The table below specifies Fannie Mae’s maximum number of allowable days between the due date of the last paid installment (LPI) and foreclosure sale date, as referenced in the Fannie Mae Servicing Guide Part E.

 

Foreclosure Timeframes Compensatory Fees Allowable Delays

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Yahudaii v Baroukhian

2016 NY Slip Op 01766

Decided on March 15, 2016

Appellate Division, First Department

Decided on March 15, 2016
Sweeny, J.P., Richter, Manzanet-Daniels, Gische, JJ.

491 103449/08

 

Cox Padmore Skolnik & Shakarchy LLP, New York (Stefan B. Kalina of counsel), for appellant-respondent.

Law Offices of Daniel A. Thomas, P.C., New York (Daniel A. Thomas of counsel), for respondents-appellants.

 

Order, Supreme Court, New York County (Marcy S. Friedman, J.), entered April 5, 2012, which, following a nonjury trial, dismissed the complaint without prejudice, and dismissed defendants Nourallah Baroukhian and Nourallah Baroukhian d/b/a East 115th Associates’ counterclaims with prejudice, unanimously affirmed, with costs.

The trial court’s well-reasoned determination that plaintiff provided $275,000 at a closing on December 1, 1997 is based on its reasonable assessment of the witnesses’ credibility and a fair interpretation of the evidence (see Matter of Metropolitan Transp. Auth., 86 AD3d 314, 320 [1st Dept 2011]). The record also supports the court’s finding that the mortgage and note were validly assigned by nonparty Joanne Sims to nonparty True Gate Holding Ltd.

Although consideration was not required to effectuate the assignment by True Gate to plaintiff, since the assignment is in writing and signed by the assignor (see General Obligations Law § 5-1107), nevertheless the assignment is invalid, because it was not permitted under the True Gate agreement. Therefore, plaintiff lacks standing to enforce True Gate’s foreclosure rights in his individual capacity (see Scott v Pro Mgt. Servs. Group, LLC, 124 AD3d 454 [1st Dept 2015]).

The judgment of foreclosure is a nullity, since, unbeknownst to the court, the parties had discontinued the action before the judgment was entered. Therefore, the judgment did not bar any subsequent assignments of the mortgage and note as a matter of law.

There is no support in the record for the counterclaims. We have considered the parties’ remaining arguments for affirmative relief and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: MARCH 15, 2016

CLERK

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Front Line-

Eight years ago, the country was in financial free fall. Now, with the 2016 presidential election looming, America’s economic landscape is much different: unemployment is below five percent; job growth is rising; and corporate profits and housing prices are booming.

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We at FRONTLINE, APM’s Marketplace and PBS NewsHour are joining forces to investigate why.

[FRONT LINE]

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2016-Ohio-919

FEDERAL NATIONAL MORTGAGE ASSOCIATION, PLAINTIFF-APPELLEE,
v.
STANLEY FORD, ET AL., DEFENDANTS-APPELLANTS.

No. 102395.Court of Appeals of Ohio, Eighth District, Cuyahoga County.Released and Journalized: March 10, 2016.Marc E. Dann, William C. Behrens, Grace M. Doberdruk, Paul Bellamy, The Dann Law Firm Co., L.P.A., P.O. Box 6031040, Cleveland, Ohio 44103, Attorneys for Appellant.

Eric T. Deighton, Richard J. Feuerman, Carlisle McNellie Rini Kramer & Ulrich, Co., L.P.A., 24755 Chargin Boulevard, Suite 200, Cleveland, Ohio 44122, Attorneys for Appellee, for Federal National Mortgage Association.

Kenneth Boukis, Hohmann Boukis & Curtis Co., L.P.A., The Rockefeller Building, 614 W. Superior Avenue, Suite 601, Cleveland, Ohio 44113; Joseph T. Chapman, Collections Enforcement, 150 East Gay Street, 21st Floor, Columbus, Ohio 43215, Attorneys for Appellee, for State of Ohio Department of Taxation,

Marlon A. Primes, Assistant United States Attorney, U.S. Courthouse, Suite 400, 801 West Superior Avenue, Cleveland, Ohio 44113, Attorneys for Appellee, for The United States of America

BEFORE: Kilbane, J., Jones, A.J., and Stewart, J.

JOURNAL ENTRY AND OPINION

MARY EILEEN KILBANE, J.

{¶1} Defendant-appellant, Stanley Ford (“Ford”), appeals from the trial court’s judgment adopting the magistrate’s decision granting summary judgment in the foreclosure action brought by Federal National Mortgage Association (“Federal”). For the reasons set forth below, we reverse and remand the matter for further proceedings consistent with this opinion.

{¶2} In July 2011, Federal filed a foreclosure action against Ford, alleging that he is in default on a mortgage and note for his home in Bedford Heights, Ohio. Federal alleged that “it has performed all of the conditions precedent required to be performed by it.” Federal further alleged that Ford owes it $57,634.57, plus interest and late charges from April 25, 2009. In support of its complaint, Federal attached, as exhibits, a copy of the promissory note, mortgage, preliminary judicial report, and notice of tax lien. Federal also attached to its complaint a copy of the notice of debt as required under the Fair Debt Collection Practices Act, but did not attach a copy of the notice of acceleration.

{¶3} In response to the complaint, Ford, pro se, filed a motion to dismiss for failure to state a claim. Ford alleges that Federal did not comply with the terms of the agreement by failing to give him 30 days notice of its intention to accelerate the payments on the mortgage prior to commencing the foreclosure action. The trial court denied Ford’s motion to dismiss, finding that Federal’s complaint adequately stated a cause of action. Ford then filed his answer and counterclaim.

{¶4} The parties proceeded with discovery. In November 2012, Federal filed its motion for summary judgment. In support of its motion, Federal attached an affidavit and Ford’s responses to Federal’s first set of request for admissions, interrogatories, and request for production of documents. The affidavit is from a foreclosure specialist for Federal’s loan servicing contractor. This affiant averred that Federal examined the loan and associated documents. Federal accelerated the loan after it performed all of the prerequisites required under the note and mortgage necessary to accelerate the balance due. Having examined Ford’s loan history, the affiant averred that Ford was in default because no payments had been made on the loan since May 2009. The affiant stated that Ford owes “the principal balance of $57,634.47, plus interest at the rate of 7.25% per annum from April 25, 2009 until paid, plus late charges and, pursuant to the mortgage, all sums advanced for the payment of real estate taxes and assessments, insurance premiums and property protection.” Ford opposed Federal’s motion and filed an objection, seeking to strike the exhibits attached to Federal’s summary judgment. According to Ford, Federal failed to attach any documents supporting the affidavit.

{¶5} In February 2014, the magistrate issued a decision granting Federal’s motion for summary judgment. Ford objected to the magistrate’s decision, arguing Federal lacked jurisdiction, Federal is not the holder in due course, and Federal lacks standing to file the foreclosure action. In December 2014, the trial court overruled Ford’s objections and adopted the magistrate’s decision.^[1] It is from this order that Ford appeals, assigning the following two assignments of error for review, which shall be discussed together.

Assignment of Error One

It was error for the trial court to grant summary judgment in favor of [Federal] where the note and mortgage contract contained explicit condition precedent requirements for [Federal] to issue a notice of default to [Ford]; the failure to provide such notice was raised by [Ford] in both his motion to dismiss the complaint and in his answer; and the putative notice of default itself was not attached to the motion for summary judgment, nor produced at any other stage of the proceedings below.

Assignment of Error Two

It was error for the trial court to sustain a motion for summary judgment where: [Federal] failed to demonstrate that [Ford] was in default and failed to prove the amount of principal and interest due on the note and mortgage.

{¶6} Within these assigned errors, Ford challenges the trial court’s grant of summary judgment in Federal’s favor. We review an appeal from summary judgment under a de novo standard of review. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671 N.E.2d 241; Zemcik v. LaPine Truck Sales & Equip. Co., 124 Ohio App.3d 581, 585, 706 N.E.2d 860 (8th Dist.1998). In Zivich v. Mentor Soccer Club, 82 Ohio St.3d 367, 369-370, 1998-Ohio-389, 696 N.E.2d 201, the Ohio Supreme Court set forth the appropriate test as follows:

Pursuant to Civ.R. 56, summary judgment is appropriate when (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion and that conclusion is adverse to the nonmoving party, said party being entitled to have the evidence construed most strongly in his favor. Horton v. Harwick Chem. Corp., 73 Ohio St.3d 679, 1995-Ohio-286, 653 N.E.2d 1196, paragraph three of the syllabus. The party moving for summary judgment bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Dresher v. Burt, 75 Ohio St.3d 280, 292-293, 1996-Ohio-107, 662 N.E.2d 264.

{¶7} Once the moving party satisfies its burden, the nonmoving party “may not rest upon the mere allegations or denials of the party’s pleadings, but the party’s response, by affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Civ.R. 56(E); Mootispaw v. Eckstein, 76 Ohio St.3d 383, 385, 1996-Ohio-389, 667 N.E.2d 1197. Doubts must be resolved in favor of the nonmoving party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356, 358-359, 1992-Ohio-95, 604 N.E.2d 138.

{¶8} To prevail on a motion for summary judgment claim in a foreclosure action, the plaintiff must prove:

(1) that the plaintiff is the holder of the note and mortgage, or is a party entitled to enforce the instrument; (2) if the plaintiff is not the original mortgagee, the chain of assignments and transfers; (3) that the mortgagor is in default; (4) that all conditions precedent have been met; and (5) the amount of principal and interest due.

Deutsche Bank Natl. Trust Co. v. Najar, 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657, ¶ 17.

{¶9} In the instant case, Ford did not include in his objections to the magistrate decision that Federal failed to comply with condition precedent requirements to issue a notice of default and also failed to demonstrate the amount he was in default. We note that Civ.R. 53 imposes an affirmative duty on parties to submit timely, specific, written objections to the trial court, identifying any error of fact or law in the magistrate’s decision. Hameed v. Rhoades, 8th Dist. Cuyahoga No. 94267, 2010-Ohio-4894, ¶ 14. Civ.R. 53(D)(3)(b)(iv) provides:

Except for a claim of plain error, a party shall not assign as error on appeal the court’s adoption of any factual finding or legal conclusion, whether or not specifically designated as a finding of fact or conclusion of law under Civ.R. 53(D)(3)(a)(ii), unless the party has objected to that finding or conclusion as required by Civ.R. 53(D)(3)(b).

{¶10} As a result, Ford has waived all but plain error. Huntington Natl. Bank v. Blount, 8th Dist. Cuyahoga No. 98514, 2013-Ohio-3128, ¶ 10, citing Morgan Stanley Credit Corp. v. Fillinger, 2012-Ohio-4295, 979 N.E.2d 362 (8th Dist.2012); Fannie Mae v. Hicks, 8th Dist. Cuyahoga No. 102079, 2015-Ohio-1955.

{¶11} When applying the plain error doctrine in the civil context, the Ohio Supreme Court has stated that reviewing courts “must proceed with the utmost caution.” Goldfuss v. Davidson, 79 Ohio St.3d 116, 121, 1997-Ohio-401, 679 N.E.2d 1099. The doctrine is limited to those “extremely rare cases” in which “exceptional circumstances require its application to prevent a manifest miscarriage of justice, and where the error complained of, if left uncorrected, would have a materially adverse effect on the character of, and public confidence in, judicial proceedings.” Id. Therefore, we consider the trial court’s judgment applying the plain error standard of review.

{¶12} Ford contends that summary judgment is improper because Federal failed to attach a copy of the dated notice of default and payment history to its motion in violation of Civ.R. 56(E). Civ.R. 56(E) sets forth the requirements for affidavits submitted with motions for summary judgment. It provides in relevant part:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavit. Sworn or certified copies of all papers or parts of papers referred to in an affidavit shall be attached to or served with the affidavit. * * * When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the party’s pleadings, but the party’s response, by affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the party does not so respond, summary judgment, if appropriate, shall be entered against the party.

(Emphasis added.)

{¶13} We find the instant case analogous to Third Fed. S&L Assn. of Cleveland v. Farno, 12th Dist. Warren No. CA 2012-04-028, 2012-Ohio-5245. In Farno, the lender attached an affidavit from one of its legal analysts to its motion for summary judgment. The affiant averred that it reviewed the loan documents, the homeowner was in default, and the lender had performed all of the prerequisites required under the note and mortgage necessary to accelerate the balance due. Id. at ¶ 9. The homeowner moved to strike the lender’s affidavit. Id. at ¶ 4. On appeal, the homeowner argued that three paragraphs in the lender’s affidavit should have been stricken from the record because of the lack of supporting documentation, and the trial court’s grant of summary judgment was improper. The Farno court agreed with the homeowner, finding that the lender failed to satisfy its initial burden for summary judgment when the last three paragraphs of the lender’s affidavit were stricken and none of the pertinent material was provided in the record to the trial court. Id. at ¶ 13.

{¶14} The Farno court noted that the lender “indicated it reviewed documents pertaining to the loan history and evidence of payment default, but no documents or portions of documents relative to those matters were attached or served with the affidavit, or for that matter, found anywhere in the record.” Id. at ¶ 9. The court found that

paragraphs five, six, and seven of [the lender’s] affidavit should have been stricken because its summary judgment motion was not supported as provided in Civ.R. 56(E), when no documentation referenced in those portions of the affidavit were attached to or served with the affidavit to show default of payment and payment history. See Civ.R. 56; see Cincinnati Bar Assn. v. Newman, 124 Ohio St.3d 505, 2010-Ohio-928, ¶ 7, 924 N.E.2d 359 (requirement of Civ.R. 56[E] that sworn or certified copies of all papers referred to in the affidavit be attached is satisfied by attaching the papers to the affidavit, coupled with a statement therein that such copies are true copies and reproductions); see State ex rel. Varnau v. Wenninger, 12th Dist. [Brown] No. CA2009-02-010, 2011-Ohio-3904, ¶ 10 (striking portions of affidavit where documents were reviewed and relied upon in drafting affidavit, but not attached to affidavit or served therewith).

Farno at ¶ 10.

{¶15} The court acknowledged that its holding

does not suggest that [the lender] was required to attach every document in its file on [the homeowner’s] note, but [the lender] needed to attach or serve with its affidavit some document or documents material to the issues in this case, to wit, the default in payment and applicable portions of the payment history.

Id. at ¶ 11, citing Countrywide Home Loans, Inc. v. Rodriguez, 9th Dist. Lorain Nos. 03CA008345, 03CA008417, 2004-Ohio-4723 (affiant attested to true record of payments on homeowner’s account and attached to affidavit document chronicling the payment history on the account).

{¶16} Likewise, in the instant case, none of the documents referenced in Federal’s affidavit were attached to its summary judgment motion. The only document Federal attached was Ford’s responses to Federal’s first set of request for admissions, interrogatories, and request for production of documents. Federal did not attach the note or mortgage (although the affiant references those documents as attached to the complaint); there are no documents to support the contention that all of the prerequisites required under the note and mortgage necessary to accelerate the balance due on the note have been performed; there is no loan history or relevant portions of loan histories attached to the motion evidencing the sums allegedly owed by Ford; and there is no documentary evidence to support the claim concerning late fees or advances on the loan. See Nationstar Mtge., L.LC. v. Wagener, 8th Dist. Cuyahoga No. 101280, 2015-Ohio-1289 (summary judgment was proper when the bank attached to its summary judgment motion copies of the note, the mortgage, the assignments, the notice of intent to accelerate the loan, two notices advising homeowners that the servicing of their mortgage loan was being transferred, and the payment history for the loan by reference into his affidavit);RBS Citizens, N.A. v. Krasnov, 8th Dist. Cuyahoga No. 100992, 2014-Ohio-4217 (summary judgment was proper when the bank attached to its summary judgment motion copies of the original note and mortgage, and affidavit of its foreclosure specialist);Deutsche Bank Natl. Trust Co., 8th Dist. Cuyahoga No. 98502, 2013-Ohio-1657 (summary judgment was proper when the bank attached to its summary judgment motion the affidavit of the bank’s representative, copies of the unendorsed note, the note endorsed in blank, the mortgage, the assignment of mortgage, selected pages from the payoff statement for the homeowner’s loan, and various notices of acceleration and default for the loan.)

{¶17} The dissent, relying on Chase Bank USA, NA v. Lopez, 8th Dist, Cuyahoga No. 91480, 2008-Ohio-6000, maintains that Ford has waived any error with respect to Federal’s affidavit in support of its motion for summary judgment. Chase, however, is distinguishable from the matter before us.

{¶18} In Chase, Chase sued Lopez for money he owed on a credit card account. In support of its motion for summary judgment, Chase attached the card member agreement, the affidavit of Chase’s custodian of records, and 11 monthly statements addressed to Lopez, reflecting a $14,388.97 balance. Id. at ¶ 5. On appeal, Lopez argued for the first time, that the affidavit Chase attached to its motion for summary judgment did not meet the requirements of Civ.R. 56(E). Id. at ¶ 16. This court found that Lopez could not raise this argument for the first time on appeal because this issue was not raised in the trial court. Id., citing Republic Steel Corp. v. Bd. of Revision, 175 Ohio St.179, 192 N.E.2d 47 (1963), syllabus.

{¶19} Unlike in Chase, in the instant case, Federal did not attach any of the documents referenced in its affidavit to its summary judgment motion. Furthermore, the procedural posture in Chase involved a motion for summary judgment in a credit account action proceeding solely before the trial court. Whereas, the instant case involves a foreclosure action that proceeded before a magistrate and was subject to a magistrate’s decision and objections prior to proceeding before the trial court. Therefore, Chase does not control the outcome of this matter.

{¶20} Based on the record before us, it was plain error for the trial court to award summary judgment to Federal without Federal providing the documents necessary to substantiate: (1) that the required prerequisites under the note and mortgage were performed in order to accelerate the balance due on the note; (2) the relevant loan history; and (3) the evidence to support the late fees. Therefore, summary judgment was not appropriate.

{¶21} Accordingly, the first and second assignments of error are sustained.

{¶22} Judgment reversed and remanded.

It is ordered that appellant recover of appellee costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the common pleas court to carry this judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.

LARRY A. JONES, SR., A.J., CONCURS IN JUDGMENT ONLY; MELODY J. STEWART, J., DISSENTS (SEE SEPARATE OPINION).

MELODY J. STEWART, J., DISSENTING.

{¶23} As the majority concedes, Ford did not object to the magistrate’s decision to grant summary judgment on grounds that Federal failed to include in its motion proof that it complied with its contractual obligation to provide Ford with notice of his default. Ford’s failure to object to Federal’s affidavit filed in support of its motion for summary judgment waived any error. In Chase Bank USA, NA v. Lopez, 8th Dist. Cuyahoga No. 91480, 2008-Ohio-6000, we addressed this same issue and stated:

Chase notes that Lopez, in his appellate briefs, raises for the first time the issue that the affidavit of John Wells, attached to its motion for summary judgment, did not meet the requirements of Civ.R. 56(E). We agree that because this issue was not raised in the trial court, Lopez cannot raise it for the first time on appeal. Republic Steel Corp. v. Bd. of Revision, 175 Ohio St. 179, 192 N.E.2d 47 (1963), at syllabus. Furthermore[,] “[f]ailure to move to strike or otherwise object to documentary evidence submitted by a party in support of, or in opposition to, a motion for summary judgment waives any error in considering that evidence under Civ.R. 56(C).” Darner v. Richard E. Jacobs Group, Inc., 8th Dist. Cuyahoga No. 89611, 2008-Ohio-959, at ¶ 15.

Id. at ¶ 16.

{¶24} Even though the Ohio Supreme Court has made it clear in the context of a plain error analysis that the “failure to follow procedural rules can result in forfeiture of rights,” Goldfuss, 79 Ohio St.3d 116, 122, 679 N.E.2d 1099 (1997), the majority nonetheless finds it was plain error for the court to grant summary judgment in the absence of evidentiary material showing that Federal gave notice of its intent to accelerate the debt in the wake of Ford’s default.

{¶25} The majority fails to acknowledge that Federal’s complaint contained a copy of the notice of default and acceleration of the note it provided to Ford. Civ.R. 56(C) states that summary judgment can be rendered if “the pleadings” show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Ford offered no evidence to contradict the notice of default. When Ford answered the complaint, he raised the affirmative defense of “failure to comply with notice provisions,” but he offered nothing to prove that affirmative defense in opposition to the motion for summary judgment. Todd Dev. Co. v. Morgan, 116 Ohio St.3d 461, 2008-Ohio-87, 880 N.E.2d 88, syllabus (“A plaintiff or counterclaimant moving for summary judgment does not bear the initial burden of addressing the nonmoving party’s affirmative defenses.”).

{¶26} Because of waiver and a failure of proof, Ford has failed to show the existence of any error in this case. And to the extent that the majority finds plain error, it says nothing about why this is the “exceptional” case in which ignoring the error would result in a “manifest miscarriage of justice” and undermine the judicial process. Goldfuss, 79 Ohio St.3d at 121. Apart from failing to prove his affirmative defense of the failure to comply with notice provisions, Ford has never offered evidence to dispute the amount that Federal claims he owes under the note. I would affirm the decision of the trial court.

[1] On January 23, 2015, the trial court granted Ford’s motion to stay the sheriff’s sale and waiver of supersedeas bond.

 

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EVERY SUNDAY
3:00 PM HAWAII
6:00 PM PACIFIC
9:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

 

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DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA

FOURTH DISTRICT

SHARLENE HAMPTON LEWIS,

Appellant,

v.

U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Registered
Holders of ABFC 2007-WMC 1 Trust, Asset-Backed Certificates, Series
2007-WMC1,

Appellee.

No. 4D14-815

[March 9, 2016]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; Jeffrey E. Streitfeld, Judge; L.T. Case No. CACE-08-
057939 (11).

Bruce Jacobs, Court E. Keeley, Amida U. Frey, and Anna C. Morales of
Jacobs Keeley, PLLC, Miami, for appellant.

Diana B. Matson of Baker, Donelson, Bearman, Caldwell & Berkowitz,
PC, Fort Lauderdale, for appellee.

ON MOTION FOR REHEARING

PER CURIAM.

We grant appellant’s motion for rehearing, withdraw our per curiam
affirmance, and enter the following opinion.

In 2008, appellee bank filed a foreclosure action and included a count
seeking to reestablish a lost note. No copy of the original note was
attached to the complaint. The case went to trial in 2014. The
endorsements on an allonge to the note were undated and the bank’s
witness could not testify when the endorsements were placed on the
allonge. The bank’s reliance on a pooling and servicing agreement was
insufficient to establish the bank’s standing to bring suit at the time the
suit was filed. See Jarvis v. Deutsche Bank Nat’l Trust Co., 169 So. 3d 194,
196 (Fla. 4th DCA 2015); Balch v. Lasalle Bank N.A., 171 So. 3d 207, 209

(Fla. 4th DCA 2015); Perez v. Deutsche Bank Nat’l Trust Co., 174 So. 3d
489, 491 (Fla. 4th DCA 2015).

Reversed and remanded.

GROSS, GERBER and KLINGENSMITH, JJ., concur.

* * *

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JD SUPRA-

The Federal Trade Commission (FTC) received more than 3 million consumer complaints in 2015 with debt collection topping the list, according to its newly released Consumer Sentinel Network Data Book. The annual report, which does not include do-not-call complaints, provides national and state-by-state data on consumer complaints received by the FTC.

Debt collection complaints moved from the second-most reported complaint category in 2014 to the top in 2015. The FTC stated that this change was largely due to a substantial increase in the number of complaints contributed by PrivacyStar, a non-governmental source that collects complaints through a mobile application. According to the FTC, this development also caused a spike in complaints related to debt collection calls to mobile phones. Of the total 897,655 debt collection complaints received by the FTC in 2015, 895,158 involved third-party debt collection and 2,511 involved creditor debt collection. (Fourteen complaints were coded for both types of collection.)

Identity theft complaints, which occupied the top spot for the previous 15 years, were the second-most reported category in 2015. Nevertheless, identity theft complaints still increased more than 47 percent from 2014 and the FTC reported a large jump in the number of such complaints involving tax identity theft. Imposter scam complaints, which the FTC describes as complaints about scammers impersonating someone else to commit fraud, continued to be the third-most common complaint in 2015.

[JD SUPRA]

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DONALD MILLER and MARY T. MILLER, Appellants,
v.
THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, as TRUSTEE FOR THE CERTIFICATE HOLDERS OF CWMBS, INC., CHL MORTGAGE PASS-THROUGH TRUST 2006-8, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-8, BANK OF AMERICA, N.A., successor by merger to COUNTRYWIDE BANK, FSB f/k/a COUNTRYWIDE BANK, N.A., OCEAN PEARL II HOMEOWNER’S ASSOCIATION, INC., UNKNOWN TENANT #1, and UNKNOWN TENANT #2, Appellees.

No. 4D15-36.District Court of Appeal of Florida, Fourth District.March 2, 2016.Shirlarian N. Williams, Peter Ticktin and Kendrick Almaguer of The Ticktin Law Group, P.A., Deerfield Beach, for appellants.

J. Kirby McDonough and S. Douglas Knox of Quarles & Brady LLP, Tampa, for appellees The Bank of New York Mellon f/k/a The Bank of New York Mellon As Trustee for the certificate holders of CWMBS, Inc., CHL Mortgage Pass-Through Trust 2006-8, Mortgage Pass Through Certificates, Series 2006-8.

DAMOORGIAN, J.

Appellants, Donald and Mary Miller, appeal a final judgment of foreclosure in favor of The Bank of New York Mellon (the “Bank”). Appellants argue that the judgment should be reversed because the Bank failed to establish that it complied with conditions precedent to filing suit. Based on the trial court’s finding to the same, we reverse.

Following a bench trial in front of a magistrate in a routine mortgage foreclosure action, the trial court entered judgment in favor of the Bank for past due amounts under the subject note. However, the trial court declined to award the accelerated amount due under the note based upon its finding that the Bank did not send proper notice of acceleration as required by paragraph twenty-two of the mortgage. In awarding the past due amounts, the court reasoned that “failure to comply with paragraph [twenty-two] does not affect entitlement to foreclose on past due installments.”

Our holding in Holt v. Calchas, LLC, 155 So. 3d 499 (Fla. 4th DCA 2015) dictates otherwise. In Holt, we explained on rehearing:

Although in our previous opinion, which is now withdrawn[^[1]], we construed paragraph twenty-two as relating to acceleration remedies and not past due amounts, upon consideration of Holt’s motion for rehearing, we are satisfied that failure to prove compliance with paragraph twenty-two at trial requires dismissal of the case due to the requirements imposed by paragraph twenty of the mortgage, which provides:

Neither Borrower nor Lender may commence … any judicial action pursuant to this Security Instrument or that alleges that the other party has breached any provision of, or any duty owed by reason of, this Security Instrument, until such Borrower or Lender has notified the other party … of such alleged breach and afforded the other party hereto a reasonable period after the giving of such notice to take corrective action….. The notice of acceleration and opportunity to cure given to Borrower pursuant to [paragraph] 22 … shall be deemed to satisfy the notice and opportunity to take corrective action provisions of this [paragraph] 20.

Id. at 507 n.4.

Paragraph twenty of the mortgage at issue contains identical language to that quoted in Holt. Accordingly, Holt compels us to conclude that the trial court erred in entering judgment of foreclosure in favor of the Bank in light of its finding that the Bank failed to send proper notice of acceleration as required by the mortgage. Under such circumstances, the proper remedy was a complete dismissal. Id. In arriving at this conclusion, we note that the merits of the court’s finding regarding the Bank’s failure to comply with conditions precedent is not properly before this court as the Bank did not file a cross-appeal.

Reversed.

TAYLOR and GERBER, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

[1] The final judgment appealed was rendered before we issued our opinion in Holt on rehearing and as such, the trial court relied on the withdrawn version of Holt in awarding the Bank past due amounts.

 

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Johnnie Mae Edwards, Appellant,
v.
Reverse Mortgage Solutions, Inc., Appellee.

Case No. 3D14-2631.District Court of Appeal of Florida, Third District.

Opinion filed March 2, 2016.Legal Services of Greater Miami, Inc., and Jacqueline C. Ledón, for appellant.

McCalla Raymer and Toby Foor-Pessin (Orlando), for appellee.

Before, SALTER, FERNANDEZ and LOGUE, JJ.

FERNANDEZ, J.

The defendant, Johnnie Mae Edwards, appeals the entry of a final judgment of foreclosure entered in favor of appellee, Reverse Mortgage Solutions, Inc., in this reverse residential mortgage foreclosure case. Following this Court’s recent opinion in Smith v. Reverse Mortgage Solutions, Inc., etc., 2015 WL 4257632 (motions for rehearing and rehearing en banc pending), we reverse because Reverse Mortgage failed to establish a condition precedent to its right to foreclose.

On November 21, 2006, Willie A. Edwards obtained a reverse mortgage from Reverse Mortgage using the equity in his marital home (a home equity conversion mortgage). Mr. Edwards signed and executed a promissory note for the debt. The note defines “borrower” as the person who signs at the end of the note. Mr. Edwards, joined by his wife, Johnnie Mae Edwards, secured the debt by signing and executing a mortgage. Mrs. Edwards appears as a borrower on the mortgage’s signature block. However, she was not mentioned in the note, and her signature was not on the note.

On April 10, 2008, Mr. Edwards passed away. As per the terms of the mortgage’s acceleration provision in paragraph 9(a)(i):

Grounds for Acceleration of Debt. Due and Payable. Lender may require immediate payment in full of all sums secured by this Security Instrument if: A borrower dies and the Property is not the principal residence of at least one surviving Borrower; . . .

Accordingly, Reverse Mortgage Solutions, Inc. accelerated the debt. Mrs. Edwards failed to pay the alleged sum due under the note and defaulted. On November 8, 2013, Reverse Mortgage filed a one-count foreclosure action. Initially, Mrs. Edwards was defaulted for her failure to appear and for failing to file any responsive pleadings. However, she eventually appeared pro se. A non-jury trial was held, at which point she had obtained counsel to represent her.

At trial, due to having been defaulted, Mrs. Edwards was barred from testifying and from entering affirmative defenses. Her counsel stated that she no longer had title of the home, having quitclaimed it to her husband prior to his application for the reverse mortgage. This assertion was not objected to. Mrs. Edwards contended that despite the default, Reverse Mortgage was still required to prove its case. She maintained that Reverse Mortgage needed to prove she defaulted under the note and mortgage by failing to pay the payment due on April 10, 2008 and all subsequent payments. The trial court held that Reverse Mortgage was entitled to foreclosure because Mr. Edwards was the only borrower under the note, and therefore, the only borrower for the purposes of the mortgage’s acceleration provision. Accordingly, as Mr. Edwards was now deceased, the trial court entered final judgement in favor of Reverse Mortgage. Mrs. Edwards then filed this appeal.

We believe the issue before us today is the exact same issue that was recently addressed by this Court in Smith v. Reverse Mortgage, Solutions, Inc., etc., 2015 WL 4257632. In Smith, we found that “based on the plain and unambiguous language of the mortgage,” both the deceased husband and his wife were treated as “borrowers” under the mortgage, and each borrower was “protected from the foreclosure of the mortgage until both borrowers died.” Id. at *3 (emphasis added). Thus, we held in Smith that the wife who survived her spouse was a co-borrower and that her death was a condition precedent to Reverse Mortgage Solutions’ ability to foreclose. Id. In Smith, as in the case before us, the surviving spouse was a borrower under the mortgage, but was not designated a borrower under the note.

As in Smith, we hold that the trial court’s final judgment in the case before us should be reversed because Reverse Mortgage has not met the condition precedent required before it is able to foreclose on Mrs. Edward’s property. Here, Mrs. Edwards is a co-borrower, and her death is a condition precedent to Reverse Mortgage’s ability to foreclose on the property. Smith at *5.

We agree with the reasoning in Smith that this holding is consistent with Florida’s Homestead provisions, Article X, § 4(c), Florida Constitution, as well as the purpose of federal laws related to reverse mortgages enacted to prevent the displacement of elderly homeowners. See Smith at *4; 12 U.S.C. § 1715z-20(j). This provision provides, and as we stated in Smith, “For purposes of this subsection, the term `homeowner’ includes the spouse of a homeowner.” See Smith at *11; 12 U.S.C. § 1715z-20(j).

We adhere to Smith and agree that “it would be difficult, if not impossible, for us to construe [Mrs. Edwards] as anything other than a `Borrower'”. Accordingly, Mrs. Edwards is a “borrower” for purposes of Paragraph 9 of the mortgage’s acceleration provision. Smith at *5. It then follows that pursuant to the acceleration clause, Reverse Mortgage had to establish that either Mrs. Edwards died or that as of the date of the trial in the lower court, the property was no longer Mrs. Edward’s residence. The record reflects that Mrs. Edwards is still alive, and the property is still her residence. Accordingly, Reverse Mortgage may not foreclose the mortgage, pursuant to the 9(a)(i) acceleration provision, against Mrs. Edwards, who is a surviving borrower under the mortgage, but not a borrower under the note.

We reverse the trial court’s Final Judgment of Foreclosure and remand the case to the trial court to enter final judgment in favor of Mrs. Edwards.

Reversed and remanded with instructions.

Not final until disposition of timely filed motion for rehearing.

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Reuters-

Bank of New York Mellon Corp must face a lawsuit seeking to hold it liable for causing $1.12 billion of investor losses by failing to properly monitor five trusts backed by toxic residential mortgages, a Manhattan federal judge ruled.

U.S. District Judge Gregory Woods said Belgium’s Royal Park Investments SA/NV may pursue claims that the bank, as trustee for trusts dating from 2005 to 2007, ignored widespread, systemic abuse in how the underlying loans were underwritten and serviced, and failed to require that bad loans be repurchased.

“Indeed,” Woods wrote in his decision on Wednesday, “it would be implausible to assume that somehow all of the mortgage loans underlying the trusts miraculously avoided the pervasive practices of the industry at the time.”

[REUTERS]

 

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EVERY SUNDAY
3:00 PM HAWAII
5:00 PM PACIFIC
8:00 PM EASTERN
ON KHVH-AM
(830 ON THE DIAL)
AND ON
iHEART RADIO

 

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Los Angeles Times-

During the bust that followed last decade’s housing boom, hundreds of thousands of Californians lost their homes to foreclosure. It was a process later found to be rife with problems, such as overwhelmed bank employees who sometimes didn’t even read the foreclosure documents in front of them.

But challenging foreclosures on the basis of paperwork problems proved to be mostly futile, given California courts had ruled that borrowers who weren’t paying their mortgages didn’t suffer financial harm.

Now, a recent decision by the California Supreme Court will allow some of those former homeowners to pursue lawsuits and possibly win damages for wrongful foreclosure even if they were in default.

“They opened the courthouse doors,” said Katherine Porter, a law professor at UC Irvine and a former monitor for a national settlement over foreclosure abuses.

[LA TIMES]

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Washington Post-

First, the kitchen sink stopped up. And when that happened, Doreen’s family began washing dishes in the bathtub. Then food scraps clogged the tub, too, which meant that everyone had to bathe with water boiled in the kitchen that they flushed down the toilet. Then the toilet quit working, too.

Doreen, one of the impoverished Milwaukee tenants in sociologist Matthew Desmond’s new book “Evicted: Poverty and Profit in the American City,”enters an unwinnable war over the plumbing. Sherrena, her landlord, won’t fix it. A couple months go by. Doreen calls a plumber herself and deducts the cost from her rent. Then Sherrena threatens to evict her, because now she’s behind on what she owes. The two strong-willed women lock in conflict, one trying to protect her family, the other her profit margin.

The deteriorating scene in Doreen’s cramped apartment — later the pots pile up, and the roaches come, and the cooking stops, and the kids’ grades fall and the depression sets in — builds up to the central insight of Desmond’s research: Eviction isn’t just a condition of poverty; it’s a cause of it. When stable housing is elusive, everything else falls apart. Tenants preoccupied by eviction lag at work and lose their jobs. Or they have to move farther from work and lose their jobs. Or they miss the welfare appointment reminder that was mailed to an address where they no longer live, and they lose their welfare, too.

[WASHINGTON POST]

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The Consumer Financial Protection Bureau (CFPB or Bureau) is focused on creating a consumer
financial marketplace that works for all consumers. Our mission is to make markets for consumer
financial products and services work for consumers and responsible providers by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives.

When we do our work well, we help to ensure that consumers are able to make the financial
decisions they believe are best for themselves and their families in a fair marketplace one where
prices are clear up front, risks are visible, nothing is buried in fine print, and everyone plays by the
rules. In a market that works, consumers should be able to make direct comparisons among financial products and services and no provider should be able to use unfair, deceptive, or abusive practices.

Over the past year, the CFPB has engaged in an intensive planning effort to prioritize how we will
use our tools together to tackle some of the most troubling problems facing consumers. There
are four industry wide problems that we have been focused on: deception, or situations where the
costs and risks of a financial decision are obscured or opaque; debt traps, or practices that trigger a
cycle of debt where consumers rack up substantial costs over time; dead ends, or situations where
people cannot “vote with their feet” when they are treated unfairly; and discrimination, or unequal
treatment based on characteristics such as race, gender, or other biases prohibited by law. In
developing our priorities, we assessed these problems within and across markets and then
prioritized them based on the extent of the consumer harm that we were able to identify and our
capacity to eliminate or mitigate that harm.

The result, below, is a set of near term priority goals where we hope to make substantial progress
over the next two years, and a plan for how to deploy our shared cross Bureau resources to do so.
To be clear, these goals do not capture all of the important work we are doing. In particular, the
Bureau will continue to fulfill its mandate under the Dodd-Frank Act to police all markets within
its jurisdiction for compliance with consumer financial law and regulations. That is a core part of
our work that will not change over time, even though our overall priorities as an agency will shift.
Accordingly, we were careful to preserve significant resources to ensure that we fulfill this
mandate.

Financial companies should continue their focus on complying with the law beyond the particular issues described in the goals, whether or not they see their particular industry or product mentioned explicitly among the shared cross
Bureau priorities.

We will also continue to monitor the markets in our jurisdiction and be flexible where necessary to respond to emerging issues protect consumers.

In addition, while this strategy focuses on our forward looking priorities as an agency, there are a few additional priority work streams that are well established and ongoing, and we will see that work through to completion. This includes, in particular, our fair lending oversight of indirect auto lenders and our rule making on prepaid cards.

[…]

http://files.consumerfinance.gov/f/201602_cfpb_policy-priorities-over-the-next-two-years.pdf

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CHARLES G. NOLAN, Appellant,
v.
MIA REAL HOLDINGS, LLC, Appellee.

No. 4D15-666.District Court of Appeal of Florida, Fourth District.February 24, 2016.Brian Korte and Scott J. Wortman of Korte & Wortman, P.A., West Palm Beach, for appellant.

Jerome L. Tepps of Jerome L. Tepps, P.A., Sunrise, for appellee.

GROSS, J.

We reverse the final judgment of foreclosure because the action was barred by the “two dismissal” rule of Florida Rule of Civil Procedure 1.420(a)(1). In successive actions, two different plaintiff/note holders sought to foreclose based on the same breach. Each plaintiff filed a voluntary dismissal of its lawsuit. For the purpose of rule 1.420(a)(1), we hold that the two noteholders—the original plaintiff and the subsequent assignee of the note—were the same “plaintiff” under the rule, so that the second voluntary dismissal triggered an “adjudication on the merits.” Id.

Flagstar Bank filed a foreclosure action against the homeowner, which it voluntarily dismissed. Flagstar assigned the note and mortgage to DKR Mortgage, which then filed a second foreclosure action against the homeowner, on the same note, alleging the same breach. MIA Real Holdings substituted as the party plaintiff in that action after it purchased the note from DKR Mortgage. MIA voluntarily dismissed the second action. Subsequently, MIA filed a third complaint on the same note, alleging the same breach, which resulted in the final judgment on appeal.

“[A] notice of dismissal operates as an adjudication on the merits when served by a plaintiff who has once dismissed in any court an action based on or including the same claim.” Fla. R. Civ. P. 1.420(a)(1). Under this rule, “a plaintiff may voluntarily dismiss his or her lawsuit at practically any time . . . without prejudice however to plaintiff’s commencing a wholly new lawsuit against the same defendant if the right to do so has not been exercised before.” Randle-Eastern Ambulance Serv., Inc. v. Vasta, 360 So. 2d 68, 68 (Fla. 1978) (emphasis added).

An assignor of a note “conveys to the assignee his or her rights and interest” in the note assigned. Dove v. McCormick, 698 So. 2d 585, 589 (Fla. 5th DCA 1997). As a matter of substantive law, the “assignee thereafter stands in the shoes of the assignor and may enforce the contract against the original obligor in his own name.” Lauren Kyle Holdings, Inc. v. Heath-Peterson Constr. Corp., 864 So. 2d 55, 58 (Fla. 5th DCA 2003). It follows that here, MIA stands in the procedural shoes of Flagstar, the first plaintiff/assignor which took a voluntary dismissal. See Variety Children’s Hosp. v. Mt. Sinai Hosp. of Greater Miami, Inc., 448 So. 2d 546, 548 (Fla. 3d DCA 1984) (affirming final summary judgment in favor of appellees because the hospital twice voluntarily dismissed before initiating a third action, noting that “the dismissal of the first two actions operates as a bar to the filing of a third complaint by Variety and by those in privity with Variety, including its insurers.”) (emphasis added). Any other interpretation of the rule could lead to as many voluntary dismissals as there are assignments and this is an area where notes are often assigned and reassigned. See, e.g., Salmon v. Foreclosed Asset Sales & Transfer P’ship, 162 So. 3d 1142, 1143 (Fla. 4th DCA 2015) (observing that the note at issue was “bundled, securitized, and indorsed to a series of holders”). The two voluntary dismissals, taken by two different plaintiffs but involving the same note and the same breach, required that the second dismissal operate as an adjudication on the merits; if it wanted to pursue its claim for non-payment, MIA was required to refile a lawsuit against the homeowners alleging a new and separate breach by non-payment on the note. See Singleton v. Greymar Assocs., 882 So. 2d 1004, 1006-07 (Fla. 2004).

Reversed and Remanded.

WARNER and LEVINE, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

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HuffPO-

The DNC chair isn’t the first Democrat to defend payday lenders. A handful of House Financial Services Committee members consistently join the GOP’s payday loan boosterism. But support from such backbenchers has been politically impotent. Wasserman Schultz, by contrast, is the nominal head of the Democratic Party. Her support undercuts efforts by liberals in Congress to draw contrasts with Republicans on economic issues.

The misleadingly titled Consumer Protection and Choice Act would delay the CFPB’s payday lending rules by two years, and nullify its rules in any state with a payday lending law like the one adopted in Florida. The memo being passed around by Wasserman Schultz staffers describes the Florida state law as a “model” for consumer laws on payday loans, and says the CFPB should “adjust their payday lending rules to take into account actions Florida has already taken.”

Consumer groups are appalled by the bill. The Consumer Federation of America, the NAACP, The National Consumer Law Center, The National Council of La Raza, The Southern Poverty Law Center and hundreds of others wrote a letter to every member of Congress in December urging them to oppose the legislation.

[HUFFINGTONPOST]

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ABDEL (DARWISH) DARWICHE and BATOUL (DARWISH) DARWICHE, Appellants,
v.
THE BANK OF NEW YORK MELLON f/k/a THE BANK OF NEW YORK, AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF CWMBS 2003-60, Appellee.

No. 4D13-4395.District Court of Appeal of Florida, Fourth District.February 24, 2016.Vanessa Jaleh Bravo of Neustein Law Group, P.A., Aventura, for appellants.

Tahirah R. Payne and Kristen M. Gottfried of Morris Schneider Wittstadt, LLC, Tampa, for appellee.

CONNER, J.

Abdel and Batoul Darwiche appeal the trial court’s entry of a final summary judgment of foreclosure in favor of Appellee, Bank of New York Mellon, and the denial of their motion for rehearing and relief from judgment. Although Appellants raise several issues on appeal, we find merit in only one of their arguments. Appellants argue that the trial court erred in entering final summary judgment in favor of the bank where genuine issues of material fact remained regarding the bank’s standing. We agree, and reverse and remand for further proceedings.

Factual Background and Trial Court Proceedings

The bank initiated this mortgage foreclosure action against Appellants on July 28, 2009. The copy of the note attached to the complaint states that the original lender was America’s Wholesale Lender and did not contain any indorsements. In its complaint, the bank alleged that the mortgage was transferred to it by virtue of “an assignment to be recorded” and that it “owns and holds the Note and Mortgage.”^[1] The mortgage also stated that “`MERS’ is Mortgage Electronic Registration Systems, Inc. MERS . . . is acting solely as a nominee for Lender and Lender’s successors and assigns.”

After Appellants filed a motion to dismiss challenging the bank’s standing, the bank filed a copy of the note reflecting an undated blank indorsement signed by Countrywide Home Loans, Inc., doing business under the fictitious name of America’s Wholesale Lender, the original lender. The bank also maintained in its response to Appellants’ motion that it was in possession of the original note and mortgage and that it came into ownership of the same through a valid assignment of mortgage. Appellants’ motion was denied, and Appellants filed their answer to the complaint, in which they maintained their challenge to the bank’s standing.

Thereafter, the bank filed its motion for summary judgment of foreclosure. In support of its motion, the bank filed an affidavit attesting that it “has possession of the promissory note,” and that it is “the assignee of the security instrument for the referenced loan.” The bank also filed the original note and mortgage, along with a copy of the recorded assignment of mortgage. The original note contained the undated blank indorsement by the original lender. The assignment of mortgage, notarized August 5, 2009 (after suit was filed), reflected a transfer of the note and mortgage from MERS to the bank, effective June 22, 2009 (before suit was filed). Although a hearing was held on the bank’s motion for summary judgment, it appears Appellants failed to attend, and a transcript of the hearing has not been included in the record on appeal. After the hearing, the trial court entered a final summary judgment in favor of the bank. Appellants gave notice of appeal after the trial court denied their motion for rehearing and relief from judgment.

Appellate Analysis

Appellants argue that the trial court erred in entering final summary judgment in favor of the bank where genuine issues of material fact remained regarding the bank’s standing.

The granting of a motion for summary judgment is reviewed de novo. Volusia Cnty. v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000). “When reviewing a ruling on summary judgment, an appellate court must examine the record in the light most favorable to the non-moving party.” Frost v. Regions Bank, 15 So. 3d 905, 906 (Fla. 4th DCA 2009) (citing Allenby & Assocs., Inc. v. Crown St. Vincent Ltd., 8 So. 3d 1211, 1213 (Fla. 4th DCA 2009)). Summary judgment is appropriate only where “there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.” Fla. R. Civ. P. 1.510(c). The burden is on the moving party to show “conclusively the absence of any genuine issue of material fact and the court must draw every possible inference in favor of the party against whom a summary judgment is sought.” Moore v. Morris, 475 So. 2d 666, 668 (Fla. 1985). “If the evidence raises any issue of material fact, if it is conflicting, if it will permit different reasonable inferences, or if it tends to prove the issues, it should be submitted to the jury as a question of fact to be determined by it.” Id. “If the `slightest doubt’ exists, then summary judgment must be reversed.” Sierra v. Shevin, 767 So. 2d 524, 525 (Fla. 3d DCA 2000).

It is well settled that standing of the plaintiff to foreclose on a mortgage must be established at the time the plaintiff files suit. See McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012); Rigby v. Wells Fargo Bank, N.A., 84 So. 3d 1195, 1196 (Fla. 4th DCA 2012). Here, Appellants assert that the bank failed to establish that it possessed the blank-indorsed note at the inception of the suit. While the original note contained an undated blank indorsement, and while the bank ultimately filed the original note with the trial court, reflecting possession of the note at the time the original was filed, there was nevertheless insufficient evidence to establish that the bank held the blank-indorsed note, and was thus entitled to enforce it, at the time suit was filed.

The affidavits in support of the bank’s motion for summary judgment did not specifically state when the bank came into possession of the note, nor did the bank otherwise indicate that it owned or possessed the note at the time suit was filed. Though the bank filed the original note and mortgage prior to the summary judgment hearing, its bare assertion in its supporting affidavit that it “has possession of the promissory note” fails to clarify at what point the bank obtained possession of the blank-indorsed note, and is therefore insufficient evidence of whether the bank possessed the note from the inception of the suit. See Cromarty v. Wells Fargo Bank, NA, 110 So. 3d 988, 989 (Fla. 4th DCA 2013) (“While the note introduced had a blank [i]ndorsement and was sufficient to prove ownership by appellee, who possessed the note, nothing in the record shows that the note was acquired prior to the filing of the complaint. The [i]ndorsement did not contain a date, nor did the affidavit filed in support of the motion for summary judgment contain any sworn statement that the note was owned by the plaintiff on the date that the complaint was filed.” (emphasis added and internal quotation marks omitted) (quoting Hall v. REO Asset Acquisitions, LLC, 84 So. 3d 388 (Fla. 4th DCA 2012))).

As to the assignment of mortgage, upon which the bank relied to establish its standing, we agree with Appellants that genuine issues of material fact remained as to whether the assignment of mortgage was sufficient to establish the bank’s standing at the inception of the suit. The complaint was filed on July 28, 2009. Although the assignment transferring the note and mortgage to the bank states an “effective date” of June 22, 2009, the assignment appears to have been notarized and executed on August 5, 2009, which was clearly after the complaint was filed. We have held that “two inferences can be drawn from the `effective date’ language.” Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1277 (Fla. 4th DCA 2013). One inference is that ownership of the note and mortgage was equitably transferred to the bank on June 22, 2009 (prior to suit), but another inference is that the parties to the transfer were attempting to backdate an event to their benefit. Id. We have previously warned that “[a]llowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.” Id. at 1277 n.1. “Because the language yields two possible inferences, proof is needed as to the meaning of the language, and a disputed fact exists.” Id. at 1277.

Accordingly, we hold that the trial court erred in entering summary judgment in favor of the bank, where the record does not reflect as a matter of law that the bank had standing on the date the complaint was filed. We therefore reverse the entry of summary judgment and remand for further proceedings consistent with this opinion.

Reversed and remanded.

CIKLIN, C.J., and BOORAS, TED, Associate Judge, concur.

Not final until disposition of timely filed motion for rehearing.

[1] The copy of the assignment of mortgage filed in the court file states the note was assigned and transferred as well.

 

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FREDERIC MONNOT, Appellant,
v.
U.S. BANK, NATIONAL ASSOCIATION AS TRUSTEE RELATING TO CHEVY CHASE FUNDING LLC MORTGAGE BACKED CERTIFICATES SERIES 2007-2 and JENNIFER W. MONNOT, Appellees.

No. 4D14-2527.District Court of Appeal of Florida, Fourth District.February 24, 2016.Arthur Morburger, Miami, for appellant.

Susan B. Morrison and Lauren E. Wages of Law Office of Daniel C. Consuegra, P.L., Tampa, for appellee, U.S. Bank.

MAY, J.

A borrower appeals a final judgment of foreclosure. He argues the court erred in entering the judgment because U.S. Bank, N.A., as Trustee relating to Chevy Chase Funding, LLC, Mortgage Backed Certificates Series 2007-2 (“bank”) failed to prove standing, and also erred in dismissing his counterclaim alleging a Truth in Lending Act (“TILA”)^[1] violation. We agree and reverse.

The borrower and Chevy Chase Bank, F.S.B. (“Chevy Chase Bank”) executed a note and mortgage. The note provided that the annual interest rate of 8.750% may vary, but could not exceed 19.900%. The initial monthly payment under the note was $5,423.13, which would be the same for the first sixty monthly payments. MERS was named the nominee for Chevy Chase Bank.

The same day, the borrower signed and acknowledged receiving the TILA Statement from Chevy Chase Bank. The TILA Statement noted that the annual percentage rate (“APR”), which was subject to change, was 8.759%. It also noted 38 payments of $5,423.13 beginning on May 1, 2007, and 322 payments of $12,980.97 beginning on July 1, 2010. The loan was a monthly adjustable rate mortgage loan that had a variable rate.

On August 1, 2009, the borrower failed to make his monthly payment. On December 2, 2009, U.S. Bank, NA as Trustee for CCB Libor Series 2007-2 Trust (“U.S. Bank as Trustee for CCB”) filed a complaint against the borrower. Count I sought foreclosure of the mortgage and count II sought to reestablish a lost note. U.S. Bank as Trustee for CCB alleged that it held the mortgage by virtue of an assignment. It also alleged that it “owns and holds the note and subject mortgage.” And, it alleged that “[t]he Plaintiff, its Assignor, or its servicer, was in possession of the Note and was entitled to enforce the Note when loss of possession occurred.”

A copy of the note and mortgage were attached to the complaint. The attached note was executed in favor of Chevy Chase Bank and did not contain any endorsements. On December 11, 2009, U.S. Bank as Trustee for CCB filed a notice of filing original note and mortgage.

On July 22, 2010, the borrower filed an amended answer and asserted several affirmative defenses and a counterclaim. The borrower asserted affirmative defenses of lack of compliance with TILA and Regulation Z of the Code of Federal Regulations^[2] and lack of standing. He alleged untruthful disclosures on his finance charges and APR.

In the borrower’s counterclaim, he alleged that the TILA Statement failed to comply with TILA disclosure requirements because the finance charges, monthly payments, and APR were significantly understated, as demonstrated by an attached forensic audit report. He alleged that the errors were apparent on the face of the TILA Statement and could be proven inaccurate by a comparison to the note. The borrower sought offset and recoupment damages from U.S. Bank as Trustee for CCB for fraud in the inducement and TILA violations, among other counts. The borrower also requested statutory damages of not less than $200 nor more than $2,000 and actual damages.

The borrower attached a letter explaining a report from his expert witness. The report concluded that Chevy Chase Bank committed multiple TILA violations in its TILA Statement. U.S. Bank as Trustee for CCB answered the counterclaim and denied the TILA violation allegations.

On June 23, 2010, U.S. Bank as Trustee for CCB filed a corrective assignment of mortgage. It stated that “prior to November 20, 2009, . . . assignor has granted, bargained, sold, assigned . . . the [subject] mortgage,” together with the note, to the bank. However, the vice president of MERS executed it on May 11, 2010.

On July 6, 2010, U.S. Bank as Trustee for CCB moved to reform the assignment of mortgage and correct scrivener’s errors in the complaint, lis pendens, and assignment of mortgage. It argued that (1) an assignment of mortgage was created on December 1, 2009; (2) a complaint was filed in this case on December 2, 2009; (3) the plaintiff’s name was erroneous and should have named the bank; (4) U.S. Bank as Trustee for CCB did not exist; (5) the assignment of mortgage was incorrect; and (6) the intent of the parties was to assign the mortgage to the bank because it is the owner and holder of the note and mortgage. The court granted the motion, reformed the assignment of mortgage, and corrected the scrivener’s errors to name the bank.

On April 29, 2014, the bank filed a declaration from a records custodian for Capital One, N.A., as successor by merger to Chevy Chase Bank, N.A., formerly known as Chevy Chase Bank, FSB (“Capital One”). Attached were the payment history, collection notes, and demand letters. It also filed a second records custodian declaration from a bank records custodian, who verified that the attached limited powers of attorney; June 1, 2007 PSA relating to Chevy Chase Funding, LLC Mortgage Backed Certificates, Series 2007-2; and mortgage loan schedule were within its business records.

The case proceeded to a two-day non-jury trial before a magistrate. The bank requested the court take judicial notice of the merger between Chevy Chase Bank and Capital One, the original mortgage, and the corrected assignment of mortgage. The magistrate took notice. It then offered the two declarations filed by the bank and their attached records into evidence, which the magistrate admitted.

The bank then offered a declaration from its attorney’s law firm’s records custodian into evidence, which was admitted. The declaration and attachments concerned the note and mortgage. The attachment was a screenshot from the firm’s case management system, which contained one non-blacked-out line. The line noted that the firm received the original note and mortgage on December 6, 2009.

The magistrate also admitted, among other documents, the original note and mortgage. Unlike the copy of the note attached to the complaint, the original note contained an undated special endorsement from Chevy Chase Bank to U.S. Bank, N.A. as Trustee.

The bank offered the testimony of a high risk analyst for Specialized Loan Servicing (“SLS”), which began servicing the loan in March 2010. The analyst testified that “the original note and other documents related to origination” are typically found within a collateral file. SLS received the collateral file from the bank on November 27, 2009, before the suit was filed. However, the analyst had no personal knowledge whether the endorsed note was part of that file, even though it usually was.

The analyst also testified that the note was part of the merger between Chevy Chase Bank and Capital One, which she knew from a review of the PSA. And, based on her records review, the bank obtained physical possession of the note in June 2007. While she later testified that the bank had the original endorsed note in its possession at the time the complaint was filed, she admitted that she did not know the specific date on which the note was endorsed to the bank. And, she did not check the collateral file for the original note and had no personal knowledge of whether the original note was in the collateral file when received by the servicer.

The magistrate heard the borrower’s counterclaim for the alleged TILA violations. The bank’s counsel argued the statute of limitations had run and only a defense of recoupment or setoff was allowed. The borrower’s counsel argued the borrower was allowed to bring the counterclaim. The magistrate allowed the counterclaim to proceed.

The borrower’s expert testified that she conducted a forensic audit of the loan using a software program. She opined that the TILA Statement did not match the components of the note, and the payment terms in the TILA Statement were inaccurate. She further opined that the finance charges were understated by $4.9 million because the 8.75% interest rate was disclosed rather than the 19.9% interest rate, which was the interest rate cap according to the note. And, she opined the borrower was entitled to damages of $292,848, which represented double the finance charges the borrower paid from the note’s inception to the default date.

The bank moved to dismiss the TILA counterclaim under 15 U.S.C. § 1640, because the expert could determine if the TILA Statement was inaccurate only based upon a software program and not by looking at the face of the document. The borrower’s counsel argued the motion to dismiss was improperly made and the face of the TILA Statement showed violations. The magistrate reserved ruling.

The borrower testified that he relied on the truth and accuracy of the TILA Statement. When he discovered the inaccuracy in 2009, he stopped making payments to “cut his damages.” The bank moved again to involuntarily dismiss the counterclaim. The magistrate recommended granting involuntary dismissal on the counterclaim’s fraud in the inducement count and denying it on the TILA violation count. The borrower voluntarily dismissed the other counts.

The magistrate found the bank proved its foreclosure case. It then found in favor of the bank with respect to the counterclaim. The magistrate recommended that final judgment of foreclosure be granted in favor of the bank, a final judgment be granted in favor of the bank on the TILA violation counterclaim, and the fraud in the inducement counterclaim be involuntarily dismissed. The trial court accepted the magistrate’s recommendations, granted involuntary dismissal as to the fraud in the inducement count, and found in favor of the bank on the TILA violation. It then granted final judgment of foreclosure in favor of the bank. From these judgments, the borrower now appeals.

The borrower argues the bank was not the original lender, did not possess the note at the case’s inception, and had an assignment of mortgage and note under a fake name. There was no testimony regarding when the note was endorsed.

The bank responds that it proved standing through its documentary and testimonial evidence that it owned and held the note at the case’s inception. Its rights as a holder were not affected by the scrivener’s error in the assignment of mortgage, which was later corrected.

The borrower replies that the assignment of mortgage does not establish standing because it was dated after the bank filed its complaint. If, as the answer brief alleges, Capitol One was the servicer and holder of the original note at the time suit was filed, then the bank was not the proper plaintiff.

We have de novo review. Dixon v. Express Equity Lending Grp., LLLP, 125 So. 3d 965, 967 (Fla. 4th DCA 2013) (citation omitted).

“[S]tanding may be established from the plaintiff’s status as the note holder, regardless of any recorded assignments.” McLean v. JP Morgan Chase Bank Nat’l Ass’n, 79 So. 3d 170, 173 (Fla. 4th DCA 2012) (citation omitted). “If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement.” Id. “[W]here there is an indication that equitable transfer of the mortgage occurred prior to the assignment, dismissal of the complaint is error, even if the assignment was executed after the complaint was filed.” Id. at 174.

“A plaintiff alleging standing as a holder must prove it is a holder of the note and mortgage both as of the time of trial and also that [it] had standing as of the time the foreclosure complaint was filed.” Kiefert v. Nationstar Mortg., LLC, 153 So. 3d 351, 352 (Fla. 1st DCA 2014) (emphasis added). “A plaintiff’s lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed and cannot be established retroactively by acquiring standing to file a lawsuit after the fact.” LaFrance v. U.S. Bank Nat’l Ass’n, 141 So. 3d 754, 756 (Fla. 4th DCA 2014) (citation omitted) (internal quotation marks omitted).

Here, the bank alleged that it “owns and holds the note and subject mortgage.” Thus, under Kiefert it had to establish it possessed either a blank endorsed or specially endorsed note in its favor at the case’s inception. When the bank filed its complaint, it attached a copy of the note, which was in favor of the original lender, Chevy Chase Bank, and contained no endorsements. The bank did not file the original note with the undated special endorsement from Chevy Chase Bank to U.S. Bank, N.A. as Trustee until after the complaint was filed. This alone is insufficient to establish standing at the case’s inception. Tilus v. AS Michai LLC, 161 So. 3d 1284, 1286 (Fla. 4th DCA 2015) (citing Bristol v. Wells Fargo Bank, Nat’l Ass’n, 137 So. 3d 1130, 1132 (Fla. 4th DCA 2014)).

The bank also argues the custodian’s declaration and attached screenshot showing that the bank’s counsel received the original note on December 6, 2009, shows the bank or servicer was in possession of the note on or before December 5, 2009. However, possession on December 5, 2009 does not prove possession at the case’s inception, December 2, 2009. And, it does not prove when the original note was specially endorsed in the bank’s favor. See Russell v. Aurora Loan Servs., LLC, 163 So. 3d 639, 642-43 (Fla. 2d DCA 2015).

The bank next relies on its witness’s testimony to prove standing, but this also fails. The testimony revealed that the original note is usually found within the collateral file and the servicer received the collateral file from the bank on November 27, 2009. The bank’s witness testified that the bank had possession of the original endorsed note when it filed the complaint, based on her review of the business records. However, the witness had no personal knowledge of whether the specially endorsed original note was part of the collateral file because she did not review its contents. She also did not know why the endorsed note was not attached to the complaint nor the specific date the note was endorsed to the bank. See Kenney v. HSBC Bank USA, Nat’l Ass’n, 175 So. 3d 377, 380 (Fla. 4th DCA 2015).

Last, the bank argues the PSA shows it has been the owner of the loan since June 1, 2007, because the mortgage loan schedule shows the note was transferred into the PSA. This also fails because “evidence that the note was physically transferred into a trust prior to [the plaintiff] filing its foreclosure complaint does not, by itself, establish standing.” Jarvis v. Deutsche Bank Nat’l Trust Co., 169 So. 3d 194, 196 (Fla. 4th DCA 2015).

The bank simply failed to prove standing because it failed to prove that it possessed the original note endorsed in its favor prior to filing the complaint. We therefore reverse the final judgment of foreclosure.

The borrower next argues that in approving the magistrate’s recommendation of involuntary dismissal of the TILA counterclaim, the court overlooked competent substantial evidence of violations in the TILA Statement. He argues that on the face of the TILA Statement, the payment schedule and APR were grossly misstated. Thus, he was entitled to a recoupment of damages that exceeded the default amount and barred foreclosure.

Without belaboring this point, we agree the TILA violation can be considered in defense of any future foreclosure action. Although the borrower was not entitled to a separate action for damages because the statute of limitations expired, he could be entitled to an offset and recoupment of damages against the bank’s foreclosure judgment. Kasket v. Chase Manhattan Mortg. Corp., 695 So. 2d 431, 434-35 (Fla. 4th DCA 1997).^[3]

We reverse the final judgment of foreclosure based on the bank’s failure to prove standing, and also reverse the judgment in favor of the bank on the TILA violation counterclaim.

Reversed.

WARNER, J., and JEFFREY DANA GILLEN, Associate Judge, concur.

Not final until disposition of timely filed motion for rehearing.

[1] Truth in Lending Act, 15 U.S.C. § 1601 et seq. (2014).

[2] 12 C.F.R. § 226 (2014).

[3] In Beach v. Great Western Bank, 692 So. 2d 146 (Fla. 1997), our supreme court discussed Allie v. Ionata, 503 So. 2d 1237 (Fla. 1987), and noted that “we held that a counterclaim of recoupment of money damages may be asserted even though the underlying claim itself would have been timebarred if raised as a separate cause of action.” Beach, 692 So. 2d at 150-51 (citing Allie, 503 So. 2d at 1239-40).

 

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