at inappropriate times – before 8 a.m. and after 9 p.m. in the borrower’s time zone. Discover learned about these violations in October 2012 but failed to address the problem until February 2013.

• Engaged in illegal debt collection tactics: Discover acquired a portfolio of defaulted debt from Citibank but failed to comply with the consumer notices required by federal law. For example, the company failed to provide consumers with specific information about the amount and source of the debt and the consumer’s right to contest the debt’s validity. That information must be provided during the debt collector’s initial communication or in a written notice immediately following that initial communication.

Enforcement Action

Under the Dodd-Frank Act, the CFPB has the authority to take action against institutions engaging in unfair, deceptive, or abusive practices. Among the terms of the consent order filed today, Discover must:

• Return $16 million to more than 100,000 borrowers: Specifically, Discover will:
  • Provide an account credit (or a check if the loans are no longer serviced by Discover) to the consumers who were misled about their minimum payments in an amount equal to the greater of $100 or 10 percent of the overpayment, up to $500. About 5,200 victims will get this credit;
  • Reimburse up to $300 in tax preparation costs for consumers who amend their 2011 or 2012 tax returns to claim student loan interest deductions. For consumers who do not participate in this tax program or did not take advantage of earlier ones offered by the company, Discover will issue an account credit of $75 (or a check if their loans are no longer serviced by Discover) for each relevant tax year. About 130,000 victims will receive this relief; and
  • Provide account credits of $92 to consumers subjected to more than five but fewer than 25 out-of-time collection calls and account credits of $142 to consumers subjected to more than 25 calls. About 5,000 victims will receive these credits.

• Accurately represent the minimum periodic payment: Discover cannot misrepresent to consumers the minimum periodic payment owed, the amount of interest paid, or any other factual material concerning the servicing of their loans.

• Send clear and accurate student loan interest and tax information to borrowers: Discover must send borrowers the IRS W-9S form that it requires them to complete to receive a form 1098 from the company, and it must clearly explain its W-9S requirement to borrowers. Discover must also accurately state the amount of student loan interest borrowers paid during the year.

• Cease making calls to consumers before 8 a.m. or after 9 p.m.: Discover must contact overdue borrowers at reasonable times. This will be determined by the time zone of the consumer’s known residence or phone number, unless the consumer has expressly authorized Discover to call outside these hours.

• Pay $2.5 million civil penalty: Discover will pay $2.5 million to the CFPB’s Civil Penalty Fund.

A copy of the consent order can be found at: http://files.consumerfinance.gov/f/201507_cfpb_consent-order-in-the-matter-of-discover-bank-student-loan-corporation.pdf

This order comes as the Bureau considers steps to ensure that all student loan borrowers have access to adequate student loan servicing. Last year, the Bureau expanded its examination program to supervise the largest nonbank participants in the student loan servicing market. In October, the Bureau released an edition of Supervisory Highlights identifying a range of illegal student loan servicing practices at one or more companies. Earlier this year, the Bureau was joined by leaders from the Department of Education and the Department of the Treasury in launching a public inquiry into student loan servicing practices.

WS Journal-

Wells Fargo & Co. said Friday it projected an overall $10.7 billion loss if the U.S. economy were to go through a severe downturn during a 2 1/4 year period ending June 30, 2017.

The bank projected losses of $57.6 billion — $46.1 billion for loan losses, $9.6 billion in trading and counterparty credit, and $1.9 billion in investment securities.

Much of the losses would be offset by $46.9 billion in fee and loan revenue minus noninterest expense.

Wells Fargo is among 31 bank holding companies required by the Federal Reserve to conduct stress-test assessments twice annually. The assessments are designed to gauge the potential impact of a severe downturn on bank operations and capital levels as part of the Dodd-Frank financial reform law.

[WINSTON-SALEM JOURNAL]

National Mortgage News-

Resetting home equity lines of credit to the tune of $150 billion over the next 48 months, combined with a near-certain increase in short term interest rates over that same period, could very well be a bad situation for institutions who hold these assets.

Simply creating a preemptive solution, or series of solutions, for borrowers facing hardship is not enough. While it’s important to know that borrowers fully understand the reset risk they face as well as the options available to them; it’s critical that those consumers actually follow through to reduce their risk – and yours.

In a perfect world, the consumer who is facing a significant increase in their monthly HELOC payment would not only be aware of the coming increase, but would be mindful of all available options before moving quickly toward a solution that benefits all parties.

[NATIONAL MORTGAGE NEWS]

Better Markets-

Better Markets released an extensive Cost of the Crisis Report detailing how the 2008 financial crash and the economic catastrophe it caused will cost the United States more than $20 trillion. The Report was released the day before the fifth anniversary of President Obama signing the historic Dodd-Frank Financial Reform and Consumer Protection Act into law, the most comprehensive financial reform since the Great Depression that’s working to reinstate the layers of protection between Main Street families and Wall Street’s riskiest activities. 

[BETTER MARKETS]