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Sunday –  July 23

TFH 7/23 | Foreclosure Workshop #37: Rigby v. Bank of New York Mellon — The “Standing-at-Inception” Rule Versus the Question Whether “the Mortgage Follows the Note” or “the Note Follows the Mortgage”
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This Sunday’s show tackles one of the most fundamental of all foreclosure issues underlying most of our foreclosure rules, yet the least understood despite its ever growing importance:

Ownership wise, does the mortgage follow the note or does the note follow the mortgage?

In the foreclosure field, how that underlying question is answered implicitly not explicitly often determines standing, jurisdiction, the burden of proof and the actual result in most foreclosure cases.

A full understanding by the judiciary and by foreclosure defense attorneys alike of the difference between the two approaches might well in the future control whether or not an individual homeowner (which could be you) loses his or her foreclosure case — it is that important.

Centuries ago when traditional real estate mortgages secured promissory notes, the mortgage was merely security for the debt and the two rarely separated in ownership, both placed one on top of the other in the same local bank vault, undisturbed until either the mortgage loan was paid in full or in default.

The “inseparability” concept, for instance, was cemented in American law by the U.S. Supreme Court in the later celebrated case of Carpenter v. Logan decided in 1872, and by the N.Y. Court of Appeals five years earlier in Merritt v. Bartholick decided in 1867.

Yet, with the advent of securitized trusts, where mortgages seemingly wildly became separated from notes in secondary market casinos, mortgages usually without recorded assignments started to be passed back and forth like basketballs in the NBA.

At first, facing foreclosure, homeowners latching on to Carpenter and its inseparability rule demanded in court that foreclosing plaintiffs “show me the note, but courts enforcing state foreclosure laws written exclusively in terms of mortgage foreclosures understandably universally rejected requiring foreclosing plaintiffs to prove note ownership, and foreclosing plaintiffs seemed rarely to have kept the original notes, preferring instead the convenience of digitizing tens of millions of them if they should later be needed.

Then, after the robo-signing scandal of the early 2010’s and the problems uncovered with the sloppy if not fraudulent handling of mortgage assignments, in recent years foreclosing plaintiffs suddenly were forced to reverse themselves, now almost in unison gleefully announcing that courts should ignore mortgage assignment and ownership irregularities altogether, proudly stating in summary judgment hearings nationally to the presiding judge that “here is the note.”

This insincere about face, but largely effective tactic until recently, has in turn seemingly backfired on pretender lenders, now leading the majority of state courts to announce a “standing-at-inception” rule requiring proof of ownership of the note at the time a foreclosure complaint is filed, completely ignoring irregularities with photoshopped or robo-signed and robo-notarized mortgage assignments, as the Hawaii Supreme Court did recently in Toledo discussed in depth on an earlier show, available on the “past broadcast” section of our website at www.foreclosurehour.com.

In Rigby v. Bank of New York Mellon, the Florida First District Court of Appeal has just recently asked counsel surprisingly for further briefing, even though not contested in the parties’ briefs, regarding whether the “standing-at-inception” rule, long adopted in Florida, one of the first States to do so, should be abandoned or substantially altered despite stare decisis.

Now more than ever a better understanding therefore of the underlying mortgage/note issue in terms of “which follows which” is vitally needed to head off any erroneous abandonment of the “standing-at-inception” rule.

On this Sunday’s Foreclosure Hour, John and I will present listeners with surprising answers to “which follows which,” another example regarding how the Rule Ritual and its word robots, as discussed on our past shows, have erroneously enslaved American law.

We will provide not only a better understanding of the underlying “which follows which” controversy, never before revealed anywhere, but explain why the “standing-at-inception” rule should be maintained in Florida and adopted throughout the rest of the United States as, in effect, the “Miranda Rule” protecting homeowners facing foreclosure and which as a beginning step will enable courts upon its further application and development to finally begin to better examine, understand, and unravel the hidden, corrupt, and unregulated world of securitized trusts.

Listen live or on the past broadcast section of our website at www.foreclosurehour.com when this Sunday’s show is posted for the answers, only available on The Foreclosure Hour.

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