dinsfla | FORECLOSURE FRAUD | by DinSFLA - Part 2

Author Archives | dinsfla

NATIONSTAR MORTGAGE LLC v. Adee | NY: Appellate Div., 3rd Dept. – Based on the foregoing, defendants satisfied their burden of establishing that plaintiff was not entitled to foreclose on the subject property.

NATIONSTAR MORTGAGE LLC v. Adee | NY: Appellate Div., 3rd Dept. – Based on the foregoing, defendants satisfied their burden of establishing that plaintiff was not entitled to foreclose on the subject property.

2019 NY Slip Op 03873

NATIONSTAR MORTGAGE LLC, Doing Business as CHAMPION MORTGAGE COMPANY, Appellant,
v.
BRIAN S. ADEE et al., as Trustees of the Gerald F. and Marjorie C. Adee Trust, Respondents, et al., Defendants.

527518.
Appellate Division of the Supreme Court of New York, Third Department.
Decided May 16, 2019.
Appeal from an order of the Supreme Court (Cawley Jr., J.), entered March 14, 2018 in Broome County, which, among other things, granted certain defendants’ cross motion for summary judgment dismissing the complaint against them.

Goldberg Segalla LLP, Buffalo (Marc W. Brown of counsel) and Gross Polowy, LLC, Williamsville (Laura Strauss of counsel), for appellant.

Coughlin & Gerhart, LLP, Binghamton (Robert R. Jones of counsel), for respondents.

Before: Lynch, J.P., Clark, Mulvey, Aarons and Rumsey, JJ.

MEMORANDUM AND ORDER

AARONS, J.

Marjorie C. Adee (hereinafter Adee), along with her husband, owned real property in the Town of Vestal, Broome County. They created the Gerald F. and Marjorie C. Adee Trust (hereinafter the trust) and their children, defendants Brian S. Adee, Barbara L. Torrey and Kathy Anne Drumm (hereinafter collectively referred to as defendants) were named trustees. In 1995, the subject property was conveyed to the trust via a quitclaim deed with a life estate reserved for Adee and her husband. After her husband died, Adee, in 2003, entered into a loan agreement with M & T Bank for a home equity line of credit in the amount of $55,000. Under the loan agreement, Adee and the trust gave M & T Bank a mortgage secured by the subject property (hereinafter the HELOC mortgage). The HELOC mortgage was recorded in the Broome County Clerk’s office in July 2003.

In October 2007, Adee applied for a reverse mortgage with Bank of America, N.A. Adee was immediately approved and executed a note and reverse mortgage in the amount of $255,900 in favor of Bank of America. According to the reverse mortgage, Adee gave the subject property as security. In conjunction with this reverse mortgage, Adee also completed a US Department of Housing and Urban Development Addendum to the Uniform Residential Loan Application, as well as a settlement statement, which stated, among other things, that the HELOC mortgage was paid by Bank of America. The satisfaction of the HELOC mortgage was recorded in November 2007.

In 2012, Bank of America assigned the reverse mortgage to plaintiff. In 2015, Adee died. In 2017, plaintiff commenced this foreclosure action against defendants, as trustees of the trust, among others, after the requisite payments due were not made following Adee’s death. Following joinder of issue, plaintiff moved for summary judgment and dismissal of defendants’ affirmative defenses. Defendants cross-moved for summary judgment dismissing the complaint on the basis that the trust did not execute the reverse mortgage. In a March 2018 order, Supreme Court denied plaintiff’s motion and granted defendants’ cross motion. Plaintiff appeals. We affirm.

In support of their cross motion for summary judgment, defendants submitted, among other things, a copy of the quitclaim deed reflecting that Adee and her husband conveyed the subject property to the trust in 1995 and that they reserved for themselves a life estate interest. Defendants therefore demonstrated that the trust, and not Adee, was the sole owner of the subject property when Adee applied for the reverse mortgage in 2007. Critically, Adee, at most, only had a life estate interest in the subject property when she entered into the reverse mortgage and such interest was extinguished upon her death in 2015. Based on the foregoing, defendants satisfied their burden of establishing that plaintiff was not entitled to foreclose on the subject property.

With the burden shifted, it was incumbent upon plaintiff to raise a triable issue of fact (see Zuckerman v City of New York, 49 NY2d 557, 562-563 [1980]Bouchard v Champlain Enters., 279 AD2d 935, 937 [2001]). In our view, plaintiff failed to do so. Plaintiff asserts that because defendants served as a power of attorney for Adee and because two of them were listed on the reverse mortgage application as alternative contacts, they were aware of the reverse mortgage. However, even if we agreed with plaintiff that defendants knew about the reverse mortgage, such knowledge does not raise an issue of fact as to Adee’s possessory interest in the property. Nor do we agree with plaintiff’s claim that the reference on the settlement statement indicating a payment for the recording of a deed raises an issue of fact as to whether Adee was a fee owner of the subject property at the time she applied for the reverse mortgage.

Plaintiff also relies on the doctrine of equitable subrogation. This doctrine applies in situations “where the funds of a mortgagee are used to satisfy the lien of an existing, known incumbrance when, unbeknown to the mortgagee, another lien on or interest in the property exists which is senior to his or her but junior to the one satisfied with his or her funds” (Green Tree Servicing, LLC v Feller, 159 AD3d 1246, 1248 [2018] [internal quotation marks, brackets and citation omitted]; see Matter of Benedictine Hosp. v Glessing, 90 AD3d 1383, 1386 [2011]). If the subrogee had actual notice of the intervening interest, equitable subrogation is inapplicable (see Green Tree Servicing, LLC v Feller, 159 AD3d at 1248). Given that the quitclaim deed reflecting Adee’s interest in the subject property was validly recorded and the documentary evidence establishes that plaintiff’s predecessor had actual notice of it, plaintiff cannot rely on the doctrine of equitable estoppel (see RTR Props., LLC v Sagastume, 145 AD3d 697, 699 [2016]compare Elwood v Hoffman, 61 AD3d 1073, 1075-1076 [2009]).

Finally, to the extent that plaintiff contends that it should have an equitable mortgage on the subject property or that defendants ratified the reverse mortgage, such claims are improperly raised for the first time on appeal (see MLB Constr. Servs., LLC v Lake Ave. Plaza, LLC, 156 AD3d 983, 985 [2017]). Plaintiff’s remaining contentions are either without merit or academic.

Lynch, J.P., Clark, Mulvey and Rumsey, JJ., concur.

ORDERED that the order is affirmed, with costs.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

FL HOMES 1 LLC v. KOKOLIS | FL 4DCA – VOID! Full of sound and fury, this foreclosure case is the tale of the legal chaos that can happen when a mortgage holder initiates a foreclosure action but fails to include the sole record title holder as a party.

FL HOMES 1 LLC v. KOKOLIS | FL 4DCA – VOID! Full of sound and fury, this foreclosure case is the tale of the legal chaos that can happen when a mortgage holder initiates a foreclosure action but fails to include the sole record title holder as a party.

 

FL HOMES 1 LLC and JOSE PEREZ, Appellants,
v.
TOULA KOKOLIS, as Trustee of the TOULA KOKOLIS REVOCABLE TRUST dated July 2, 2014, and FL HOMES, LLC, Appellees.

No. 4D18-2709.
District Court of Appeal of Florida, Fourth District.
May 15, 2019.
Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Joel T. Lazarus, Judge; L.T. Case No. CACE 18-11249 (11).

Michael Winer, Fort Lauderdale, for appellants.

Steven L. Wall of Mestdagh & Wall, P.A., Winter Park, for appellee, Toula Kokolis, as Trustee of the Toula Kokolis Revocable Trust dated July 2, 2014.

GROSS, J.

Full of sound and fury, this foreclosure case is the tale of the legal chaos that can happen when a mortgage holder initiates a foreclosure action but fails to include the sole record title holder as a party. We hold that a foreclosure judgment was void for the failure of the plaintiff to join the only record title owner of the property; because the judgment was void, a lis pendens filed in that proceeding had no effect on unrecorded property interests whose holders did not intervene in the foreclosure action.

Florida Homes I LLC and Jose Perez appeal a summary final judgment of reforeclosure in favor of appellee Toula Kokolis, as trustee of the Toula Kokolis Revocable Trust. The property at issue in this case has been the subject of three separate foreclosure actions: (1) an action filed by a homeowners’ association; (2) the initial mortgage foreclosure lawsuit; and (3) the reforeclosure lawsuit.

Before any litigation, the property was owned by non-parties to this appeal, John Keefer and Denise Derosa-Keefer, who borrowed money and executed a note and mortgage in favor of the original lender. After multiple assignments, the note and mortgage landed with Greenwich Investors XLIII Trust 2013-1.

The Homeowners’ Association Foreclosure Action

In 2012, Tall Pines Community Homeowners’ Association, Inc. (the “HOA”) initiated a lawsuit to foreclose the association’s lien against the property. A final judgment of foreclosure led to a foreclosure sale on October 25, 2012.

At that foreclosure sale, appellant Perez made the winning bid of $22,100. Instead of putting the certificate of title in his name, Perez instructed the Clerk of Court to issue the title in the name of “FL Homes LLC.” The certificate of title was subsequently issued in the name of FL Homes LLC on November 6, 2012.

At the time the certificate issued, Perez was unaware that an entity named FL Homes LLC already existed in Florida. Perez had absolutely no connection to that entity, so he had no authority to acquire property on its behalf. Perez chose the name FL Homes LLC believing that the name had not yet been taken. Not until he went to register FL Homes LLC, did Perez learn that a company with that name already existed.

On November 27, 2012, Perez registered a new entity named “FL Homes 1 LLC.” Perez has never tried to retitle the property in the name of FL Homes 1 LLC. Perez took possession of the property, rented it out, and deposited rent checks in a bank account in the name of FL Homes 1 LLC. Perez also claims that he paid taxes and necessary fees associated with the property.

Initial Mortgage Foreclosure Action

Not surprisingly, after Keefer and Derosa-Keefer lost the property in the HOA foreclosure action, their mortgage loan was in default. On February 8, 2013, a lawsuit to foreclose that mortgage was filed. Greenwich Investors was later substituted as the plaintiff. This foreclosure action named the HOA and the prior owners of the property, Keefer and Derosa-Keefer, as defendants. The lawsuit did not name FL Homes LLC as a defendant, nor did it mention or seek to foreclose any interest in the property conveyed by the certificate of title in the HOA foreclosure action.

On February 14, 2013, a notice of lis pendens was recorded. After such recording, appellants did not seek to intervene in the lawsuit.

On December 16, 2014, a final judgment was entered against John Keefer, Denise Derosa-Keefer, and the HOA. A judicial sale was held in accordance with that final judgment on February 11, 2015. Greenwich Investors was the highest bidder at the judicial sale and a certificate of title for the property was issued to Greenwich Investors on February 24, 2015.

On December 22, 2015, Greenwich conveyed the property to Toula Kokolis for $539,900. In 2016, Toula Kokolis conveyed the property by quitclaim deed to Toula Kokolis, as trustee of the Toula Kokolis Revocable Trust, the appellee here.

The Reforeclosure Lawsuit

On May 10, 2018, appellee filed the underlying action (the “reforeclosure lawsuit”) to foreclose the mortgage against the interests or potential interests of parties omitted from the initial mortgage foreclosure lawsuit. The reforeclosure lawsuit named FL Homes LLC, FL Homes 1 LLC, and Perez as defendants. A notice of lis pendens was also recorded.

Appellants answered the complaint. FL Homes LLC also filed a response which stated, “FL Homes LLC claims no interest in this property and does not oppose the relief sought . . . .”

Appellee moved for summary judgment. Appellee argued that neither Perez nor FL Homes 1 LLC held any interest in the property. Appellee contended that any interest that existed by virtue of Perez’s winning bid at the HOA foreclosure sale was unrecorded at the time the lis pendens was filed in the initial mortgage foreclosure lawsuit, so that such unrecorded interests were discharged by section 48.23, Florida Statutes.

Appellants responded that the lis pendens, final judgment of foreclosure, and certificate of title issued in the initial mortgage foreclosure lawsuit were void ab initio due to Greenwich’s failure to name FL Homes LLC as a party in that lawsuit.

At the hearing on appellee’s motion for summary judgment, appellee acknowledged that appellants may have an interest in the property because, after the HOA foreclosure sale, Perez took possession of the property, rented it out, and collected rent. Appellee argued that because appellants’ interest was unrecorded, under the lis pendens statute, appellants had thirty days from the date the lis pendens was filed to intervene in the initial mortgage foreclosure action. Appellee contended that appellants’ failure to intervene meant that the judicial sale in the initial mortgage foreclosure action “forever discharged” the property from all unrecorded interests and liens under section 48.23(1)(d), Florida Statutes (2017).

Appellants responded that because Greenwich failed to name Florida Homes LLC, an indispensable party, in the initial mortgage foreclosure action, both the lis pendens and final judgment were void.

The trial court ultimately found that the judgment was not “void for failure to name the indispensable party” and granted the summary final judgment of foreclosure.

The trial court entered a written final judgment of reforeclosure, which recognized that FL Homes LLC was the party named in the November 6, 2012 Certificate of Title and was the only defendant who had an interest in the property recorded in the public records. The final judgment granted FL Homes LLC an opportunity to redeem the property and set the redemption amount at $728,789.46.

Discussion

The failure to include FL Homes LLC in the initial mortgage foreclosure action resulted in a void final judgment. FL Homes LLC held title to the property at the time the initial mortgage foreclosure action was filed. “The fee simple title holder is an indispensable party in an action to foreclose a mortgage on property.” Citibank, N.A. v. Villanueva, 174 So. 3d 612, 613 (Fla. 4th DCA 2015) (citing Oakland Props. Corp. v. Hogan, 117 So. 846, 848 (Fla. 1928) (stating that “[o]ne who holds the legal title to mortgaged property is not only necessary, but is an indispensable, party defendant in a suit to foreclose a mortgage.”)).

The failure to join FL Homes LLC rendered the entire foreclosure action void, so that the lis pendens filed in the initial foreclosure action cannot have had any legal effect. Under section 48.23, the nullifying impact of the lis pendens statute on unrecorded property interests turns on the prosecution of the lawsuit “to a judicial sale of the property.” § 48.23(1)(d), Fla. Stat. (2017). A void final judgment begets a void judicial sale. It was as if the lis pendens were discharged, so that the notice did “not affect the validity of any unrecorded interest or lien.” Id.

In English v. Bankers Trust Co. of California, N.A., 895 So. 2d 1120 (Fla. 4th DCA 2005), we wrote that the failure to join the fee simple owner in a foreclosure action rendered the foreclosure action void. There, the lender filed a foreclosure action against the original borrower, obtained a final judgment, and purchased the property at the foreclosure sale. Id. at 1121. Immediately thereafter, the lender learned that the borrower had conveyed the property to another before the foreclosure action, so it brought a second foreclosure action, naming both the original borrower and the new owner as defendants. Id. Summary judgment was entered for the lender. Id.

On appeal, the original borrower sought to avoid a deficiency judgment by arguing that res judicata precluded her from being joined in the new action because of the prior action. Id. We affirmed the summary judgment, explaining that res judicata did not apply because the original judgment was void:

The trial court correctly concluded that the first action was void. Significantly, this is not a re-foreclosure to extinguish a junior lienor. Rather, this second action is an initial foreclosure as to the fee simple owner. Because Lesa Investments, the undisputed owner, was not a party to the first suit, the initial foreclosure judgment could not result in a valid sale, as the owner of the fee simple title was an indispensable party.

. . . .

We note that, more than a century ago, the Florida Supreme Court recognized that “a foreclosure proceeding resulting in a final decree and a sale of the mortgaged property, without the holder of the legal title being before the court will have no effect to transfer his title to the purchaser at said sale.” If the foreclosure proceeding has no effect to transfer title because the legal title holder has not been joined, it is simply another way of saying that the foreclosure proceeding is void.

Id. at 1121 (emphasis added) (internal citations omitted); see also Villanueva, 174 So. 3d at 613-14.

That the initial foreclosure judgment was void for failure to join an indispensable party distinguishes this case from Epstein v. Bank of America, 162 So. 3d 159 (Fla. 4th DCA 2015). There, we rejected a bank’s due process challenge to a final judgment where the bank was not asserting its own constitutional rights, but those of another. Id. at 162. We observed that “constitutional rights are personal and may not be asserted vicariously.” Id. (quoting Broadrick v. Oklahoma, 413 U.S. 601, 610 (1973)). This case involves statutory rights under the lis pendens statute, not constitutional rights. Because the impact of the lis pendens upon appellants’ property rights depended upon the validity of the initial final judgment, appellants had standing to attack the final judgment as void.

Appellee argues that the final judgment in the initial mortgage foreclosure lawsuit was not void in its entirety and was ineffective only as to FL Homes LLC’s interest in the property. However, the cases cited by appellee are distinguishable because in those cases, at least one owner of the property was named in the foreclosure action and was properly foreclosed upon, while another owner was omitted from the action. See R.W. Holding Corp. v. R.I.W. Waterproofing & Decorating Co., Inc.,179 So. 753 (Fla. 1938) (title owners for two of three parcels of land named in foreclosure action, but title owner of third parcel omitted); Key West Wharf & Coal Co. v. Porter, 58 So. 599 (Fla. 1912) (mortgagor named in foreclosure action, but not others whom the mortgagor had conveyed portions of the premises to); Sudhoff v. Fed. Nat’l Mortg. Ass’n, 942 So. 2d 425 (Fla. 5th DCA 2006) (husband named in foreclosure lawsuit, but not wife). Thus, in cases where there are multiple owners of property, but one or more of the property owners is omitted, “a foreclosure suit may be maintained even though the holder of the legal title to the property is not a party to the foreclosure, but . . . the decree only establishes the rights of persons who are parties.” Pan Am. Bank of Miami v. City of Miami Beach,198 So. 2d 45, 47 (Fla. 3d DCA 1967).

Unlike the cases cited by appellee, in this case there was only one record title owner of the property at the time the initial mortgage foreclosure lawsuit was filed-FL Homes LLC. Therefore, consistent with this court’s precedent, the failure to name FL Homes LLC in the initial mortgage foreclosure lawsuit rendered the entire foreclosure action void. As the successor in interest to the original mortgage, appellee’s interest in the property is superior to that of appellants; our holding is that appellee may not rely on section 48.23 in a summary judgment to obtain a final judgment of foreclosure.

We reverse the summary judgment of foreclosure and remand to the circuit court for further proceedings consistent with this opinion.

WARNER and FORST, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

TFH 5/19 | Is a Homeowner’s Appeal Moot Upon  the Sale of Foreclosed Property? — Another Major Finality Versus Validity Controversy Today in State and Federal Courts

TFH 5/19 | Is a Homeowner’s Appeal Moot Upon the Sale of Foreclosed Property? — Another Major Finality Versus Validity Controversy Today in State and Federal Courts

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

Sunday – MAY 19, 2019

Is a Homeowner’s Appeal Moot Upon the Sale of Foreclosed Property? — Another Major Finality Versus Validity Controversy Today in State and Federal Courts

.

 ———————

 

As a result of a recent increase in the number of appellate decisions more favorable to mortgage borrowers in many but not all state and federal courts, foreclosed homeowners are timely appealing in greater numbers, challenging their otherwise completed foreclosures.

During several of our prior shows we have referred to this newest and perhaps most significant issue emerging in foreclosure defense today as “Finality Versus Validity.”

On prior shows we have focused our attention on whether doctrines such as res judicata prevent reopening of final foreclosure judgments whether or not appealed.

On today’s show we discuss and attempt, time permitting, to answer the following questions:

What effect does an intervening sale of an appellant’s foreclosed property have on an otherwise timely-filed appeal?

Is a foreclosure appeal therefore rendered “moot,” causing it to be dismissed?

As in most areas of foreclosure defense, our appellate courts have historically favored foreclosing plaintiffs and robotically dismissed homeowners’ appeals, holding that the appeal is or has become moot, reasoning that courts are powerless to grant appellant homeowners the relief they seek, the return of their sold property.

Today, however, many appellate courts are rethinking that view and proceeding to decide foreclosure appeals on their merits instead.

John and I on today’s show discuss the reasons why such foreclosure appeals should not be dismissed and how homeowners and attorneys alike can and should defend against appellate mootness, in favor of Validity over Finality.

The following are the questions to be discussed on today’s show, which include “exceptions” to the mootness doctrine that both federal and state appellate courts are increasingly recognizing today:

1. What are the policy reasons supporting the appellate mootness doctrine?

2. How is the mootness doctrine applied differently in federal versus state appellate courts?

3. What is the “foreclosing plaintiff exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

4. What is the “assumption-of-risk purchaser exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

5. What is the “collusive purchaser exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

6. What is the “public policy exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

7. What is the “jurisdictional exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

8. What is the “supervening authority exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

9. What is the “estoppel exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

10. What is the “fraud exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

11. What is the “bankruptcy court exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

12. What is the “damages exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

13. What is the “additional consequences exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

14. What is the “remand exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

15. What is the “balancing of the equities exception” to appellate mootness, and how to argue that it should be applied in defense of your appeal?

Be sure to be with John and me this Sunday, especially if you are planning to or are now in the process of appealing an adverse foreclosure-related judgment.

You will not want to miss this uniquely important, groundbreaking broadcast in order to apply the above analysis and exceptions to the specific facts of your case, protecting your appeal, and to further improve your understanding of the future of foreclosure defense in this, the last and final frontier.

Gary

———————

GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813
Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733
Email: gdubin@dubinlaw.net.

Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

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

The Foreclosure Hour 12

image: Video Hive

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Grosso v. HSBC BANK USA, NA EX REL. ACE SECURITIES CORP. | FL 4DCA – the homeowner was entitled to prevailing party attorney’s fees. We reverse and remand for the trial court to grant attorney’s fees and determine the reasonableness of the amount sought.

Grosso v. HSBC BANK USA, NA EX REL. ACE SECURITIES CORP. | FL 4DCA – the homeowner was entitled to prevailing party attorney’s fees. We reverse and remand for the trial court to grant attorney’s fees and determine the reasonableness of the amount sought.

 

DOMENIC GROSSO a/k/a DOMENIC L. GROSSO, Appellant,
v.
HSBC BANK USA, N.A., AS TRUSTEE ON BEHALF OF ACE SECURITIES CORP., Appellee.

No. 4D17-2874.
District Court of Appeal of Florida, Fourth District.
May 8, 2019.
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Susan R. Lubitz, Senior Judge; L.T. Case No. 50-2012-CA-005882-XXXX-MB.

Michael Vater, Kendrick Almaguer, and Peter Ticktin of The Ticktin Law Group, PLLC, Deerfield Beach, for appellant.

Kimberly S. Mello and Joseph H. Picone of Greenberg Traurig, P.A., Tampa, for appellee.

ON MOTION FOR REHEARING

PER CURIAM.

We deny the bank’s motion for rehearing, but withdraw our previously issued opinion and substitute the following in its place.

The homeowner appeals an order denying his motion for attorney’s fees following the bank’s voluntary dismissal of its foreclosure action. We reverse because the voluntary dismissal rendered the homeowner the prevailing party for purposes of attorney’s fees.

HSBC Bank filed a foreclosure complaint against the homeowner, alleging it was the owner and holder of the note and mortgage. HSBC further alleged it was entitled to attorney’s fees under the contract. A copy of the note attached to the complaint listed DB Home Lending LLC as the lender and the homeowner as the borrower. The note contained a specific endorsement by DB Home Lending to HSBC.

The homeowner filed an answer and affirmative defenses. In his affirmative defenses, the homeowner stated that the bank lacked standing, the bank did not have legal rights to enforce the note and mortgage, and the endorsement on the note was not valid and authentic. The homeowner also requested attorney’s fees.

A year after filing the complaint, HSBC voluntarily dismissed the case without prejudice. The homeowner moved for prevailing party attorney’s fees under the contract. Specifically, the homeowner alleged in the motion for attorney’s fees that “[t]he Mortgage that was the subject matter of this lawsuit provided for costs and expenses if the Note holder was to enforce the Note” and that section 57.105(7), Florida Statutes, made this provision applicable to the homeowner. HSBC opposed the motion, arguing that the homeowner’s lack of standing defense precluded him from recovering fees. After a hearing, the trial court denied the homeowner’s motion, finding that he failed to prove that he and HSBC were parties to the contract.

A trial court’s determination of whether a party is entitled to attorney’s fees based on a fee provision in the mortgage is reviewed de novo. Bank of N.Y. Mellon Tr. Co., N.A. v. Fitzgerald, 215 So. 3d 116, 118 (Fla. 3d DCA 2017). Section 57.105(7), Florida Statutes, operates to make a unilateral attorney’s fees provision in a mortgage contract reciprocal. In order for a prevailing party to avail itself of section 57.105(7), both the movant and the opponent must be parties to the contract containing the fee provision. Madl v. Wells Fargo Bank, N.A., 244 So. 3d 1134, 1138 (Fla. 5th DCA 2017).

In denying the motion for fees, the trial court relied on Florida Community Bank, N.A. v. Red Road Residential, LLC, 197 So. 3d 1112 (Fla. 3d DCA 2016). In Red Road Residential, the borrower maintained throughout the litigation, including in sworn discovery, that she never signed the mortgage. Id. at 1114. Rather than litigating its claim against the borrower, the bank ultimately dismissed her from the lawsuit with prejudice. Id. Unlike Red Road Residential, the instant case did not involve any sworn discovery and the dismissal was without prejudice.

We find instructive Rodriguez v. Wilmington Savings Fund Society, FSB as Trustee for Stanwich Mortgage Loan Trust A, No. 4D18-310, 2018 WL 6528491 (Fla. 4th DCA Dec. 12, 2018). In that case, a borrower was found to be entitled to prevailing party fees after the bank’s voluntary dismissal even though she had challenged the bank’s standing throughout the lawsuit. This court found that “the parties never litigated the merits of [the bank’s] standing below, and the trial court never made a finding that the Borrower was not a party to the note or mortgage.” Id. at *2. Because the bank voluntarily dismissed the action without the trial court resolving the standing issue on the merits, the borrower was entitled to fees. Id. See also Wells Fargo Bank, N.A. v. Elkind, 254 So. 3d 1153, 1154 (Fla. 4th DCA 2018)(finding borrower who raised lack of standing as affirmative defense was entitled to prevailing party attorney’s fees following the bank’s voluntary dismissal because the parties never litigated standing and “the trial court never made a finding that the bank or the borrower were not parties to the contract”); Harris v. Bank of N.Y. Mellon, No. 2D17-2555, 2018 WL 6816177, at *4 (Fla. 2d DCA Dec. 28, 2018) (“[P]roof of standing is not required to establish a contractual relationship between the parties.”).

In this case, HSBC voluntarily dismissed its complaint, thus rendering the homeowner the prevailing party for purposes of attorney’s fees. Notably, the trial court never made a judicial determination that HSBC or the homeowner was not a party to the contract. Additionally, HSBC maintained in its complaint a right to enforce the contract. Significantly, the copy of the note attached to the complaint contained a specific endorsement by the original lender to HSBC and listed the homeowner as the borrower. This should be sufficient record evidence to demonstrate that HSBC and the homeowner were parties to the underlying contract so as to justify attorney’s fees pursuant to section 57.105(7). See Mihalyi v. LaSalle Bank, N.A., 162 So. 3d 113, 115 (Fla. 4th DCA 2014) (implying that an evidentiary hearing is required for determining the amount of fees, not for determining entitlement to fees); Hensley v. Eckerhart, 461 U.S. 424, 437 (1983)(“A request for attorney’s fees should not result in a second major litigation.”).

The cases the dissent relies on are distinguishable, as none involve a voluntary dismissal without prejudice like the instant case. The dissent attempts to distinguish Rodriguez and Elkind by stating that those cases dealt with judicial estoppel or prevailing parties, and not with the burden for attorney’s fees. But cases with the same facts should get the same result. A voluntary dismissal, without a judicial determination, should allow reliance on the reciprocal attorney’s fees provision of section 57.105(7).

Based on the foregoing authority, the homeowner was entitled to prevailing party attorney’s fees. We reverse and remand for the trial court to grant attorney’s fees and determine the reasonableness of the amount sought.

Reversed and remanded with instructions.

LEVINE and FORST, JJ., concur.

CONNER, J., dissents with opinion.

CONNER, J., dissenting.

I respectfully dissent for two reasons: (1) the trial court properly determined that no evidence was presented by the homeowner establishing the homeowner and HSBC were parties to a contract with a fee provision; and (2) the two cases from this District primarily relied upon by the majority are inapplicable to the specific argument made by HSBC in the trial court, which the trial court found to be dispositive.

Our recent opinions in Rodriguez v. Wilmington Savings Fund Society, FSB as Trustee for Stanwich Mortgage Loan Trust A, No. 4D18-310, 2018 WL 6528491 (Fla. 4th DCA Dec. 12, 2018) and Wells Fargo Bank, N.A. v. Elkind, 254 So. 3d 1153 (Fla. 4th DCA 2018), are inapposite because those opinions address issues concerning determination of a prevailing party and judicial estoppel, but they do not address the specific argument raised in the trial court by HSBC as to who has the burden of proof regarding a contractual relationship.

I respectfully submit the case law on the issue of attorney’s fees after a voluntary dismissal is confusing. In part, this is because appellate courts have frequently failed to articulate with precision the distinction in law between who is a “prevailing party” in litigation and who is a “party” to a contract. Moreover, standing, in the context of foreclosures, can be confusing because there are two phases of standing (at the time suit is filed and at the time of trial), which can be pertinent to determining who prevails on a legal issue. Additionally, the case law frequently fails to emphasize that promissory notes are a special specie of contracts, involving a special set of legal principles. For example, a person who does not properly obtain ownership of a blank indorsed note can enforce it because he or she is in possession of it. See § 673.3011, Fla. Stat. (2018). Presumably, enforcement of the note with an attorney fee provision allows such possessor to also receive attorney’s fees. At first blush, it seems implausible to say a person who is not in the chain of ownership can be considered in privity with the maker of the note, however, simple possession of contract (the blank indorsed note) provides the privity, even though there is no meeting of the minds. I also submit that much of the confusion stems from a failure to properly analyze and apply legal principles regarding judicial estoppel.

Our case law regarding entitlement to attorney’s fees after a voluntary dismissal has properly discerned that in terms of analysis, there is a difference between cases where the trial court has made evidentiary determinations regarding standing and cases where such evidentiary determinations have not been made. See Rodriguez, 2018 WL 6528491 at *1; Elkind, 254 So. 3d at 1154. However, trial judges are frequently led down the wrong path by attorneys who fail to recognize the difference between who is the prevailing party in litigation and who has the burden of proof for entitlement to fees. More importantly, if a party to a suit seeks attorney’s fees pursuant to a contract clause, but is not in a contractual relationship with the opposing party in the suit from whom fees are sought, it is improper to award attorney’s fees based on the contract provision. Novastar Mortg., Inc. v. Strassburger, 855 So. 2d 130, 131 (Fla. 4th DCA 2003) (“Because the Strassburgers were not parties to the mortgage, they were not entitled to recover attorney’s fees under the mortgage.”); see also Gibson v. Courtois, 539 So. 2d 459, 460 (Fla. 1989) (determining that the fact that no contract was formed was dispositive on the issue of fees based on a contract provision); Fitzgerald, 215 So. 3d at 121 (“Because no contract existed between the parties, the trial court erred in awarding Fitzgerald attorney’s fees pursuant to section 57.105(7)[.]”); HFC Collection Ctr., Inc. v. Alexander, 190 So. 3d 1114, 1117 (Fla. 5th DCA 2016)(holding that a party cannot employ section 57.105(7) as a basis for fees after proving the opposing party never became a party to the contract).

In granting rehearing and denying fees to the homeowner in this case, the trial court relied upon Judge Scales’s insightful opinion in Florida Community Bank, N.A. v. Red Road Residential, LLC, 197 So. 3d 1112 (Fla. 3d DCA 2016). There, the bank filed a voluntary dismissal after one of the defendants, Rios, filed a motion for fees as a sanction under section 57.105(1), Florida Statutes. Id. at 1114. After the voluntary dismissal, Rios moved for fees under both section 57.105(1) and section 57.105(7) (the contract reciprocity fee provision). Id. The trial court denied fees under section 57.105(1), but granted fees under section 57.105(7). Id.Notably, Judge Scales observed that “[a]s section 57.105(7) plainly requires, to gain the benefit of its substantive entitlement to prevailing party fees, the party seeking the benefit of reciprocity must be a party to the contract containing the fee provision.” Id. at 1115 (emphasis added). After making the observation, the opinion goes on to explain:

Ada Rios does not appear to contest this proposition. Rather, in oral argument, she sought to distinguish the reasoning in Novastarv. Strassburger] by arguing that, in Novastar and other similar cases, the trial court actually adjudicated that the party seeking fees was not a party to the contract. Ada Rios points out that, in this case, the Bank voluntarily dismissed its lawsuit before such an adjudication occurred. Ada Rios argues that, as the prevailing party (by virtue of the Bank’s dismissal), she should be the beneficiary of the fact that her status as a mortgagor specifically was not adjudicated.

Not surprisingly, the Bank takes the contrary position in the form of this syllogism: because Ada Rios’s principal defense was that she was not a party to the mortgage, and because Ada prevailed, therefore, for the purposes of section 57.105(7), Ada Rios was not a party to the mortgage.

Regarding whether Ada Rios was a party to the mortgage, we note that both the Bank and Ada Rios take positions opposite to the positions they took before the Bank’s voluntary dismissal of Ada Rios from the lawsuit. While both the Bank and Ada Rios suggest that the other party should be estopped from making its respective argument about whether Ada was a party to the mortgage, we view the case not from the parties’ estoppel perspectives, but from the perspective of burden: which party had the threshold burden of establishing whether Ada Rios was a party to the mortgage?

In our view, in order to avail herself of section 57.105(7)’s reciprocity, Ada Rios, as the prevailing party and movant seeking fees under the mortgage’s fee provision, had the threshold burden to plead and establish that she was a party to the mortgage containing the fee provision. Ada Rios’s status as the lawsuit’s prevailing party does not equate to Ada Rios being a mortgagor under the mortgage so as to trigger section 57.105(7)’s reciprocity provision.

Id. at 1115-16 (emphases added) (footnote omitted) (citations omitted). The Third District reversed the order awarding fees and remanded the case for further proceedings because “[t]he burden lies with the prevailing party to establish, as a threshold matter, her status as a party to the contract.” Id. at 1116. I agree with the Third District that in litigation seeking to enforce a contract (which includes foreclosure cases), establishing one party as the prevailing party in the suit does not necessarily establish that the prevailing party is also in a contractual relationship with the opposing party. See id.

In the trial court below, HSBC consistently argued in opposition to the homeowner’s motion for fees, as well as in support of its motion for rehearing, that in order to prove entitlement, the homeowner had the evidentiary burden of proving not only that the homeowner was the prevailing party, but also that the homeowner and HSBC were in a contractual relationship while the foreclosure suit was being litigated. The trial court granted fees to the homeowner, after initially determining that Red Road Residential was factually distinguishable from this case. HSBC moved for rehearing contending the trial court erred in its interpretation and application of Red Road Residential. After entertaining argument on the motion for rehearing, the trial court granted rehearing and specifically set a new evidentiary hearing on the fee motion. At the conclusion of the new hearing on the fee motion, the trial court found that

the Defendant [(the homeowner)] failed to prove that the Plaintiff [(HSBC)] and Defendant were parties to the note and mortgage. The Defendant’s Answer denied paragraphs 3, 4, & 5 of Plaintiff’s Complaint and Defendant’s Affirmative Defense asserted the Defendant [sic] did not have standing to file the Complaint. These assertions have not been overcome by evidence to show the Plaintiff and Defendants were parties to the Contract.

My review of the transcript of the hearing confirms that the homeowner presented no evidence that he was in a contractual relationship with HSBC. Thus, it appears the trial court’s finding was correct that there was no competent substantial evidence to support a determination that the homeowner and HSBC were parties to a contract which contained a provision of a fee award. Therefore, I contend that we have no legal basis to reverse the trial court. I disagree with the majority’s conclusion that the copy of the note attached to the complaint provided “sufficient record evidence to demonstrate HSBC and the homeowner were parties to the underlying contract so as to justify attorney’s fees pursuant to section 57.105(7).” When the issue of entitlement is uncontested, it is not uncommon for stipulations, admissions in pleadings, and affidavits to be used. When entitlement is contested, evidentiary hearings are required, with proof by testimony, exhibits, or both, unless summary judgment proceedings are properly invoked.

In addition to arguing the homeowner was not entitled to attorney’s fees for failure to carry his burden and provide evidence of a contractual relationship, HSBC made arguments below and on appeal asserting the homeowner could not make a factual showing of entitlement based on principles of judicial estoppel. Such arguments were incorrect and distracting. Trial advocates are to be reminded:

In judicial proceedings, a party simply is not estopped from asserting a later inconsistent position (if that it can be called), unless the party’s initial position was successfully maintained.

Leitman v. Boone, 439 So. 2d 318, 322 (Fla. 3d DCA 1983).

I emphasize that judicial estoppel arguments in these fee cases are distracting, when the argument is inappropriate, for a reason. I said above that Elkind was inapposite for the disposition of this case. I was one of the panel members deciding Elkind. In going back and reviewing our analysis and the briefs submitted in that case, I now realize that a somewhat similar argument about the burden of proof in fee cases was made in Elkind, but the clarity of the argument was lost by infusing it with arguments about judicial estoppel and not as a stand-alone argument.

For the reasons I have discussed, I would affirm the trial court.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

His lawn overgrew while he was tending to his mom’s estate. Now, he faces foreclosure and a $30,000 fine.

His lawn overgrew while he was tending to his mom’s estate. Now, he faces foreclosure and a $30,000 fine.

WAPO-

The grass got long. Jim Ficken knows it.

But was it so long that he should have to pay the city of Dunedin, Fla., nearly $30,000 and lose his home to foreclosure?

Ficken, for one, would rather ask a judge.

The 69-year-old retiree is now at risk of losing his home because he doesn’t have the $29,833.50 plus interest that he needs to resolve the exorbitant fines that accrued while he was away in South Carolina for nearly two months last summer, tending to his deceased mother’s estate, according to a lawsuit he filed against the city of Dunedin last week.

[WASHINGTON POST]

image: Institute for Justice

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

New Jersey Creates Mortgage Servicers License as Part of Legislative Efforts to Curb Foreclosures in State

New Jersey Creates Mortgage Servicers License as Part of Legislative Efforts to Curb Foreclosures in State

Consumer Financial Services LAW MONITOR-

On April 29, New Jersey’s governor signed into law bill A4997, known as the Mortgage Servicers Licensing Act. As the title indicates, the Act creates a licensing regime for servicers of residential mortgage loans secured by real property within New Jersey. As with many state licensing regimes, the Act exempts most banks and credit unions from licensing. It also excludes from licensing certain entities regulated under the New Jersey Residential Mortgage Lending Act. Consequently, the licensing regime principally impacts non-bank servicers who do not lend in New Jersey.

Also like other licensing regimes, the Act requires licensees to maintain and submit evidence of surety and fidelity bonds, designate qualified individuals to serve in various roles, such as “Qualified Individual” and “Branch Manager,” and pay applicable licensing and renewal fees. Additionally, the Act:

  • Creates new operational requirements for some servicers;
  • Creates a list of prohibited activities for all servicers;
  • Provides the New Jersey Department of Banking and Insurance with investigative and examination authority; and
  • Provides the Department of Banking with enforcement authority, which includes the power to impose civil penalties of up to $25,000 per violation.

[Consumer Financial Services LAW MONITOR]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Facing Foreclosure Single Mom and Breast Cancer Survivor Makes a Call to 2 Wants To Know That Changes Everything

Facing Foreclosure Single Mom and Breast Cancer Survivor Makes a Call to 2 Wants To Know That Changes Everything

Pamela Mosley was just starting a new business when she was diagnosed with breast cancer. Unable to work for the next 13 months she fell way behind on her mortgage payments and was about to be foreclosed on.

WFMYNEWS2-

Pamela Mosley is the type of person who does things, anything and everything. Mosley has three grown kids and is now raising her god-daughter on her own, “I’m always going,” says Mosley.

Balancing being a single mom and work is no simple task. In hopes of spending more time with her family she decided to start her own business, “It was going pretty well,” said Mosley.

She was also working at a temp agency to make sure she had some money coming in as her housekeeping business got started.

[WFMYNEWS2]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Bank of Hawaii v. Marques | HAWAII ICA – JUDGMENTS VACATED! DUBIN LAW OFFICES DO IT AGAIN!

Bank of Hawaii v. Marques | HAWAII ICA – JUDGMENTS VACATED! DUBIN LAW OFFICES DO IT AGAIN!

2382022433 by DinSFLA on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

TFH 5/12 |  Foreclosure Workshop #74: Validity Versus Falsity — Proven Successful Ways in Which Homeowners in Foreclosure Can Weaponize Their Discovery Requests Relatively Inexpensively at the Beginning of a Foreclosure Case

TFH 5/12 | Foreclosure Workshop #74: Validity Versus Falsity — Proven Successful Ways in Which Homeowners in Foreclosure Can Weaponize Their Discovery Requests Relatively Inexpensively at the Beginning of a Foreclosure Case

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

Sunday – MAY 12, 2019

Foreclosure Workshop #74: Validity Versus Falsity — Proven Successful Ways in Which Homeowners in Foreclosure Can Weaponize Their Discovery Requests Relatively Inexpensively at the Beginning of a Foreclosure Case

.

 ———————

 

In recent shows we have been discussing the controversy between Validity Versus Finality, where following foreclosure homeowners attempt to set aside foreclosure decrees based on fraud and other standing and jurisdictional deficiencies.

On past shows we have highlighted the Marcantonio Appeal as illustrative of the Validity Versus Finality controversy, now hopefully coming to the forefront in Hawaii.

Last Monday, right after last Sunday’s show, the Hawaii Supreme Court for example granted certiorari in Marcantonio, and the oral argument has been set for June 20, 2019 at 10:00 a.m. at the Hawaii Supreme Court in downtown Honolulu, and any of our listeners interested and able to are invited to attend.

On today’s show we go back to the very beginning of a foreclosure case and examine the flip side of the post-judgment Validity Versus Finality controversy: pre-judgment challenges to a foreclosing plaintiff’s burden of proof during =a foreclosure case, involving Validity Versus Falsity without the burden of Finality.

There are three basic strategies for defeating a foreclosing plaintiff’s foreclosure case: (1) an ambush strategy, consisting of waiting for it to commit itself in its motion for summary judgment once filed and then attacking its lack of proof, (2) an aggressive discovery strategy, consisting of serving numerous discovery requests during a foreclosure case to prove it cannot support its case, and (3) a combination of the first two.

In deciding which strategy to use, cost is a factor along with the specific facts of each case. Also, there is some danger early on in educating a foreclosing plaintiff as to its burden of proof, activating its hidden photoshop and printing press capabilities.

And while an ambush strategy is capable of defeating summary judgment, an aggressive discovery plan can not only defeat summary judgment, but win the case outright for you by disproving the foreclosing plaintiff’s entire case.

In choosing the best strategy for each individual case, here is what we do know. Most foreclosures and certainly virtually all securitized trust foreclosures are being supported in court by various degrees of fraudulent paperwork, consisting of fake documents, false verifications, forged signatures, predated instruments, concealed unjust enrichment, and hidden ownership.

There are many reasons for such fraud upon the court, such as the covering up of sloppy record keeping, securitization which itself slices and dices loan documentation making it difficult for foreclosing securitized trusts to fit within state statutory foreclosure requirements, loan modification hocus locus, and federal government insider machinations, as well as sheer fraudulent intent on the part of banksters, pretender lenders and loan disservicers.

The law in every state and federal jurisdiction provides litigants with several discovery weapons for gathering facts in advance of summary judgment proceedings and in advance of trial proceedings. And with the exception of oral depositions, most are relatively inexpensive.

However, expect the necessity of filing motions to compel as many foreclosing plaintiffs may at first refuse to provide you with adequate answers to your discovery requests or no answers at all, increasing costs that you may be able to recover from the court granting your motion to compel.

And you often also need an expert forensic report identifying your mortgage or deed of trust within a trading platform and/or disproving the existence of a “wet ink” original promissory note, which will add as much as $10,000 or more to your discovery costs, although well worth it if you can afford it.

There are four basic discovery weapons: (1) requests for admissions, where you can ask the other side to admit or to deny specific material facts, (2) requests for answers to interrogatories, where you can ask specific questions of the other side and also to some limited extent nonparty witnesses, (3) requests for the production of documents and things, where you can inspect and acquire copies of specific writings and inspect other physical objects, and (4) notices of the taking of oral depositions, consisting of your questioning of specific persons or unknown persons to be identified by the other side who are knowledgeable as to certain needed information.

The best approach to discovery is to combine the requests by making each separately numbered request in three parts — for example (subpart 1) asking for an admission of a fact, immediately followed by (subpart 2) asking if not given an unqualified admission, for answers to various interrogatories supporting the denial, including the names of witnesses supporting the denial, immediately followed by (subpart 3) asking for all documents to be produced and inspected supporting the denial.

Then you can follow up by serving notices of the oral or written depositions of specific individuals or ask for the other side to identify and produce for an oral deposition knowledgeable individuals as to certain specific issues in the case.

On today’s show we identify the general format for each successfully combined discovery request and list twenty specific three-part sample requests, as time permits, that could cause your foreclosing plaintiff to give up at an early stage in your foreclosure case, offering you an attractive loan modification in settlement, unless you are seeking an even better outcome at trial.

Please join John and me on today’s show and advance your understanding of the struggle between Validity Versus Falsity at the onset of a foreclosure case and how you can relatively inexpensively weaponize your discovery requests, preferably near the beginning of a foreclosure case and before, post-judgment, you are caught within a Validity Versus Finality controversy.

Gary

———————

GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813
Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733
Email: gdubin@dubinlaw.net.

Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

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

The Foreclosure Hour 12

image: Video Hive

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

2 Attys DQ’d From Challenge To PNC Bank Home Foreclosure

2 Attys DQ’d From Challenge To PNC Bank Home Foreclosure

LAW 360-

Two attorneys representing homeowners who sued PNC Bank over a foreclosure were disqualified Wednesday after a Florida federal judge determined they had used inadvertently disclosed privileged information in their amended complaint….

[LAW360] PAYWALL

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Alessio v. OCWEN LOAN SERVICING, LLC | FL 4DCA – As there was no testimony with respect to personal knowledge of the practices of the entity which allegedly mailed the letter, the evidence was insufficient to prove that appellee complied with the condition precedent. We reverse.

Alessio v. OCWEN LOAN SERVICING, LLC | FL 4DCA – As there was no testimony with respect to personal knowledge of the practices of the entity which allegedly mailed the letter, the evidence was insufficient to prove that appellee complied with the condition precedent. We reverse.

 

GINO ALESSIO, a/k/a GINO DAVIDE ALESSIO, and FERNANDA ALESSIO, a/k/a FERNANDA LALIA CURY, Appellants,
v.
OCWEN LOAN SERVICING, LLC, Appellee.

No. 4D18-793.
District Court of Appeal of Florida, Fourth District.
May 1, 2019.
Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; David E. French, Judge; L.T. Case No. 502009CA035115AJ.

Kendrick Almaguer and Natalie M. Eusebe of The Ticktin Law Group, Deerfield Beach, for appellants.

James H. Wyman of Hinshaw & Culbertson LLP, Coral Gables, for appellee.

WARNER, J.

Appellants challenge a final judgment of foreclosure. They raise several issues, one of which requires reversal. While the trial court concluded that through witness testimony appellee had established its compliance with the provisions of the mortgage that required notice of default to have been mailed to the appellant borrowers prior to acceleration, we disagree that the proof was adequate. In Torres v. Deutsche Bank National Trust Co., 256 So. 3d 903, 905 (Fla. 4th DCA 2018), we explained that where witness testimony is used to prove mailing, the witness must have personal knowledge of the business’s general practice in mailing letters. As there was no testimony with respect to personal knowledge of the practices of the entity which allegedly mailed the letter, the evidence was insufficient to prove that appellee complied with the condition precedent. We reverse.

Appellants executed a note and mortgage to IndyMac Bank, F.S.B., in 2007. In 2009, OneWest Bank, F.S.B., brought an action to foreclose the mortgage, alleging that it was the holder of the note and servicer for the owner of the note, Federal National Mortgage Association. Attached to the complaint was a copy of the promissory note with a blank endorsement from IndyMac. Appellants answered with various affirmative defenses, including OneWest’s failure to send a notice of default pursuant to Paragraph 22 of the mortgage, a condition precedent to foreclosure. During the proceedings, Ocwen was substituted as the party plaintiff for OneWest, as it had become the servicer of the loan.

The case proceeded to trial. A senior loan analyst for Ocwen testified. Prior to her employment with Ocwen, which began in 2014, she was employed with OneWest as a default litigation specialist from 2012-2013. The analyst described Ocwen’s boarding process, and through her testimony, the note, mortgage, and assignments of mortgage (from IndyMac to One West, and then to Ocwen) were admitted, as well as the loan payment history.

With respect to the notice of default, required by Paragraph 22 of the mortgage, appellee sought to admit the notice that was purportedly sent to the appellants in July 2009. The notice stated that it was from IndyMac Mortgage Services, a division of OneWest. The analyst identified the notice as being maintained in Ocwen’s system of records. The trial court admitted the notice as a business record of Ocwen, over the objection of appellants. Appellee’s witness also testified that there was no indication from Ocwen’s records that the letter was ever returned. During cross-examination, the analyst testified that IndyMac Mortgage Services was a division of OneWest Bank. As to the notice, she testified that she did not have any personal involvement in sending default letters, but OneWest did not utilize a vendor or third party to send out its letters. She had not observed the sending of breach letters by IndyMac Bank, nor was she ever employed by it or had access to its policies and procedures. Ocwen was not involved in sending the default letter to appellants. Appellee’s witness did testify that as part of her job description at OneWest, she was trained on how to determine whether a default letter was actually mailed. However, she never described the mail procedure at either IndyMac, OneWest, or Ocwen.

Appellants moved for involuntary dismissal at the end of appellee’s case on two grounds, including the lack of evidence that the default letter was actually mailed. The letter itself did not contain any proof that it was mailed, and there was no evidence to establish the regular business practices of IndyMac. Although the letter was boarded, there was no return receipt or mail log showing that it was mailed. The witness did not have personal knowledge of IndyMac’s mailing practices; thus, there was no evidence that the lender complied with the condition precedent of providing notice of the loan’s acceleration under Paragraph 22 of the mortgage.

Counsel for Ocwen responded that the witness testified that she was previously employed with OneWest, was familiar with its mailing procedures, and knew how to determine whether documents were mailed by OneWest based on its business records. Based on the witness’s review, the notice was sent. The letter was sent by IndyMac, which was a division of OneWest. The court noted that the letter identified IndyMac as a division of OneWest, and the analyst used to be employed with OneWest and understood the nature of its mailing procedures. It therefore denied the motion for involuntary dismissal.

Appellant Gino Alessio testified that he had never received the default letter. Following closing arguments, the court found that appellee had proved its case and entered final judgment of foreclosure. This appeal followed.

This Court reviews de novo the denial of a motion for involuntary dismissal. Torres v. Deutsche Bank Nat’l Tr. Co., 256 So. 3d 903, 905 (Fla. 4th DCA 2018). There must be competent substantial evidence that the lender complied with the conditions precedent to foreclosure under the terms of the mortgage, including the requirement that the notice of default was actually sent to the borrowers. See PNC Bank Nat’l Ass’n v. Roberts, 246 So. 3d 482, 485 (Fla. 5th DCA 2018).

Paragraph 22 of the mortgage requires that the lender give the borrower thirty days’ notice to cure a default prior to acceleration of the amount due. Paragraph 15 provides that notices to the borrower “shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower’s notice address if sent by other means.” Appellants contend that the evidence was insufficient to prove that the notice was mailed to them.

After the final judgment in this case, this court decided Torres v. Deutsche Bank National Trust Co., 256 So. 3d 903 (Fla. 4th DCA 2018). There, we discussed the requirement for a lender to present sufficient evidence that it actually mailed the default letter to the borrower:

Where there are conditions precedent to filing the foreclosure suit, a bank must prove that it has substantially complied with them. Ortiz v. PNC Bank, Nat’l Ass’n, 188 So. 3d 923, 925 (Fla. 4th DCA 2016). Along with the note, mortgage, and evidence regarding the outstanding debt on the loan, the default or acceleration letter must be introduced to demonstrate entitlement to foreclosure. Liberty Home Equity Sols., Inc. v. Raulston, 206 So. 3d 58, 60 (Fla. 4th DCA 2016). In addition to introducing the letter, the bank must also present competent, substantial evidence that the letter was actually mailed. Ensler v. Aurora Loan Servs., LLC, 178 So. 3d 95, 97 (Fla. 4th DCA 2015).

Evidence that a document was drafted is insufficient, standing alone, to establish that it was in fact mailed. See Burt v. Hudson & Keyse, LLC, 138 So. 3d 1193, 1195 (Fla. 5th DCA 2014). Rather, the “mailing must be proven by producing additional evidence such as proof of regular business practices, an affidavit swearing that the letter was mailed, or a return receipt.” CitiBank, N.A. for WAMU Series 2007-HE2 Tr. v. Manning, 221 So. 3d 677, 681 (Fla. 4th DCA 2017) (quoting Allen v. Wilmington Tr., N.A., 216 So. 3d 685, 688 (Fla. 2d DCA 2017)).

If the evidence comes by way of witness testimony, “the witness must have personal knowledge of the company’s general practice in mailing letters.” Allen, 216 So. 3d at 688 (citing CitiMortgage, Inc. v. Hoskinson, 200 So. 3d 191, 192 (Fla. 5th DCA 2016)); accord Spencer v. Ditech Fin., LLC, 242 So. 3d 1189, 1191 (Fla. 2d DCA 2018). Mere reliance on the boarding process to prove that the notice letter was mailed is insufficient. See Allen, 216 So. 3d at 687.

Id. at 905. In this case, there was no proof of regular business practices or documents admitted to show that the document was actually mailed. The court originally admitted the notice as a business record of Ocwen, but as noted in Torres, reliance on the boarding process to prove that the notice was mailed is insufficient. The analyst testified that she had been taught by OneWest to determine whether a default letter was mailed, but she never described that process. As she began working for OneWest in 2012, she did not testify that the process used by IndyMac Mortgage Services in 2009 (when the letter allegedly was sent) was the same process used by OneWest when she commenced work for them three years later. In other words, she had no personal knowledge of the company’s general practice in mailing letters as it existed in 2009. In fact, there was no evidence presented of any process of mailing letters of any of the entities involved. Compare with Roberts, 246 So. 3d at 486 (finding evidence of the witness’s personal knowledge of the routine business practice of the Bank and its vendor regarding the mailing of letters was sufficient to prove mailing where the witness explained that the Bank ordered its letters from the outsourcing vendor, which printed, folded, placed them in window envelopes, sealed them, affixed postage and mailed them first class; the witness also testified that the vendor then provided a report to the Bank showing that the letter was mailed). Thus, there was insufficient evidence that the notice was mailed, and the trial court erred in denying the motion for involuntary dismissal. See Torres.

For the foregoing reasons, we reverse the final judgment of foreclosure and remand for dismissal of the action.

GROSS and FORST, JJ., concur.

Not final until disposition of timely filed motion for rehearing.

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

New Jersey approves mortgage lending bill package

New Jersey approves mortgage lending bill package

Lexology-

On April 29, the New Jersey governor approved several bills related to mortgage lending in the state. According to a press release issued by the governor, the package of nine bills addresses the state’s foreclosure crisis and includes the following:

  • A 4997, known as the Mortgage Services Licensing Act, requires persons who act as mortgage servicers—either directly or indirectly—to obtain a license from the New Jersey Commissioner of Banking and Insurance for each office where business is conducted. The Act provides certain licensing exemptions, including federally insured banks and credit unions and their wholly-owned subsidiaries, those already licensed under the state’s Residential Mortgage Lending Act (the Act) who meet certain criteria, and the New Jersey Housing and Mortgage Finance Agency. However, the Act stipulates that sections 9 – 12, which discuss, among other things, record-keeping requirements, late fee restrictions, and required disclosures, apply to all persons, including exempt persons, acting as mortgage servicers in the state. Among other provisions, the Act (i) outlines licensing application requirements, procedures, and expiration terms; (ii) requires licensed mortgage servicers to file annual reports about loan servicing in the state; (iii) stipulates that licenses are non-transferable; (iv) mandates mortgage servicers to file a surety bond, fidelity bond, and evidence of coverage with the Commissioner; (v) requires compliance with all applicable federal laws including RESPA and TILA; (vi) requires mortgage servicers to keep a current schedule of service-related activity fees; and (vii) prohibits mortgage servicers from engaging in unfair or deceptive practices in connection with loan servicing. Moreover, the Act grants the Commission with supervision, investigation, and examination authority. The Act takes effect in 90 days.
  • A 5001 “reduces the statute of limitations in residential mortgage foreclosures from 20 years to six years from the date on which the debtor defaulted, in situations in which the date of default is used as the method to determine when the statute of limitations has expired.” A 5001 takes effect immediately and applies to all residential mortgages executed on or after the effective date.
  • S 3416 states that provisions of the New Jersey Residential Mortgage Lending Act now apply to certain out-of-state persons involved in residential mortgage lending in the state “provided they are otherwise required to be licensed pursuant to the provisions of the [A]ct. . . .” S 3416 takes effect immediately.
  • S 3411, among other things, (i) requires a notice of intention to foreclose on a residential mortgage to be filed within 180 days prior to commencing foreclosure, stating that if a foreclosure proceeding has not yet commenced, “the lender shall send a new written notice at least 30 days, but not more than 180 days, in advance of that action”; and (ii) limits the number of permitted reinstatements of dismissed mortgage foreclosure actions to three, with certain exceptions. S 3411 takes effect August 1, which is the first day of the fourth month following enactment.

[LEXOLOGY]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

City of Miami v. Wells Fargo & Co., BOA, Countrywide et al. | 11th Cir.  The City has plausibly alleged a violation of the FHA and has stated a claim in its First Amended Complaints. Accordingly we conclude that the district court improvidently dismissed the FHA claims in their entirety and ought to have granted the City leave to amend its complaints, since amendation would not have been futile.

City of Miami v. Wells Fargo & Co., BOA, Countrywide et al. | 11th Cir. The City has plausibly alleged a violation of the FHA and has stated a claim in its First Amended Complaints. Accordingly we conclude that the district court improvidently dismissed the FHA claims in their entirety and ought to have granted the City leave to amend its complaints, since amendation would not have been futile.

201414544.rem by DinSFLA on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Edmondson v. Eagle National Bank | 4th Cir. Court – certain lenders participated in “kickback schemes” prohibited by the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. …  We, however, hold that, under the allegations set forth in their complaints, Plaintiffs are entitled to relief from the limitations period under the fraudulent concealment tolling doctrine.

Edmondson v. Eagle National Bank | 4th Cir. Court – certain lenders participated in “kickback schemes” prohibited by the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2601 et seq. … We, however, hold that, under the allegations set forth in their complaints, Plaintiffs are entitled to relief from the limitations period under the fraudulent concealment tolling doctrine.

H/T DUBIN LAW OFFICES

Buckley InfoBytes – Edmonson, Et Al v. Eagle National Bank – 4th Circuit Opinion 2019.04.26 by DinSFLA on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

TFH 5/5 | Foreclosure Workshop #73: Wells Fargo Bank v. Prentice – Highlighting Another Emerging Challenge to Res Judicata in the Battle Between Finality Versus Validity

TFH 5/5 | Foreclosure Workshop #73: Wells Fargo Bank v. Prentice – Highlighting Another Emerging Challenge to Res Judicata in the Battle Between Finality Versus Validity

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

Sunday – MAY 5, 2019

Foreclosure Workshop #73: Wells Fargo Bank v. Prentice – Highlighting Another Emerging Challenge to Res Judicata in the Battle Between Finality Versus Validity

.

 ———————

 

As a result of an increase in the number of judicial decisions more favorable to mortgage borrowers in many but not all state and federal courts, foreclosed homeowners are returning in greater numbers, challenging their otherwise completed foreclosures.

During several of our prior shows we have referred to this newest and perhaps most significant issue emerging in foreclosure defense today as “Finality Versus Validity”.

As foreclosed borrowers seek post-judgment relief today, they are being derailed in the process by three especially formidable foes, (1) res judicata, (2) stare decisis, and (3) laches, each of which has its own underlying rationale for blocking the setting aside of judgments, irrationally even those that can be shown to have been procured by fraud.

On last week’s show we examined this last frontier in foreclosure defense by contrasting two foreclosure cases, one in the Marcantonio Appeal presently before the Supreme Court of the State of Hawaii awaiting a decision on an Application for Writ of Certiorari so far denied post-judgment relief, and the other in the Takhar Appeal just decided by the Supreme Court of Great Britain, granting post-judgment relief.

The contrast between those two Appeals we pointed out is especially significant, since not only is this battle between Finality Versus Validity inevitably going to take place eventually in every American jurisdiction, but Great Britain is after all where the doctrine of res judicata originated in Anglo-Saxon jurisprudence.

Unfortunately, due to an errant wire in our office studio last week, and not caused by the Banksters as some thought, there was considerable static on last week’s broadcast which has delayed its placement in the past broadcast section of our website, www.foreclosurehour.com.

We have, however, cleaned up the audio sufficiently to make it easier to listen to, which audio is now on our website today, together with relevant copies of both of the above-referenced contrasting appeals.

Today’s show discusses Validity deficiencies in yet another nightmarish foreclosure case, Prentice, and highlights even more serious problems than ever before for Finality worshippers.

The facts in Prentice will surely open everyone’s eyes to why Finality must give way to Validity in the foreclosure field.

Be sure therefore to be with John and me this Sunday, especially if you are planning or now in the process of trying to reopen your foreclosure case by taking advantage of new case precedents in your individual jurisdiction.

You will not want to miss this broadcast in order to understand the future of foreclosure defense in this again, the last and final frontier.

Gary

———————

GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813
Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733
Email: gdubin@dubinlaw.net.

Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

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

The Foreclosure Hour 12

image: Video Hive

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

NATIONSTAR MORTGAGE LLC, vs. DANIEL KALEOALOHA KANAHELE and THE ESTATE OF MARCUS C. KANAHELE et al., | HAWII ICA – In conclusion, if Nationstar can prove on remand that it possessed the Note with three indorsements prior to filing its Complaint, it will establish its standing to enforce the Note under Reyes-Toledo. However, Nationstar conceded its status as “holder”

NATIONSTAR MORTGAGE LLC, vs. DANIEL KALEOALOHA KANAHELE and THE ESTATE OF MARCUS C. KANAHELE et al., | HAWII ICA – In conclusion, if Nationstar can prove on remand that it possessed the Note with three indorsements prior to filing its Complaint, it will establish its standing to enforce the Note under Reyes-Toledo. However, Nationstar conceded its status as “holder”

H/T DUBIN LAW OFFICES

SCWC-16-0000319 by DinSFLA on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

TANIGUCHI et al., v. RESTORATION HOMES, LLC, | CA 1st App. Court – The trial court order granting Restoration Homes’ motion for summary adjudication on the Taniguchis’ causes of action for violation of Civil Code section 2924c and Business and Professions Code section 17200 et seq. is vacated, and the matter is remanded

TANIGUCHI et al., v. RESTORATION HOMES, LLC, | CA 1st App. Court – The trial court order granting Restoration Homes’ motion for summary adjudication on the Taniguchis’ causes of action for violation of Civil Code section 2924c and Business and Professions Code section 17200 et seq. is vacated, and the matter is remanded

A152827A by DinSFLA on Scribd

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Some minority homeowners still feeling effect of foreclosure crisis

Some minority homeowners still feeling effect of foreclosure crisis

Consumer Affairs-

For some, the foreclosure crisis of a decade ago is only a distant, unpleasant memory. But an analysis from Zillow suggests it remains a troubling reality for some minority homeowners.

Home prices now exceed their housing bubble highs in most parts of the country, but home values have been much slower to recover in neighborhoods that suffered massive foreclosures.

In predominantly black and Hispanic neighborhoods, home values plunged as much as 50 percent before the market began to recover. Foreclosed homes in black and Hispanic communities have more than doubled in value since then. Even so, they remain as much as 9.5 percent below their peaks.

[CONSUMER AFFAIRS]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

OneWEST BANK, FSB v. Palmero |  FL 3DCA – Accordingly, because it is undisputed that Mrs. Palmero was still alive and the subject property was her primary residence on the date of trial, we affirm the final judgment on review for OneWest’s failure to establish the occurrence of a condition precedent to its right to foreclose

OneWEST BANK, FSB v. Palmero | FL 3DCA – Accordingly, because it is undisputed that Mrs. Palmero was still alive and the subject property was her primary residence on the date of trial, we affirm the final judgment on review for OneWest’s failure to establish the occurrence of a condition precedent to its right to foreclose

 

OneWest Bank, FSB, Appellant,
v.
Luisa Palmero, et al., Appellees.

Case No. 3D14-3114.
District Court of Appeal of Florida, Third District.
Opinion Filed April 24, 2019.
An Appeal from the Circuit Court for Miami-Dade County, Lower Tribunal No. 10-3055, Abby Cynamon, Judge.

Burr & Forman LLP, and Joshua H. Threadcraft, (Birmingham, AL), for appellant.

Carrera & Amador, P.A., and Juan M. Carrera; Legal Services of Greater Miami, Inc., and Jacqueline C. Ledón and Jeffrey M. Hearne, for appellees.

Before EMAS, C.J., and SALTER, FERNANDEZ, LOGUE, SCALES, LINDSEY, HENDON and MILLER, JJ.

ON MOTION FOR REHEARING EN BANC

SCALES, J.

We grant rehearing en banc, withdraw the panel opinion in OneWest Bank, FSB v. Palmero, 43 Fla. L. Weekly D827 (Fla. 3d DCA Apr. 18, 2018), and substitute the following opinion in its stead.

OneWest Bank, FSB (“OneWest”), the plaintiff below, appeals from a final judgment entered in favor of the defendants below, Luisa Palmero (“Mrs. Palmero”), Idania Palmero and Rene Palmero, after a bench trial on OneWest’s action to foreclose on a reverse mortgage. We affirm because OneWest failed to establish the occurrence of a condition precedent to its right to foreclose, i.e., that the subject property is not the principal residence of Mrs. Palmero, a surviving co-borrower under the instant reverse mortgage. See Smith v. Reverse Mortg. Sols., Inc., 200 So. 3d 221 (Fla. 3d DCA 2016).

I. Factual Background and Procedural History

A. The underlying facts

In August 2006, Roberto and Mrs. Palmero (“the Palmeros”), as husband and wife, completed a form residential loan application for an adjustable rate line of credit to be secured by a home equity conversion mortgage (commonly referred to as a reverse mortgage[1]) on their primary residence. It is not disputed that the Palmeros’ residence is their homestead property. The August 2006 loan application reflects that: (i) the Palmeros represented that they owned their primary residence in fee simple; (ii) the Palmeros applied for the loan as co-borrowers; and (iii) the Palmeros had conducted a face-to-face interview with a counselor from the prospective lender.

Despite their representation, the Palmeros did not own their primary residence in fee simple when they completed the August 2006 loan application. In fact, the record depicts a series of quitclaim deeds transferring ownership interest in the subject property back and forth between the Palmeros and their adult children, Idania and Rene Palmero, prior to that time. Consequently, on October 20, 2006, Idania and Rene executed a quitclaim deed on the subject property, granting a life estate to their father, Roberto Palmero, with the remainder to their mother, Mrs. Palmero, and to themselves.

On December 20, 2006, Roberto Palmero signed and executed, by himself: (i) a second, form residential loan application with the same lender, wherein Roberto stated that he held a life estate in the Palmeros’ primary residence and that he was the only borrower on the loan; (ii) a home equity conversion loan agreement, which defined Roberto as the borrower; and (iii) an adjustable rate note, which identified Roberto as the borrower. The note provides that the lender is entitled to demand immediate payment in full if, among other things, “[a] Borrower dies and the Property is not the principal residence of at least one surviving Borrower.” As is the case with such loans that are secured by reverse mortgages, however, the note also provides that “Borrower shall have no personal liability for payment of the debt,” and that “Lender shall enforce the debt only through the sale of the Property covered by [the reverse mortgage].”

That same day, December 20, 2006, to secure the note, both of the Palmeros signed and executed a reverse mortgage encumbering their primary residence. Consistent with the note, the reverse mortgage provides that: (i) the lender is entitled to demand immediate payment in full on the note if “[a] Borrower dies and the Property is not the principal residence of at least one surviving Borrower”; (ii) “Borrower shall have no personal liability for the payment of the debt” secured by the mortgage; and (iii) “Lender may enforce the debt only through the sale of the Property” secured by the mortgage.

The first paragraph of the reverse mortgage defines the “Borrower” as “[t]he mortgagor,” and further describes the “Borrower” as “Roberto Palmero, a married man reserving a life estate unto himself with the ramainderman [sic] to Luisa Palmero, his wife, Idania Palmero, a single woman, and Rene Palmero, a single man.” Later in the mortgage document, the “Borrower” covenants that “Borrower is lawfully seised of the estate hereby conveyed and has the right to mortgage, grant and convey the Property and that the Property is unencumbered.”[2] The “Borrower” further pledges to defend title to the property.

At the end of the mortgage, immediately before the signature block, the document states: “BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any rider(s) executed and recorded with it.” Below this statement, Roberto and Mrs. Palmero placed their signatures on the separate lines above their pre-printed names as “Borrower.”[3][4] The mortgage was recorded in the Miami-Dade County public records on January 12, 2007; no other loan documents were recorded.

At the trial, over the defendants’ objection, OneWest introduced a document the Palmeros signed, labeled “Non-Borrower Spouse Ownership Interest Certification.” Mrs. Palmero signed this document as the “Non-Borrower Spouse” directly below a statement — contradicting the reverse mortgage’s condition precedent — “acknowled[ing] that should [her] spouse predecease [her] . . . and unless another means of repayment is obtained, the home where [she] reside[s] may need to be sold to repay Reverse Mortgage debt incurred by [her] spouse.” Further, the document states, “[i]f the home where [she] reside[s] is required to be resold, [she] understand[s] that [she] may be required to move from [her] residence.” The date this document was executed is illegible. No signature appears on the line designated for the closing agent/witness and the document is not notarized. The record reflects that this document was made part of the lender’s closing file, but it was not recorded with the mortgage. Critically, the subject reverse mortgage does not include any of the language from the Non-Borrower Spouse Ownership Interest Certification purporting to qualify Mrs. Palmero’s designated status as “Borrower” in the reverse mortgage.

The lender issued regular payments on the note until Roberto Palmero passed away on August 18, 2008. Thereupon, the lender sent a notice letter to the Palmeros’ residence, addressed only to Roberto, expressing sympathy to Roberto on his death, as well as to his friends and family. Therein, the lender accelerated the loan and declared all outstanding principal and interest due and payable. When Mrs. Palmero did not pay the balance declared due, on January 19, 2010, the lender filed the instant foreclosure action against Mrs. Palmero, Idania Palmero and Rene Palmero in the Miami-Dade County Circuit Court. During the pendency of this action, the reverse mortgage was assigned to OneWest, which was then substituted as the plaintiff in these proceedings.

B. The litigation proceedings

The lender’s single-count complaint against the defendants sought only to foreclose on the reverse mortgage. While the complaint generally alleged that all conditions precedent to foreclosure had occurred, the complaint specifically alleged that “the basis for this default is the death of Roberto Palmero.” Copies of the note and mortgage, and nothing else, were attached to the pleading.

Mrs. Palmero, Idania Palmero and Rene Palmero filed an answer denying the general allegation that all conditions precedent to initiating the action had occurred. The defendants also raised the affirmative defense that the plaintiff could not foreclose on the reverse mortgage because: (i) the mortgage expressly identifies Mrs. Palmero as a co-borrower; and (ii) Mrs. Palmero “is a surviving Borrower, whose principal residence is the subject property.”

The matter proceeded to a bench trial, held on March 17, 2014. The primary issue considered at trial was whether Mrs. Palmero is a “Borrower” as that term is used in the reverse mortgage. To this end, OneWest argued in its closing brief that, despite OneWest’s foreclosure action being premised exclusively on the reverse mortgage, the trial court should consider all of the other documents executed by the Palmeros as part of the instant transaction (i.e., the loan applications, note, loan agreement, and Non-Borrower Spouse Ownership Interest Certification) to determine the meaning of the word “Borrower” in the reverse mortgage. According to OneWest, these documents showed that, notwithstanding the contrary language in the reverse mortgage, Roberto Palmero is the sole “Borrower” on the mortgage, as well as the note.

The defendants responded in their closing brief that because the “plain language of the mortgage . . . clearly identified Luisa Palmero as a named borrower,” the trial court should not “delve into the subjective intent of the parties by looking outside the four corners of the mortgage instrument.”

On September 11, 2014, the trial court entered a final judgment in favor of the defendants, declining to grant OneWest foreclosure on the reverse mortgage. Therein, notwithstanding its finding that Mrs. Palmero is not a co-borrower under the reverse mortgage, the trial court concluded that OneWest could not foreclose because of the federal statute governing the required contents of a reverse mortgage, like this one, which is insured by the federal Department of Housing and Urban Development (“HUD”). In relevant part, that statute expressly prevents HUD from insuring a reverse mortgage unless the mortgage prevents foreclosure until the homeowner and the homeowner’s spouse die or sell the home. See 12 U.S.C. § 1715z-20(j) (providing that “[t]he Secretary may not insure a home equity conversion mortgage under this section unless such mortgage provides the homeowner’s obligation to satisfy the loan obligation is deferred until the homeowner’s death, sale of the home, or occurrence of other events specified in regulations of the Secretary,” and defining “homeowner” as including the “spouse of a homeowner”).

OneWest timely appealed the final judgment against it. A split panel of this Court reversed the trial court’s judgment. OneWest Bank, FSB v. Palmero, 43 Fla. L. Weekly D827 (Fla. 3d DCA Apr. 18, 2018). We grant the appellees’ motion for rehearing en banc, withdraw the panel opinion and substitute this opinion in its stead.

II. Analysis[5]

A. Issue before this Court

In this appeal, OneWest argues that reversal is warranted because application of the federal reverse mortgage law was neither raised as an affirmative defense by the defendants in their pleadings, nor litigated by the consent of the parties at the bench trial. While we agree with OneWest that the federal reverse mortgage law was not properly considered by the trial court, and judgment should not have been entered below for these reasons, see e.g., Dysart v. Hunt, 383 So. 2d 259, 260 (Fla. 3d DCA 1980), this conclusion does not end our judicial labor.

We must still consider the dispositive issue of whether the trial court’s initial determination that Mrs. Palmero is not a co-borrower under the instant reverse mortgage constitutes legal error.[6] Should this Court determine that, as a matter of law, Mrs. Palmero is a “Borrower” as that term is used in the reverse mortgage, then this Court must affirm the final judgment on review for OneWest’s failure to establish the occurrence of a condition precedent to its right to foreclose, i.e., that the subject property is not the principal residence of a surviving borrower under the mortgage. See Dade Cty. Sch. Bd. v. Radio Station WQBA, 731 So. 2d 638, 644 (Fla. 1999) (“[I]f a trial court reaches the right result, but for the wrong reasons, it will be upheld if there is any basis which would support the judgment in the record.”).

B. This case is controlled by this Court’s precedent in Smith v. Reverse Mortgage Solutions, Inc.

When the trial court conducted the bench trial in this case on the issue of whether Mrs. Palmero is a “Borrower” under the instant reverse mortgage, this very issue was under consideration before this Court in Smith. See Smith, 200 So. 3d at 224(“[W]e must determine, whether, as a matter of law, Mrs. Smith is a `Borrower’ as that term is used in the mortgage.”). Smith considered a reverse mortgage containing provisions that, in all material respects, were identical to the provisions contained in the reverse mortgage in this case. There, as here, the married couple’s principal residence was their homestead. Id. at 223 n.2. There, as here, only the husband signed an adjustable rate note identifying the husband as the “Borrower.” Id. at 225 n.6. There, as here, both the husband and the wife signed the reverse mortgage identifying the husband and the wife as “Borrower” in the signature block at the end of the mortgage, while only the husband was identified as “Borrower” in the reverse mortgage’s opening paragraph. Id. at 225. The reverse mortgage in Smith also contained the same Borrower Covenants and the same provisions setting forth the condition precedent to foreclosure at issue here (“[a] Borrower dies and the Property is not the principal residence of at least one surviving Borrower.”). Id. at 226.

In Smith, this Court determined unequivocally that, as a matter of law, “based on the plain and unambiguous language of the mortgage — which was executed by both Mr. and Mrs. Smith — (i) both Mr. and Mrs. Smith were treated as the “Borrower” under the mortgage, and (ii) each borrower is protected from the foreclosure of the mortgage until both borrowers die.” Id. We reversed the final judgment of foreclosure against Mrs. Smith, concluding that, because Mrs. Smith was a “Borrower” under the mortgage — and was clearly still alive — and because the mortgagee had not alleged below that the homestead residence was no longer Mrs. Smith’s principal residence, the mortgagee failed to establish the occurrence of a condition precedent to its right to foreclose. Id. at 228.

We are confident that the trial court, with the benefit of this Court’s decision in Smith, would have applied Smith and concluded that Mrs. Palmero is a “Borrower” under the instant mortgage, without needing to address whether the federal reverse mortgage statute prohibited foreclosure in this case.[7] See Ramcharitar v. Derosins, 35 So. 3d 94, 98 (Fla. 3d DCA 2010) (stating that stare decisis obligates the trial court to “follow the decisions of the district courts of appeal `unless and until they are overruled by the supreme court.'” (quoting Chapman v. Pinellas Cty., 423 So. 2d 578, 580 (Fla. 2d DCA 1982))). Our opinion in Smith controls the instant case, and compels us to affirm the trial court’s final judgment for the defendants, albeit for a different reason than that relied upon by the trial court. To wit, because Mrs. Palmero, a co-borrower under the subject reverse mortgage, was still alive and the subject property was her primary residence on the date of trial,[8] OneWest failed to establish the occurrence of a condition precedent to its right to foreclose and the defendants were entitled to entry of judgment in their favor in this action. See also Edwards v. Reverse Mortg. Sols., Inc., 187 So. 3d 895, 896-97 (Fla. 3d DCA 2016) (citing Smith, reversing final judgment of foreclosure, and remanding for entry of final judgment in favor of the wife because “Mrs. Edwards is a co-borrower, and her death is a condition precedent to Reverse Mortgage’s ability to foreclose on the property”).[9]

C. The other documents that are part of this transaction

For several reasons, we are not persuaded to reach a contrary result in this case merely because additional, unrecorded documents — specifically, the note, second loan application, and loan agreement executed solely by Roberto Palmero, and the Non-Borrower Spouse Ownership Interest Certification executed by both Palmeros — all identify Roberto Palmero as the sole “borrower” on the loan.[10]

i. Inapplicability of Mutual Construction Doctrine

First, while we recognize the doctrine of mutual construction generally requires that these documents be read and construed together, see 37 Fla. Jur. 2d Mortgages, Etc. § 94 (2018), the doctrine does not, on the facts of this case, permit us to graft inconsistent provisions found in these other documents onto the instant reverse mortgage. The primary purpose of the mutual construction doctrine — which applies to a mortgage, the note it secures and the other instruments that are executed by the same parties and as part of a single mortgage transaction — is “to determine and give effect to the intention of the parties.” Id.; Sardon Found. v. New Horizons Serv. Dogs, Inc., 852 So. 2d 416, 420 (Fla. 5th DCA 2003)(applying the mutual construction doctrine, and stating “[t]he primary rule of construction of a mortgage is to ascertain the intention of the parties”). Where though, as here, this Court has unqualifiedly determined that, as a matter of law, the “plain and unambiguous language of the mortgage” treats both signing spouses as the “Borrower,” see Smith, 200 So. 3d at 226, there is no cause to utilize the mutual construction doctrine to look beyond the face of the mortgage in order to determine and give effect to the parties’ intent.

Indeed, this Court has held that the mutual construction doctrine is applicable onlyto assist in clarifying an ambiguity in a document. See Sims v. New Falls Corp., 37 So. 3d 358, 361 (Fla. 3d DCA 2010) (“It is also urged upon this Court that the `doctrine of mutual construction’ permits the importation of the sentiment of the choice of law provision in the second mortgage into the promissory note . . . However, [the doctrine] may not be invoked to override the clear and unambiguous expression of agreement of the parties to a transaction.”); see also In re Nunez, No. 17-21018-BKC-LMI, 2018 WL 1568524, at *2-3 (Bankr. S.D. Fla. Mar. 28, 2018) (citing Smith, and rejecting the mortgagee’s argument that the court “look at all of the documents executed in connection with the Reverse Mortgage to ascertain the parties’ intent” as to who was the borrower under the mortgage, where the mortgage unambiguously defined the term “Borrower” to include both the decedent and her daughter); KRC Enters., Inc. v. Soderquist, 553 So. 2d 760, 761 (Fla. 2d DCA 1989) (holding, in a mortgage foreclosure action, that the language in a mortgage providing for acceleration at the option of the mortgagee prevailed over the automatic acceleration clause contained within the note); Grier v. M.H.C. Realty Corp., 274 So. 2d 21, 22 (Fla. 4th DCA 1973) (same). And, with respect to whether Mrs. Palmero was a “Borrower” under the instant reverse mortgage, we would be hard pressed to conclude the reverse mortgage is ambiguous — thus implicating the doctrine of mutual construction — given this Court’s decisions in Smith and Edwards. In those cases, this Court considered reverse mortgages identical to the instant reverse mortgage and determined that, as a matter of law, the surviving spouse is a co-borrower under the reverse mortgage documents.

That other documents omit reference to Mrs. Palmero, or might characterize her as someone other than a borrower, does not change the fact that Mrs. Palmero signed the subject reverse mortgage as “Borrower,” and the reverse mortgage’s Borrower Covenants are accurate only if Mrs. Palmero is a “Borrower” therein. While contemporaneously executed loan documents may all be part of a single transaction, it is well settled that loan documents are separate and distinct instruments, each with their own legal effect. See Sims, 37 So. 3d at 360. When, as here, a reverse mortgage document unambiguously requires conditions precedent to foreclose, we are loath to graft inconsistent provisions contained in collateral loan documents on the reverse mortgage to alter those unambiguous conditions precedent. Id. at 361-62.

This case is distinguishable from Nationstar Mortgage Co. v. Levine, 216 So. 3d 711 (Fla. 4th DCA 2017). In Levine, unlike our case, the parties to the reverse mortgage did not characterize Mrs. Levine as a “Borrower” in the document’s signature block. Rather, the parties characterized Mrs. Levine as a “Non-Borrowing Spouse,” while other parts of the reverse mortgage defined Mrs. Levine as “Borrower.” Id. at 716. Based on that “internal contradiction” in the reverse mortgage, the Fourth District found a patent ambiguity on the face of the document requiring resolution by extrinsic evidence, and reversed a summary judgment for the surviving spouse. Id. at 716-17.

No similar “internal contradiction” exists here. Unlike in Levine, Mrs. Palmero’s signature on the reverse mortgage was not characterized as a “Non-Borrowing Spouse.” Mrs. Palmero was plainly and unequivocally characterized by the document’s drafter as “Borrower.” While the parties in Levine characterized Mrs. Levine as a “Non-Borrowing Spouse” in the reverse mortgage, OneWest seeks to have the court similarly characterize Mrs. Palmero as such in this case’s reverse mortgage. We reject OneWest’s attempt to have the court accomplish by judicial fiat what the parties themselves assuredly did not do.

ii. The reverse mortgage does not integrate the Non-Borrower Spouse Ownership Interest Certification

Second, on the facts of this case, we reject OneWest’s argument that the Non-Borrower Spouse Ownership Interest Certification signed by the Palmeros must be considered part of the instant reverse mortgage. Paragraph twenty-six of the mortgage, titled “Riders to this Security Instrument,” provides:

If one or more riders are executed by Borrower and recorded together with this Security Instrument, the covenants of each such rider shall be incorporated into and shall amend and supplement the covenants and agreements of this Security Instrument as if the rider(s) were a part of this Security Instrument. [Check applicable box(es).]

(Emphasis added). The box for “Other (Specify)” within paragraph twenty-six is not checked, nor are the boxes for any of the other delineated riders. There are no attachments to the reverse mortgage beyond the Signature Exhibit. The Non-Borrower Spouse Ownership Interest Certification was neither witnessed, notarized, nor recorded in the public record with the mortgage. Had the parties intended to integrate into the reverse mortgage the Non-Borrower Spouse Ownership Interest Certification, or any collateral loan document, they certainly could have done so as plainly and expressly outlined in the reverse mortgage. They did not.[11]

In sum, the Non-Borrower Spouse Ownership Interest Certification is not integrated into the reverse mortgage.

iii. Response to the dissents

In his dissent, Chief Judge Emas suggests that unrecorded, collateral documents can, and should, inform the determination of “who is a mortgagor” in this case. While he does not directly take issue with this Court’s holdings in Smith and Edwards, the Chief Judge distinguishes those cases based on the unrecorded, collateral documents that are contained in this case’s record, but that were absent in Smith and Edwards. While obviously not his intention, the Chief Judge’s conclusion in this regard seems to suggest that, notwithstanding a Florida district court’s construction of identical language in an identical instrument, a Florida circuit court may conclude an ambiguity exists based on such unrecorded, collateral documents.

Judge Miller, in her separate dissent, takes a somewhat different approach, and advocates receding from this Court’s precedent in Smith and Edwards. Relying principally upon precedent that a promissory note’s terms control over inconsistent mortgage terms, Judge Miller suggests that OneWest may foreclose on Mrs. Palmero’s homestead by virtue of an unrecorded promissory note that Mrs. Palmero did not sign.

OneWest’s foreclosure claim against Mrs. Palmero, though, is premised exclusively on Mrs. Palmero’s status as a party to the mortgage (see, footnotes 2 and 9, supra); she did not sign the note and is not a party to it. Indeed, as stated earlier, the note and mortgage are two separate and distinct agreements. See Sims, 37 So. 3d at 360. The note memorializes Mr. Palmero’s debt to OneWest, while the mortgage defines the parameters of OneWest’s ability to recover Mr. Palmero’s debt from Mrs. Palmero. OneWest’s and Mrs. Palmero’s rights and obligations in this case flow from only the recorded instrument giving OneWest a security interest in Mrs. Palmero’s homestead: the mortgage document.

While the dissenters’ eloquent attempts to elevate the role of collateral documents, while diminishing the role of the mortgage document, in this case are admirable, we are concerned how Florida real estate transactions (and mortgage foreclosure actions) would be affected if we were to conclude that, as a matter of course, unrecorded, collateral documents could alter the very parties to a recorded mortgage document.[12]

III. Conclusion

OneWest’s sole assertion entitling it to foreclose on the subject reverse mortgage was that Roberto Palmero, a borrower and Mrs. Palmero’s spouse, had died. Yet, under the subject reverse mortgage, an express condition precedent to foreclosure when a “Borrower” dies is that the subject property is not the principal residence of a “surviving Borrower” under the mortgage. As Judge Logue stated in his dissent from the panel opinion that we now withdraw, “[b]ecause the mortgage and the nature of the spouse’s signature in this case are identical to the ones in Smith and Edwards, we [apply] our rather unremarkable precedent that, as a matter of law, when the surviving spouse signed the mortgage as a borrower, as revealed by an examination of the mortgage itself, the spouse will be treated as a borrower for purposes of the mortgage.” OneWest Bank, FSB v. Palmero, 43 Fla. L. Weekly D827 (Apr. 18, 2018) (Logue J, dissenting), opinion withdrawn (April 24, 2019).

Smith is directly on point and controls this case. Mrs. Palmero is a co-borrower under the subject reverse mortgage, notwithstanding any inconsistent provisions in the collateral documents. Had the parties intended to characterize Mrs. Palmero as someone other than a “Borrower” — for instance, as a “Non-Borrowing Spouse” — the parties could have done so within the reverse mortgage. They did not; and this Court is powerless to rewrite the parties’ reverse mortgage to do what the parties themselves assuredly did not do. See Fernandez v. Homestar at Miller Cove, Inc., 935 So. 2d 547, 551 (Fla. 3d DCA 2006) (concluding that where the terms of an agreement “are clear and unambiguous, `the contracting parties are bound by those terms, and a court is powerless to rewrite the contract to make it more reasonable or advantageous for one of the contracting parties'” (quoting Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So. 2d 1000, 1003 (Fla. 2d DCA 1995))). Accordingly, because it is undisputed that Mrs. Palmero was still alive and the subject property was her primary residence on the date of trial, we affirm the final judgment on review for OneWest’s failure to establish the occurrence of a condition precedent to its right to foreclose.[13]

Affirmed.

SALTER, FERNANDEZ, LOGUE, LINDSEY and HENDON, JJ., concur.

EMAS, C.J., dissenting.

I. INTRODUCTION

After a bench trial at which witnesses testified and exhibits were introduced, and following the submission of extensive posttrial memoranda, the trial court determined that Luisa Palmero was not a “borrower” under her husband’s reverse mortgage.

The majority brushes aside the trial court’s factual finding, holding instead that, as a matter of law, the mortgage unambiguously defined Mrs. Palmero as a borrower. In doing so, the majority opinion failed or refused to consider the other documents referred to by, and signed contemporaneously with, the mortgage.

I respectfully dissent, because: (1) the conflicting provisions of the mortgage and note created a patent ambiguity; (2) the documents referred to and described in the mortgage, and executed contemporaneously during this transaction, must be treated as part of the same writing and construed together with the mortgage and note in resolving this ambiguity and ascertaining the parties’ intent; and (3) the trial court properly determined, in a factual finding supported by competent substantial evidence, that Luisa Palmero was not a “borrower” under the mortgage.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

In September 2006, Roberto and Luisa Palmero met with a reverse mortgage counselor and received “information about the implications of and alternatives to a reverse mortgage.” In a session tailored to their unique financial circumstances, the Palmeros and the counselor discussed the impact of the reverse mortgage on their estate and heirs. Following the counseling session, Mr. and Mrs. Palmero executed a document certifying that they had discussed the financial implications of, and alternatives to, the reverse mortgage, and that they understood its advantages and disadvantages, the payment plan, and its costs.

In December 2006, the Palmeros mortgaged their home to Value Financial Mortgage Services, Inc. (The reverse mortgage was later assigned to OneWest Bank.) As part of the mortgage transaction, the following five documents were executed on December 20, 2006:

1. The Loan Application.

In the loan application, the property was stated to be in Mr. Palmero’s name. Mr. Palmero was named in the loan application as the borrower, and he signed as the “borrower.” Although there was a space provided for a co-borrower’s name and a space for a co-borrower’s signature, those spaces were left blank-Mrs. Palmero was not named in the loan application as a co-borrower, nor did she sign the loan application as a co-borrower. Indeed, neither her name nor signature appears anywhere on the loan application.

2. The Loan Agreement.

In the loan agreement, “borrower” was defined as Mr. Palmero. Mr. Palmero, and no one else, signed the loan agreement as the borrower. Indeed, neither Mrs. Palmero’s name nor her signature appears anywhere on the loan agreement.

3. The Non-Borrower Spouse Ownership Interest Certification.

In a document entitled “Non-Borrower Spouse Ownership Interest Certification,” the Palmeros acknowledged that they were given ample time “prior to the closing of this reverse mortgage loan to consult with independent legal and tax experts of [their] own choosing regarding the ownership or vesting of real property that will serve as collateral for the reverse mortgage loan.” Mr. Palmero signed this certification as the Borrower, while Mrs. Palmero signed as the “Non-Borrower Spouse.”

In Mrs. Palmero’s portion of the document, just above her signature as the Non-Borrower Spouse, Mrs. Palmero expressly certified the following:

I understand and acknowledge that should my spouse predecease me or fail to occupy the home where I reside as his . . . principal residence, and unless another means of repayment is obtained, the home where I reside may need to be sold to repay Reverse Mortgage debt incurred by my spouse. If the home where I reside is required to be resold, I understand that I may be required to move from my residence.

4. The Note.

The note defined “borrower” to mean “each person signing at the end of this Note.” Mr. Palmero was the only person who signed at the end of the note as the borrower. Indeed, neither Mrs. Palmero’s name nor her signature appears anywhere on the note.

5. The Mortgage.

In the mortgage, the borrower was defined as “Roberto Palmero, a married man reserving a life estate unto himself with the r[e]mainderman to Luisa Palmero, his wife, Idania Palmero, a single woman and Rene Palmero, a single man.” The signature block read, “BY SIGNING BELOW, Borrower accepts and agrees to the terms contained in this Security Instrument and in any rider(s) executed by Borrower and recorded with it.” Mr. and Mrs. Palmero each signed as the Borrower below this sentence.

Under the terms of the loan, the bank paid Mr. Palmero from May 2007 through July 2008.[14] Mr. Palmero passed away in August 2008. As provided for in the mortgage, the bank accelerated the loan in November 2008. When Mrs. Palmero did not pay the balance of the loan, the bank filed a complaint to foreclose on the home.

The case proceeded to trial, and after taking testimony and examining the loan documents, the trial court concluded that Mrs. Palmero was not a borrower, but determined that under the federal reverse mortgage statute, 12 U.S.C. § 1715z-20(j), “the repayment of a reverse mortgage loan is deferred until the death of both the borrowing homeowner and the homeowner’s spouse.”[15] Judgment was entered for Mrs. Palmero, and the bank has appealed.

III. STANDARD OF REVIEW

“A trial court’s construction of notes and mortgages involves pure questions of law, and therefore is subject to de novo review.” Smith v. Reverse Mortg. Sols., Inc., 200 So. 3d 221, 224 (Fla. 3d DCA 2016) (citing Nagel v. Cronebaugh, 782 So. 2d 436, 439 (Fla. 5th DCA 2001)). Likewise, “whether an ambiguity exists in a contract is a question of law,” subject to de novo review. Weisfeld-Ladd v. Estate of Ladd, 920 So. 2d 1148, 1150 (Fla. 3d DCA 2006) (quoting Wagner v. Wagner, 885 So. 2d 488, 492 (Fla. 1st DCA 2004)). However, if an ambiguity exists, the resolution of that ambiguity is a question of fact which we review for competent substantial evidence. Id. at 1150. See also Antoniazzi v. Wardak, 259 So. 3d 206 (Fla. 3d DCA 2018).

IV. DISCUSSION

The majority opinion takes issue with the trial court’s finding that Mrs. Palmero was not a borrower. Instead, and relying on Smith, 200 So. 3d at 221, and Edwards v. Reverse Mortgage Solutions, Inc., 187 So. 3d 895 (Fla. 3d DCA 2016), the majority concludes that, under the note and mortgage and as a matter of law, Mrs. Palmero was unequivocally and unambiguously a borrower in this reverse mortgage transaction.

1. Smith and Edwards are Inapplicable

I do not believe that Smith or Edwards is controlling in this case because, unlike those cases, the record here provides documentary evidence of the complete loan transaction which establishes the parties’ intent that Mr. Palmero be the sole borrower.

In Smith, there was no transcript of the trial. 200 So. 3d at 224 (noting “the absence of a transcript.”) There was no evidence as to how the property was titled. Id. at 226 n.8 (“It is not clear from the record how the subject property was titled at the time the mortgage was executed by Mr. and Mrs. Smith.”). And the loan application was not a part of the record on appeal. Id. at 223 n.1 (noting: “While the subject note and mortgage both reference a `Loan Agreement’ . . . no Loan Agreement is contained in the record on appeal.”)

In Edwards, 187 So. 3d at 896, the record was also severely limited because the defendant failed to appear or respond to the complaint, resulting in entry of a default. There was a nonjury trial, but the defendant was not allowed to testify and was not permitted to assert any defenses. Id. The only loan documents presented to the trial court were the mortgage and note. Id. (noting: “The trial court held that [the bank] was entitled to foreclosure because Mr. Edwards was the only borrower under the note, and therefore, the only borrower for purposes of the mortgage’s acceleration provision.”)

2. The Mutual Construction Principle is Applicable

Conversely, and as described earlier, the record in the instant case contains a number of documents which Mr. Palmero, Mrs. Palmero, or both Palmeros signed contemporaneously as a part of the transaction. It is apodictic: “Where other instruments are executed contemporaneously with a mortgage and are part of the same transaction, the mortgage may be modified by these other instruments. All the documents should be read together to determine and give effect to the intention of the parties.” Sardon Found. v. New Horizons Serv. Dogs, Inc., 852 So. 2d 416, 420 (Fla. 5th DCA 2003). See also MV Ins. Consultants v. NAFH Nat’l Bank, 87 So. 3d 96, 99 (Fla. 3d DCA 2012) (holding: “Documents executed by the same parties, on or near the same time, and concerning the same transaction or subject matter are generally construed together as a single contract”) (quoting Quix Snaxx, Inc. v. Sorensen, 710 So. 2d 152, 153 (Fla. 3d DCA 1998)); Citicorp Real Estate, Inc. v. Ameripalms 6B GP, Inc., 633 So. 2d 47, 49 (Fla. 3d DCA 1994)(noting: “The law is well established that two or more documents executed by the same parties, at or near the same time, and concerning the same transaction or subject matter are generally construed together as a single contract”); Bianchi’s from Roma, Inc. v. Big Five Club, Inc., 630 So. 2d 642, 643 (Fla. 3d DCA 1994)(concluding that “a release which was signed simultaneously by the parties with the written agreement sued upon [thereby requiring that both of these instruments be construed together in determining the parties’ intent] did not, as a matter of law, extinguish the parties’ obligations to each other under the written agreement” (alteration in original)).

Nevertheless, the majority eschews this well-accepted legal principle of mutual construction, choosing not to consider any documents other than the mortgage and note. The primary reason given by the majority for not applying this principle is its overbroad application of this court’s opinion in Smith. I do not read Smith as establishing a blanket rule that, any time a surviving spouse’s name and signature appear on a reverse mortgage, that surviving spouse, as a matter of law, must be treated as a co-borrower. The procedural posture of Smith was such that the panel decision was limited to the pleadings (including their attachments, the mortgage and note), and the final judgment entered following a trial. In the absence of a trial transcript, the appellate court was limited to a construction of these two documents. It was upon this limited record, and this court’s de novo review in Smith, that we held the surviving spouse was a co-borrower. Smith, 200 So. 3d at 228. Smith does not stand for the proposition that, for all situations and for all time, regardless of the record, a surviving spouse whose name appears on a mortgage must, as a matter of law, be treated as a borrower.

3. The Ambiguity is Patent

In this case, the trial court was presented with a note signed by Mr. Palmero only (and defining the “borrower” as Mr. Palmero only) and a mortgage signed by both Mr. and Mrs. Palmero. This was the same situation in Smith which created an ambiguity as to who was the borrower (or borrowers) in the mortgage transaction. The record before us in this case, unlike in Smith, reveals that the trial court, charged with resolving this patent ambiguity, considered the contemporaneously executed documents in assessing and ultimately determining the parties’ intent. The trial court concluded that Mrs. Palmero was not a borrower, and that conclusion is supported by competent and substantial evidence, including the loan application, the loan agreement, and the Non-Borrower Spouse Ownership Interest Certification, which self-evidently certifies that Mrs. Palmero was not (and did not intend to be) a borrower.

I take no issue with the majority’s reference to the well-established principle that the mutual construction doctrine may not be used to create an ambiguity, but only to assist in clarifying an existing ambiguity. See Maj. Op. at 16. However, this principle is gratuitously invoked by the majority, as I do not suggest that consideration of these contemporaneous documents creates an ambiguity. What I do suggest-indeed what is inescapable from this record-is that the mortgage itself,[16] or at the very least the mortgage and the note together, create an ambiguity as to whether Mrs. Palmero is a borrower. This ambiguity is patent, raising a question of fact to be resolved by the trier of fact. The trial court properly resolved this question of fact by conducting a trial, taking testimony and considering exhibits introduced into evidence, including the loan application, the loan agreement, and the Non-Borrower Spouse Ownership Interest Certification.

4. The Contemporaneously Executed Documents Resolve the Patent Ambiguity.

The majority also concludes these other documents cannot be considered because they were not recorded. However, the recordation of the document (or, as in this case, the non-recordation) in no way affects the validity of documents executed to formalize an agreement. See Mayfield v. First City Bank of Fla., 95 So. 3d 398, 401 (Fla. 1st DCA 2012) (holding: “Section 695.01 is a `notice’ recording statute, the primary purpose of which is to protect subsequent purchasers (including mortgagees and creditors) against claims arising from prior unrecorded instruments”) (citing Argent Mortg. Co., LLC v. Wachovia Bank, N.A., 52 So. 3d 796, 799 (Fla. 5th DCA 2010)); Townsend v. Morton, 36 So. 3d 865, 869 (Fla. 5th DCA 2010) (holding: “Morton’s explanation that the deed’s unrecorded status renders it ineffective . . . is wrong. The fact that a deed is unrecorded does not affect the efficacy or validity of the instrument as between the grantor and grantee or those with notice. Hence, the purpose of recording a deed is to give notice to third parties, rather than validate an otherwise properly executed instrument between the parties”) (citations omitted).

The contemporaneously executed documents in this case did not need to be recorded to provide the public with notice of the parties’ interest in the property. Neither does their non-recordation affect their evidentiary value in assessing the intent of the parties and determining the rights granted and obligations imposed in this transaction. Quite simply, these contemporaneously executed documents, when read together with the note and mortgage, resolved the patent ambiguity created between the note (in which Mrs. Palmero was not listed as a borrower, and did not sign the note in any capacity) and the mortgage (in which Mrs. Palmero signed as “borrower” even though that term was defined in the mortgage to mean only Mr. Palmero).

Following a non-jury trial, the trial court found an ambiguity existed, and properly resolved that ambiguity, finding that Mrs. Palmero had knowingly and voluntarily entered into an agreement by which she expressly:

• Agreed, acknowledged and understood she was a non-borrowing spouse;

• Agreed it was in her best interest to enter into this reverse mortgage loan with the understanding that any interest she had in the real property would serve as collateral for the reverse mortgage loan;

• Understood and acknowledged that if her husband predeceased her, the home could be sold to repay the debt; and

• Understood and acknowledged that if the home were to be sold upon her husband’s death, she would be required to move out of the home.

V. CONCLUSION

In order to reach its conclusion that, as a matter of law, Mrs. Palmero was a borrower under the mortgage, the majority considers in isolation a single signature line of the mortgage, while failing to consider the contradictory portions of that same mortgage which defines the borrower as Mr. Palmero only; ignores the fact that the contemporaneously executed note contains only Mr. Palmero’s name and signature as borrower; and ignores altogether the other contemporaneously executed documents, which establish the intentions of the parties that only Mr. Palmero was the borrower and that the loan was required to be repaid when Mr. Palmero died.[17]

Reading these contemporaneously executed documents together, and in a manner to carry out the express intentions of the parties, there is competent substantial evidence to support the fact-finder’s well-reasoned determination at the conclusion of the trial: Mrs. Palmero was not a borrower under the mortgage. Because she was not a “borrower,” she was not entitled under the terms of the mortgage to remain in the home as a “surviving borrower” following the death of her husband.

For these reasons, I respectfully dissent. I would affirm the trial court’s finding that Mrs. Palmero was not a borrower, and would reverse the trial court’s alternative conclusion that she was nonetheless entitled to judgment in her favor upon application of the reverse mortgage law. I would remand this cause to the trial court for entry of judgment in favor of OneWest.

MILLER, J., dissenting.[18]

Although I agree with the well-articulated dissent of Chief Judge Emas, I nonetheless write separately to further express my views that diverge from today’s decision. I conclude that, in addition to failing to mutually construe the contemporaneously executed documents, the majority dispenses with a body of well-reasoned, established jurisprudence, the controlling provisions of the promissory note, and the express terms of the mortgage in determining that the inclusion of Mrs. Palmero’s unnotarized signature on the mortgage renders her a “Borrower,” as a matter of law.[19]

STANDARD OF REVIEW

“A court must `interpret and apply the provisions of mortgages the same way [it] interpret[s] and appl[ies] the provisions of any other contract.'” Bank of N.Y. Mellon v. Nunez, 180 So. 3d 160, 162 (Fla. 3d DCA 2015) (quoting Green Tree Servicing, LLC v. Milam, 177 So. 3d 7, 12-13 (Fla. 2d DCA 2015)). “A trial court’s construction of notes and mortgages involves pure questions of law, and therefore is subject to de novo review.” Smith v. Reverse Mortg. Sols., Inc., 200 So. 3d 221, 224 (Fla. 3d DCA 2016). “The initial determination of whether [a] contract term is ambiguous is a question of law for the court, and, if the facts of the case are not in dispute, the court will also be able to resolve the ambiguity as a matter of law.” Strama v. Union Fidelity Life Ins. Co., 793 So. 2d 1129, 1132 (Fla. 1st DCA 2001) (citation omitted).

ANALYSIS

Contrary to longstanding principles of law, in conferring the unequivocal status of “Borrower” upon Mrs. Palmero, the majority considers the appearance of her signature on the last page of the mortgage in isolation. “Under Florida law, contracts are construed in accordance with their plain language, as bargained for by the parties.” Konsulian v. Busey Bank, N.A., 61 So. 3d 1283, 1285 (Fla. 2d DCA 2011) (citing Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000)). Further adages of contract interpretation dictate that courts “reviewing [a] contract in an attempt to determine its true meaning . . . must review the entire contract without fragmenting any segment or portion.” J.C. Penney Co., Inc. v. Koff, 345 So. 2d 732, 735 (Fla. 4th DCA 1977) (citing Ross v. Savage, 66 Fla. 106, 126, 63 So. 148, 155 (1913) (“[A]ll the different provisions of such instrument must be looked to, and all construed so as to give the effect to each and every [one] of them, if that can reasonably be done.”)). “Every provision in a contract should be given meaning and effect.” Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d 938, 941 (Fla. 1979) (citations omitted). To that end, courts are required to “read provisions of a contract harmoniously.”[20] City of Homestead v. Johnson, 760 So. 2d 80, 84 (Fla. 2000) (citations omitted).

i. The note prevails

As a predicate, the majority finds Smith, 200 So. 3d 221, and Edwards v. Reverse Mortgage Solutions, Inc., 187 So. 3d 895 (Fla. 3d DCA 2016), to be controlling. However, neither the majority opinion nor these two decisions reconcile a body of entrenched jurisprudence mandating that if there is “a conflict between the terms of a note and mortgage, the note should prevail.”[21] Hotel Mgmt. Co. v. Krickl, 117 Fla. 626, 629, 158 So. 118, 119 (1934) (citing 19 R.C.L. 493; Clark v. Paddock, 132 P. 795, 793 (Idaho 1913)); see also First Interstate Bank of Fargo, N.A. v. Rebarchek, 511 N.W.2d 235, 241 (N.D. 1994); A-1 Fin. Co. v. Nelson, 85 N.W.2d 687, 692 (Neb. 1957)Brown v. First Nat’l Bank of Montgomery, 75 So. 2d 141, 143 (Ala. 1954)Smith v. Kerr, 157 A. 314, 317 (Me. 1931)Pac. Fruit Exch. v. Duke, 284 P. 729, 730 (Cal. Dist. Ct. App. 1930)Tipton v. Ellsworth, 109 P. 134, 138 (Idaho 1910).

This principle is well-founded, in recognition of the nature of each instrument. The note represents a promise to pay, while the mortgage merely secures that promise in the event of a default. See, e.g., HSBC Bank USA, Nat’l Ass’n v. Buset, 241 So. 3d 882, 891 (Fla. 3d DCA 2018) (“[T]he assignment of the mortgage was superfluous. It was unnecessary because Florida law has always held that the mortgage follows the note.”) (citing First Nat’l Bank of Quincy v. Guyton, 72 Fla. 43, 44, 72 So. 460, 460 (1916)U.S. Bank, NA v. Glicken, 228 So. 3d 1194, 1196 (Fla. 5th DCA 2017)). “It is elementary, absent contrary contract, that the mortgage security follow[s] the note.” Am. Cent. Ins. Co. of St. Louis v. Whitlock, 122 Fla. 363, 367, 165 So. 380, 382 (1936). “A `mortgage is the security for the payment of the negotiable promissory note.'” Cleveland v. Crown Fin., LLC, 183 So. 3d 1206, 1209 (Fla. 1st DCA 2016) (quoting Perry v. Fairbanks Capital Corp., 888 So. 2d 725, 727 (Fla. 5th DCA 2004)). “A promissory note is not a mortgage.” Id. (citing Bank of N.Y. Mellon v. Reyes, 126 So. 3d 304, 308 (Fla. 3d DCA 2013)). Rather,

The promise to pay is one distinct agreement, and, if couched in proper terms is negotiable. The pledge of real estate to secure that promise is another distinct agreement, which ordinarily is not intended to affect in the least the promise to pay, but only to give a remedy for failure to carry out the promise to pay. The holder of the note may discard the mortgage entirely, and sue and recover on the note.

Id. at 1210 (quoting Taylor v. Am. Nat’l Bank of Pensacola, 63 Fla. 631, 652, 57 So. 678, 685 (1912)). Therefore, the terms of the note prevail over the mortgage, as it is the note that actually gives rise to the debt. See Supria v. Goshen Mortg., LLC, 232 So. 3d 422, 424 (Fla. 4th DCA 2017) (“[A] mortgage is but an incident to the debt, the payment of which it secures.”) (alteration in original) (quoting Peters v. Bank of N.Y. Mellon, 227 So. 3d 175, 180 (Fla. 2d DCA 2017)).

ii. The note expressly defines Mr. Palmero as the sole “Borrower”

Here, the note defines Mr. Palmero as the sole “Borrower.” It states: “Borrower means each person signing at the end of this Note.”[22] While the note reflects two signature lines, each labeled “Borrower,” it was only signed by Mr. Palmero. Thus, Mr. Palmero was the sole borrower under the note. As Mr. Palmero was the sole borrower under the note, and the note prevails over the mortgage, upon his death the lender was unambiguously endowed with the right to accelerate the debt and foreclose the mortgage.[23]

iii. The mortgage designates Mr. Palmero as the sole “Borrower”

Similarly, the mortgage designates only Mr. Palmero as the “Borrower.” Indeed, the mortgage states, “[t]he mortgagor is ROBERTO PALMERO . . . (`Borrower’).” Although the note defines “Borrower” as “each person signing at the end of th[e] Note,” the mortgage contains no equivalent provision. Thus, under the express terms of the mortgage, Mrs. Palmero’s unnotarized signature on the attestation page does not confer upon her the status of “Borrower.” See Am. Home Assurance Co. v. Larkin Gen. Hosp., Ltd., 593 So. 2d 195, 197 (Fla. 1992) (A determination of intent requires consideration of a contract’s language, subject matter, and object and purpose).

iv. The mortgage expressly integrates the note

The conclusion that Mr. Palmero is the sole “Borrower” is further urged by entrenched rules of contractual integration. It is well-established that “a reference by the contracting parties to an extraneous writing for a particular purpose makes it a part of their agreement . . . for the purpose specified.” Guerini Stone Co. v. P.J. Carlin Constr. Co., 240 U.S. 264, 277, 36 S. Ct. 300, 306, 60 L. Ed. 636 (1916). Moreover, “[i]n interpreting a contract, `[c]ourts are not to isolate a single term or group of words and read that part in isolation; the goal is to arrive at a reasonable interpretation of the text of the entire agreement to accomplish its stated meaning and purpose.'” Horizons A Far, LLC v. Plaza N. 15, LLC, 114 So. 3d 992, 994 (Fla. 5th DCA 2012) (emphasis added) (quoting Delissio v. Delissio, 821 So. 2d 350, 353 (Fla. 1st DCA 2002)).

Here, the mortgage states, “Borrower has agreed to repay to Lender . . . [t]he agreement to repay is evidenced by Borrower’s Note dated the same date as this [mortgage],” and “[t]his [mortgage] secures to Lender . . . the performance of Borrower’s covenants and agreements under this [mortgage] and the Note . . . For this purpose, Borrower does hereby grant and convey to Lender the [property].”[24](Emphasis added). Thus, as the mortgage integrates the note, through acknowledgment of the underlying covenants and agreements, both documents must be mutually construed, the last page of the mortgage may not be read in isolation, and foreclosure upon the death of the sole “Borrower” was authorized.

v. Harmonization of the note and mortgage renders Mr. Palmero the sole “Borrower”

Finally, we are required “to read provisions of a contract harmoniously in order to give effect to all portions thereof.” Johnson, 760 So. 2d at 84. In his dissent in Smith, noting an identical purported conflict between the note and mortgage, Judge Shepherd sought harmonization. There, he concluded the unstated purpose of the inclusion of the non-borrowing spouse’s name on the mortgage was to establish enforceability upon the death of the borrowing spouse:

[A] necessary purpose for the signature is that the mortgage would have been unenforceable absent [Mrs. Smith’s] joinder of the document. See Art. X, § 4(c), Fla. Const. (“The owner of homestead real estate, joined by the spouse if married, may alienate homestead by mortgage, sale, deed or gift …”); Pitts v. Pastore, 561 So. 2d 297, 301 (Fla. 2d DCA 1990) (holding that a mortgage is ineffectual as a lien until such time as either the spouse joins in the alienation or the property loses its homestead status.). This imputation of purpose for [Mrs.] Smith’s signature is harmonious with the evident intent of the drafters in the first paragraph of the mortgage document.

Smith, 200 So. 3d at 231 (Shepherd, J., dissenting).

Similarly, here, the trial court found, based upon the evidence presented, “Mrs. Palmero’s signature on the [mortgage] serves as a practical protection for lenders . . . in order to ensure that Mrs. Palmero, as the non-borrowing spouse, will not invoke a homestead claim to the mortgaged property as a defense to foreclosure, her signature on the mortgage instrument would be necessary.” Thus, the object and purpose of Mrs. Palmero’s signature on the mortgage does not defeat the parties’ intent that Mr. Palmero serve as the sole “Borrower” in the transaction, and again, Mr. Palmero’s death licensed the lender to require payment in full.

CONCLUSION

“[C]ourts may not rewrite, alter, or add to the terms of a written agreement between the parties and may not substitute their judgment for that of the parties in order to relieve one from an alleged hardship of an improvident bargain.” Int’l Expositions, Inc. v. City of Miami Beach, 274 So. 2d 29, 30-31 (Fla. 3d DCA 1973). “Rather, it is a court’s duty to enforce the contract as plainly written.” Okeechobee Resorts, LLC v. E Z Cash Pawn, Inc., 145 So. 3d 989, 993 (Fla. 4th DCA 2014) (citation omitted).

Here, the appearance of Mrs. Palmero’s unnotarized signature on the attestation page of the mortgage cannot be used to circumvent unambiguous, bargained-for contractual language. Mr. Palmero was the sole defined “Borrower” under both the note and mortgage. Moreover, as the note and mortgage must be harmonized to effect the intent of the parties, and any purported conflicts between the note and mortgage should be resolved in favor of the note, I conclude, under any construction, Mr. Palmero was the sole “Borrower,” and upon his death, the lender was entitled to foreclose. See also In re Clayton, 802 S.E.2d 920, 926 (N.C. Ct. App. 2017) (“As the sole obligor under the Note and loan agreement, these provisions make clear that [Appelle’s deceased husband] was the only “surviving borrower” contemplated by the Deed of Trust’s acceleration provision.”); TRG Columbus Dev. Venture, Ltd. v. Sifontes, 163 So. 3d 548, 552 (Fla. 3d DCA 2015)(“While this language is not a model of clarity, we must give it the meaning and effect intended by the parties to the contract.”) (citation omitted).

Accordingly, I concur with the majority that “the federal reverse mortgage law was not properly considered by the trial court.” Nonetheless, for the foregoing reasons, I would reverse the final judgment under review and remand this cause for entry of judgment in favor of OneWest Bank, FSB.

Not final until disposition of timely filed motion for rehearing.

[1] As this Court explained in Smith, a reverse mortgage generally “allows elderly homeowners to receive monthly payments from a lender based upon the homeowners’ equity in their principal residence.” 200 So. 3d at 222-23. Importantly, unlike a traditional mortgage arrangement, “in a reverse mortgage arrangement . . . the homeowners’ obligation to repay the lender ripens only upon the homeowners’ death or when the homeowners move from their home.” Id.

[2] We note that, because the encumbered property was the Palmeros’ homestead residence, this covenant would be accurate only if both Roberto and Mrs. Palmero were the “Borrower.” Art. X, § 4(a)(1), (c) Fla. Const.; Taylor v. Maness, 941 So. 2d 559, 563-64 (Fla. 3d DCA 2006) (recognizing that, even if the spouse owns only a beneficial interest and not title interest in the residence constituting his or her homestead, the spouse must join in the conveyance or encumbrance of the homestead property); see also Pitts v. Pastore, 561 So. 2d 297, 301 (Fla. 2d DCA 1990) (“[T]he mortgage is ineffectual as a lien until such time as either the spouse joins in the alienation or the property loses its homestead status.”). In fact, while we need not, and do not, reach the issue, the reverse mortgage’s validity may be challenged if Mrs. Palmero were somehow not a mortgagor. See, e.g., Ezem v. Fed. Nat’l. Mortg., 153 So. 3d 341, 345 (Fla. 1st DCA 2014).

[3] Two witnesses attest to the Palmeros’ signatures. While it appears that only Mr. Palmero’s signature was notarized, Mrs. Palmero has not, in this appeal, challenged the validity of the mortgage on this basis. New York Life Ins. Co. v. Oates, 192 So. 637, 641 (Fla. 1939) (recognizing that, subject to the doctrine of estoppel, the validity of the mortgage may be challenged where both spouses sign the mortgage but one spouse does not acknowledge the execution of the mortgage before a notary).

[4] Attached to the mortgage is also a “Signature Exhibit,” where Mrs. Palmero and the adult children, Idania and Rene Palmero, placed their signatures on the separate lines above their pre-printed names “as remainderman.” Defense counsel argued at trial that Idania’s and Rene’s signatures on this signature exhibit did not have any legal effect as to them. See In re Nunez, No. 17-21018-BKC-LMI, 2018 WL 1568524, at *1, n.5 (Bankr. S.D. Fla. Mar. 28, 2018) (suggesting that “[i]f an eligible mortgagor holds only a life estate when the mortgage is executed, all holders of any future interest in the property (remainder or reversion) will also be required to execute the mortgage to ensure that the mortgage is secured by a fee simple interest.”). Because the trial court entered final judgment in favor of the defendants on another basis, see infra, the trial court never reached this question. Nor is any argument with respect thereto made in this appeal. Given our resolution of this appeal on other grounds, we need not, and therefore do not, reach this issue.

[5] “A trial court’s construction of notes and mortgages involves pure questions of law, and therefore is subject to de novo review.” Smith, 200 So. 3d at 224.

[6] We note that the appellees, the defendants below, did not file a cross-appeal of the trial court’s finding that Mrs. Palmero is not a co-borrower. Yet, in this appeal, both parties extensively briefed this dispositive issue, and OneWest has not suggested, much less argued, that they have suffered any prejudice from the appellees’ failure to file a notice of cross-appeal. Therefore, notwithstanding the lack of a notice of cross-appeal, we may review the trial court’s determination. See City of Hialeah v. Martinez, 402 So. 2d 602, 603 n.4 (Fla. 3d DCA 1981) (“Since our jurisdiction to determine the validity of the order in question is clear, and a notice of cross-appeal is not jurisdictional, and since [the appellant] makes no claim of lack of notice or prejudice, we treat [the appellee’s] brief as sufficient notice to the [appellant] that he cross-appeals from the trial court’s ruling.”) (citations omitted).

[7] We need not, and therefore do not, address the federal mortgage law in this appeal. Though, as we noted in Smith, our decision in this case is consistent with “Congress’s clear intent to protect from foreclosure a reverse mortgagor’s surviving spouse who is maintaining the encumbered property as his or her principal residence.” Smith, 200 So. 3d at 227-28; 12 U.S.C. §1715z-20(j).

[8] OneWest’s counsel stipulated at the bench trial that Mrs. Palmero was living at the subject property on the date of trial. Mrs. Palmero testified to this as well.

[9] Judge Miller’s dissent posits that, based on the reverse mortgage’s introductory paragraph, the only “mortgagor” is Roberto Palmero. As referenced, though, in footnote 2, supra, by definition Mrs. Palmero must be a “mortgagor” for OneWest to have a valid security interest in the Palmeros’ jointly owned homestead property.

[10] No such documents were present in the record in Smith.

[11] We note that the parties to the reverse mortgage certainly knew how to incorporate into the reverse mortgage definitions from collateral documents. Indeed, pursuant to paragraph four of the mortgage, the “Borrower” is required use the property “as Borrower’s principal residence.” The provision then expressly states that the term “principal residence” shall have the “same meaning as in the Loan Agreement.” Had the parties intended for the term “Borrower” in the reverse mortgage to have the same meaning as in some other document, the parties certainly could have employed similar language in defining the term “Borrower.” They did not.

We also note that the Non-Borrower Spouse Ownership Interest Certification was neither appended to, nor incorporated in, the lender’s complaint. Presumably, had this document been part of the contract documents upon which the lender based its entitlement to foreclose, it would have at least been referred to in the lender’s complaint. It was not. See Fla. R. Civ. P. 1.130(a) (“All . . . contracts, . . . or documents on which action may be brought . . ., or a copy thereof or a copy of the portions thereof material to the pleadings, must be incorporated in or attached to the pleading.”).

[12] Other than the reverse mortgage signed by Mrs. Palmero as “Borrower,” no other documents were recorded with the Palmeros’ reverse mortgage. As a practical matter, and had the parties intended to qualify or alter Mrs. Palmero’s borrower status so as to provide constructive notice to third parties, recordation of such qualifying documents was advisable. See Slachter v. Swanson, 826 So. 2d 1012, 1014 (Fla. 3d DCA 2001) (recognizing that the act of recording any document in the grantor/grantee index of the official records imputes constructive notice to creditors and subsequent purchasers of the document); Air Flow Heating & Air Conditioning, Inc. v. Baker, 326 So. 2d 449, 451-52 (Fla. 4th DCA 1976) (“We are not unmindful of the proposition that reference may be made in a recorded document to a deed or other document for the purpose of aiding any defect or uncertainty created by the recorded instrument. . . . However, the reference to the existence of another deed or unrecorded document must be Specific [sic] not only in terms of identifying the other deed or document with particularity but in putting a reasonable person on notice of the need to make reference to such other deed or unrecorded document.”).

[13] Of course, OneWest retains the ability to file a new foreclosure action upon the future occurrence of any of the conditions precedent outlined in the subject reverse mortgage.

[14] The evidence at trial established that, because Mr. Palmero was the only borrower under the terms of the loan agreement, he qualified for—and received—a higher amount than would have been paid had Mrs. Palmero been a co-borrower. At the time of the agreement, Mr. Palmero was 83 years old; Mrs. Palmero was 71. The bank’s representative testified that when spouses apply as co-borrowers, the bank uses the age of the youngest spouse to calculate the amount of the payment made to the borrowers. The Palmeros knew that, because Mr. Palmero was the only borrower, the bank paid out a higher amount on the reverse mortgage than it would have paid had Mr. Palmero and Mrs. Palmero been co-borrowers under the agreement.

[15] I agree with the majority’s conclusion that the trial court erred in its sua sponte consideration and reliance upon the federal reverse mortgage law, which was never pleaded, raised or argued by the parties below. See Maj. Op. at 10.

[16] The majority relies heavily on the fact that both Mr. Palmero and Mrs. Palmero signed the last page of the mortgage under signature blocks indicating they are each a “borrower.” However, the majority fails to account for the patent ambiguity created by page one of that very same mortgage, where the term “Borrower” is defined as “Mr. Palmero, a married man reserving a life estate to himself with the r[e]mainderman to Luisa Palmero, his wife, Idania Palmero, a single woman and Rene Palmero, a single man . . . .” As Mrs. Palmero’s own expert acknowledged while opining on the language of the mortgage: “The borrower who is defined on the first page of the mortgage is Roberto Palmero” and “[i]s not Mrs. Luisa Palmero.”

[17] While the majority opinion deems Mrs. Palmero a co-borrower under the mortgage, Mr. Palmero remains the only borrower under the note. This is significant because the note and the mortgage contain the same acceleration provisions. Under the mortgage as construed by the majority, the bank is entitled to accelerate the loan only after both Mr. Palmero and Mrs. Palmero pass away. However, under the note, the bank is entitled to accelerate the loan upon Mr. Palmero’s death. The majority opinion fails to address this issue, which is especially troubling in light of the “general rule . . . that, if there is a conflict between the terms of a note and mortgage, the note should prevail.” Hotel Mgmt. v Krickl, 158 So. 118, 119 (Fla. 1934). See also Cleveland v. Crown Fin., LLC, 183 So. 3d 1206 (Fla. 1st DCA 2016)Lewis v. Estate of Turcol, 709 So. 2d 186 (Fla. 5th DCA 1998)Gibbs v. Hicks, 146 So. 2d 391 (Fla. 1st DCA 1962).

[18] I did not participate in the initial vote on suggestion for rehearing en banc. However, I note that a motion for rehearing en banc “must establish that the case, rather than an issue in the case, is of exceptional importance.” Univ. of Miami v. Wilson, 948 So. 2d 774, 788 (Fla. 3d DCA 2006) (Shepherd, J., concurring).

[19] Although both signatures appear on the mortgage, only Mr. Palmero acknowledged the document before a notary.

[20] Smith, 200 So. 3d at 231 (Shepherd, J., dissenting) (“The decision of the majority creates the anomalous result that the `Borrower’—expressly defined in two simultaneously executed and related documents . . . —now has two meanings.”).

[21] To the extent that Smith and Edwards hold the terms of the mortgage should be considered in isolation, or take precedence over the integrated, unambiguous terms of the note, I would recede from both cases. See Washington-Jarmon v. OneWest Bank, FSB, 513 S.W.3d 103, 109 (Tex. Ct. App. 2016) (holding that, despite wife appearing as co-borrower on mortgage, her omission from the promissory note rendered her a non-borrowing spouse as a matter of law, as “if there are conflicting terms in a note and a deed of trust, the terms of the note control.”) (citing Larsen v. OneWest Bank, FSB, No. 14-14-00485-CV, at *12 (Tx. Ct. App. Nov. 5, 2015) (“[T]he terms in a Note prevail over the terms in a Deed of Trust.”); Pentico v. Mad-Wayler, Inc., 964 S.W.2d 708, 715 (Tx. Ct. App. 1998)); see also In re D’Alessio v. CIT Bank, N.A., 587 B.R. 211 (Bankr. D. Mass. 2018) (finding spouse was not a borrower within the terms of the loan documents executed in connection with a reverse mortgage transaction, as spouse only signed the mortgage).

[22] The majority opinion is correct—”[h]ad the parties intended for the term `Borrower’ in the reverse mortgage to have the same meaning as in some other document, the parties certainly could have employed similar language in defining the term `Borrower.’ They did not.” Nonetheless, contrary to its own admonition, the majority opinion imports the note’s definition of “Borrower,” “each person signing at the end of th[e] Note,” into the mortgage.

[23] The promissory note contains the following provision:

Immediate Payment in Full

(A) Death or Sale

Lender may require immediate payment in full of all outstanding principal and accrued interest, if:

(i) A Borrower dies and the Property is not the principal residence of at least one surviving Borrower . . .

The mortgage contains identical language to this effect.

[24] The principle expressio unius est exclusion alterius, the expression of one thing implies the exclusion of others, should guide the analysis. See 5 Corbin on Contracts § 24.28 (2018) (“If the parties in their contract have specifically named one item or if they have specifically enumerated several items of a larger class, a reasonable inference is that they did not intend to include other, similar items not listed.”); see, e.g., Shumrak v. Broken Sound Club, Inc., 898 So. 2d 1018, 1020 (Fla. 4th DCA 2005) (“It is a fundamental principle of contract construction, known as expressio unius est exclusion alterius.“). Here, to the exclusion of any other name, Mr. Palmero, alone, is named in: (1) the definition of “Borrower” in the mortgage; (2) the definition of “Borrower” in the note; and (3) the notary’s attestation statement below the signatures on the mortgage. As such, a reasonable inference is that the parties did not intend to include Mrs. Palmero as a “Borrower.”

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

TFH 4/28 | Foreclosure Workshop #72: Finality Versus Validity, The Last Frontier in Foreclosure Defense, Comparing and Contrasting HSBC Bank v. Marcantonio, in the Supreme Court of the State of Hawaii (March 25, 2019), and Takhar v. Gracefield Developments, in the Supreme Court of Great Britain (March 20, 2019)

TFH 4/28 | Foreclosure Workshop #72: Finality Versus Validity, The Last Frontier in Foreclosure Defense, Comparing and Contrasting HSBC Bank v. Marcantonio, in the Supreme Court of the State of Hawaii (March 25, 2019), and Takhar v. Gracefield Developments, in the Supreme Court of Great Britain (March 20, 2019)

COMING TO YOU LIVE DIRECTLY FROM THE DUBIN LAW OFFICES AT HARBOR COURT, DOWNTOWN HONOLULU, HAWAII

LISTEN TO KHVH-AM (830 ON THE AM RADIO DIAL)

ALSO AVAILABLE ON KHVH-AM ON THE iHEART APP ON THE INTERNET

.

Sunday – APRIL 28, 2019

Foreclosure Workshop #72: Finality Versus Validity, The Last Frontier in Foreclosure Defense, Comparing and Contrasting HSBC Bank v. Marcantonio, in the Supreme Court of the State of Hawaii (March 25, 2019), and Takhar v. Gracefield Developments, in the Supreme Court of Great Britain (March 20, 2019)

.

 ———————

 

As a result of an increase in the number of judicial decisions more favorable to mortgage borrowers in many but not all state and federal courts, foreclosed homeowners are returning in greater numbers, challenging their otherwise completed foreclosures.

In doing so, resembling at times Lord Tennyson’s “The Charge of the Light Brigade,” riding into “The Valley of Death,” mortgage borrowers seeking post-judgment relief are being derailed in the process by three especially formidable hurdles, (1) res judicata, (2) stare decisis, and (3) laches, each of which has its own underlying rationale for blocking the setting aside of judgments, irrationally even those that can be shown to have been procured by fraud.

On today’s show we examine this last frontier in foreclosure defense by contrasting two foreclosure cases, one in the Marcantonio Appeal presently in the Supreme Court of the State of Hawaii awaiting a decision on an Application for Writ of Certiorari, and the other in the Takhar Appeal just decided by the Supreme Court of Great Britain.

The contrast between the two Appeals is especially significant, since not only is this battle between finality and validity inevitably going to take place eventually in every American jurisdiction, but Great Britain is after all where the doctrine of res judicata originated in Anglo-Saxon jurisprudence.

This controversy, if not already there, will be coming to every listener’s jurisdiction shortly.

Be sure therefore to be with John and me this Sunday, especially if you are planning or now in the process of trying to reopen your foreclosure case by taking advantage of new case precedents in your individual jurisdiction.

You will not want to miss this broadcast in order to understand the future of foreclosure defense in this, the last and final frontier.

Gary

———————

GARY VICTOR DUBIN
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813
Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733
Email: gdubin@dubinlaw.net.

Host: Gary Dubin Co-Host: John Waihee

.

CALL IN AT (808) 521-8383

Have your questions answered on the air.

Submit questions to info@foreclosurehour.com

The Foreclosure Hour is a public service of the Dubin Law Offices

Past Broadcasts

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

The Foreclosure Hour 12

image: Video Hive

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

Homeowners Hurt by Mortgage Scam Seek Role in Ditech Bankruptcy

Homeowners Hurt by Mortgage Scam Seek Role in Ditech Bankruptcy

  • ‘Vulnerable’ homeowners request committee to protect interests
  •  Ditech seeks plan that would release firm from legal liability

Bloomberg-

Homeowners in Chicago cheated by a mortgage fraud scheme are seeking to form a committee to protect their interests in the bankruptcy of Ditech Holding Corp., the company that owns their loans.

 The Investor Protection Center at the Northwestern Pritzker School of Law filed a request for the creation of a committee of consumer creditors to represent borrowers who were victims of the scheme. The fraud targeted elderly African-American homeowners and coerced them into reverse mortgages with no benefits that left some in foreclosure, the filing states.

Ditech, the mortgage lender and servicer led by Tom Marano, filed for bankruptcy in February and has proposed a plan to restructure its debt that would release it from liabilities such as lawsuits filed by consumer borrowers. J. Samuel Tenenbaum, a professor of law at Northwestern, said the homeowners he helps represent will be harmed by such a release of liabilities.

[BLOOMBERG]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

US BANK NA v. Cannella | NY: Supreme Court – The Court rejects Plaintiff’s argument that the Assignment effectuated a transfer of the Note, by which Plaintiff need not satisfy UCC § 3-202(2)’s explicit requirement for the allonge to be firmly affixed to the Note. Plaintiff having failed to successfully circumvent UCC § 3-202(2), a triable issue of fact remains as to whether the purported endorsement on the allonge was firmly affixed to the Note as to constitute a valid transfer of the Note to Plaintiff, thereby conferring standing to foreclose.

US BANK NA v. Cannella | NY: Supreme Court – The Court rejects Plaintiff’s argument that the Assignment effectuated a transfer of the Note, by which Plaintiff need not satisfy UCC § 3-202(2)’s explicit requirement for the allonge to be firmly affixed to the Note. Plaintiff having failed to successfully circumvent UCC § 3-202(2), a triable issue of fact remains as to whether the purported endorsement on the allonge was firmly affixed to the Note as to constitute a valid transfer of the Note to Plaintiff, thereby conferring standing to foreclose.

2019 NY Slip Op 29112

U.S. BANK NA, AS TRUSTEE, ON BEHALF OF THE HOLDERS OF THE J.P. MORGAN MORTGAGE TRUST 2007-S3 MORTGAGE PASS-THROUGH CERTIFICATES, Plaintiff,
v.
ROCCO CANNELLA, CITIBANK (SOUTH DAKOTA), N.A., HSBC BANK NEVADA, N.A., JOHN DOE (THOSE UNKNOWN TENANTS, OCCUPANTS, PERSONS OR CORPORATIONS OR THEIR HEIRS, DISTRIBUTES, EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS, ASSIGNEES, CREDITORS OR SUCCESSORS CLAIMING AN INTEREST IN THE MORTGAGED PREMISES.), Defendants.

034916/2017.
Supreme Court, Rockland County.
Decided April 15, 2019.
Peter R. Bonchonsky, Esq., Bonchonsky & Zaino, LLP, 226 Seventh Street, Garden City, NY, 11530, Counsel for Plaintiff.

R. Spencer Lauterbach, Esq., The Lauterbach Law Firm, 151 North Main Street — 4th Floor, New City, NY 10956, Counsel for Defendant Rocco Cannella.

PAUL I. MARX, J.

It is ORDERED that Plaintiff’s motion is disposed as follows:

BACKGROUND

On October 9, 2017, Plaintiff commenced this residential mortgage foreclosure action by filing a Summons and Complaint against Defendant borrower, Rocco Cannella (“Defendant”), Defendant lienholders, Citibank (South Dakota), N.A. (“Citibank”) and HSBC Bank Nevada, N.A. (“HSBC”), and “John Doe”.

On May 22, 2007, Defendant executed a note in the amount of $488,000 (“Note”) payable to JPMorgan Chase Bank, N.A. (“Chase”). Defendant secured the Note by executing a mortgage against real property located at 15 Spruce Court, Nanuet, New York 10954 (“Mortgage”).

On November 11, 2011, Defendant entered into a Loan Modification Agreement with Chase (“Agreement”).[1] Affidavit of Patrick Riquelme, Document Control Officer of Select Portfolio Servicing, Inc. (“SPS”), at ¶ 7 (NYSCEF Doc. 36). The “Agreement created a single lien of $506,676.03.” Id. The Agreement also “changed the interest rate to 3.125% per annum for the first five years and then increased to 4.000% in the sixth through the twenty-fifth year.”Affirmation of Peter R. Bonchonsky, Esq. in Support of Motion at ¶ 6 (referencing Agreement at ¶ 7, attached to Riquelme Affidavit as Exhibit C). As Riquelme attests, “[t]he Note [dated May 22, 2007], Mortgage, and Modification Agreement are the `Loan Documents’ referenced herein that memorialize the `Loan’.”[2] Affidavit of Patrick Riquelme at ¶ 9.

Chase subsequently endorsed the Note in blank on an undated allonge, which is “titled in bold, capital letters `ALLONGE TO MORTGAGE NOTE'”. Reply Affirmation of Peter R. Bonchonsky, Esq. at ¶ 10 (NYSCEF Doc. 54). The allonge “contains very specific language stating that the Allonge pertains to the ROCCO CANNELLA $488,000 Note dated May 22, 2007, in favor of JPMorgan Chase Bank, N.A., with loan number XXXXXXXXXX and relating to the property address of 15 Spruce Court, Nanuet, New York 10954. It is endorsed in blank by an authorized officer (vice president) of JPMorgan Chase Bank, N.A.” Id.

Defendant defaulted on the Loan by failing to make the payment that was due November 1, 2016.[3] Thereafter, the Note and Mortgage were transferred to Plaintiff.[4] “On August 3, 2017, the Mortgage together with `all beneficial interest’ under the Mortgage was assigned to Plaintiff. The assignment was recorded on August 4, 2017 in Instrument Number XXXX-XXXXXXX.” Riquelme Affidavit at ¶ 8 (Assignment is annexed as Exhibit D).

SPS, Plaintiff’s loan servicer and attorney-in-fact, is in possession of the original Note, Mortgage and Agreement (the Loan Documents) on Plaintiff’s behalf. SPS sent the default notices required by the Mortgage and RPAPL § 1304 to Defendant prior to commencement of the action.

On November 20, 2017, Defendant filed an Answer, asserting five combined affirmative defenses and counterclaims arising under the Truth in Lending Act and Regulation “Z” for allegedly failing to inform him of his right to rescind the loans (15 USC §§ 1601 et seq; 12 CFR § 226); deceptive business practices under General Business Law § 349 by extending credit based on collateral rather than capacity to repay; violations of Banking Law §§ 6-l and 6-m; and Banking Law § 598. Defendant also alleged six additional affirmative defenses raising plaintiff’s lack of standing; failure to provide notice of default; violations of RPAPL §§ 1304 and 1306; statute of limitations bar; and improper transfer of the Note and Mortgage after the closing date set forth in the pooling and servicing agreement (“PSA”) pursuant to which Plaintiff acquired the Note (NYSCEF Doc. 16).

On December 22, 2017, Plaintiff replied to defendant’s counterclaims, asserting general denials and affirmative defenses (NYSCEF Doc. 23).

Defendants Citibank and HSBC have not answered or appeared in the action.[5]

On July 30, 2018, Defendant served a Demand for Discovery and Inspection upon Plaintiff, requesting production of, among other items, the original Note and “any and all endorsements of the subject note and the back side of any allonge or endorsement page. “Demand for Discovery and Inspection at ¶ h (NYSCEF Doc. 28). On September 7, 2018, the parties stipulated to extend the time to respond to Defendant’s discovery request to September 28, 2018. Defense counsel states in the opposition papers that “[d]iscovery was exchanged.” Affirmation of Jennifer L. Fredeman, Esq. at ¶ 10. However, counsel does not state whether the original Note and allonge were produced for inspection.

On September 28, 2018, Plaintiff filed the instant motion seeking summary judgment against Defendant and striking the Answer, affirmative defenses and counterclaims; amending the caption; granting default judgment against the remaining defendants; appointing a referee and other just and proper relief.

DISCUSSION

A plaintiff in an action to foreclose a mortgage “[g]enerally establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default”. U.S. Bank Nat. Ass’n v Sabloff, 153 AD3d 879, 880 [2nd Dept 2017] (citing Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689see Deutsche Bank Natl. Trust Co. v Brewton, 142 AD3d 683, 684). However, where a defendant has affirmatively pleaded standing in the Answer,[6] the plaintiff must prove standing in order to prevail. Bank of New York Mellon v Gordon, 2019 NY Slip Op. 02306, 2019 WL 1372075, at *3 [2nd Dept March 27, 2019] (citing HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983, 983-984HSBC Bank USA, N.A. v Calderon, 115 AD3d 708, 709Bank of NY v Silverberg, 86 AD3d 274, 279).

A plaintiff establishes its standing in a mortgage foreclosure action by showing that it was the holder of the underlying note at the time the action was commenced. Sabloff, supra at 880 (citing Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361U.S. Bank N.A. v Handler, 140 AD3d 948, 949). Where a plaintiff is not the original lender, it must show that the obligation was transferred to it either by a written assignment of the underlying note or the physical delivery of the note. Id. Because the mortgage automatically passes with the debt as an inseparable incident, a plaintiff must generally prove its standing to foreclose on the mortgage through either of these means, rather than by assignment of the mortgage. Id. (citing U.S. Bank, N.A. v Zwisler, 147 AD3d 804, 805U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754).

Here, Plaintiff demonstrated, prima facie, that it was the holder of the Note at issue when the action was commenced, by attaching the Note, endorsed in blank on an allonge, to the Summons and Complaint. Sabloff, supra at 880 (citing U.S. Bank N.A. v Saravanan, 146 AD3d 1010Deutsche Bank Natl. Trust Co. v Logan, 146 AD3d 861Nationstar Mtge., LLC v Weisblum, 143 AD3d 866).

In opposition, Defendant raised the sole issue whether “Plaintiff has failed to establish standing because it has submitted an undated Allonge that does not appear to have been permanently affixed to the Note.” Memorandum of Law in Opposition at 2 (emphasis added). Defendant cites UCC § 3-202(2), which 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.” Id. (emphasis added).

Defendant contends that a material question of fact is raised as to whether the allonge was properly affixed to the Note, because the Note contains two (2) hole punches at the top of each of its three pages, while there are no hole punches on the allonge. This circumstance, Defendant argues, demonstrates that the allonge is not “permanently affixed” to the Note. Memorandum of Law in Opposition at 2. Defendant relies on HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983 [2nd Dept 2015], which held that an allonge attached to a note by a paperclip did not constitute a valid transfer of the note to the plaintiff, because the allonge was not so firmly affixed to the note as to become a part thereof. Id. at 985. Thus, the Second Department affirmed the Supreme Court’s order dismissing the action for lack of plaintiff’s standing.

Defendant asserts that the affidavit of Patrick Riquelme, SPS Document Control Officer, fails to establish that the allonge was permanently affixed to the Note. Defendant alleges that Riquelme’s affidavit is deficient, because he “simply states that the Allonge is affixed but not that it is `permanently affixed’, which is the legal standard.” Memorandum of Law in Opposition at 3 (citing Riquelme Affidavit at ¶ 5). Defendant states that Plaintiff’s counsel, Peter R. Bonchonsky, Esq., also “does not state that the Allonge was permanently affixed, simply that it was affixed.” Id.(citing Bonchonsky Affirmation at ¶ 4). Defendant continues, that “[t]here is no statement as to when the Allonge was attached and no statement that the Allonge was permanently affixed to the Note in accordance with UCC § 3-202 and caselaw. Furthermore, there is no payee/transferee/assignee specified in the Note.” Id.Defendant concludes that “Plaintiff has not satisfied its burden of establishing standing [thus,] there is an existence of material fact with respect to physical possession and Plaintiff’s Motion for Summary Judgment must be denied.” Id.

In reply, Plaintiff asserts, in the first instance, that Defendant has not raised a triable issue of fact, because he did not submit a party affidavit. Plaintiff advances the argument that Defendant’s counsel’s affirmation alone is not sufficient to raise a triable issue of fact. Reply Affirmation of Peter Bonchonsky, Esq. at ¶ 1-2 (NYSCEF Doc. 54).

Plaintiff further contends that Defendant has applied its own incorrect standard, which purportedly requires that the allonge must be “permanently” affixed to the note, when “neither the language of § UCC 3-202 nor any controlling decisional law require that an endorsement and/or allonge be dated nor that it be shown [to be] `permanently‘ affixed to the note.” Id. at ¶ 3 (emphasis in original). Plaintiff again refers to Riquelme’s statement that “[t]he Note bears an endorsement and/or Allonge affixed to the Note” and to the copy of the Note attached to its Complaint to establish its standing. Affidavit of Patrick Riquelme at ¶ 5 (NYSCEF Doc. 36).

Plaintiff also asserts that Citimortgage v MacKenzie, 161 AD3d 1040 [2nd Dept 2018] and Bank of America National Association v Masri, 158 AD3d 660 [2nd Dept 2018] are directly on point and support its entitlement to summary judgment. MacKenzie, Plaintiff asserts, held that attaching a copy to the complaint of the underlying note with an allonge annexed establishes a plaintiff’s standing. Reply Affirmation of Peter R. Bonchonsky, Esq. at ¶ 9. Plaintiff further states that Masriheld that a plaintiff may satisfy its prima facie burden by submitting an “affidavit of merit which merely state[s] that the allonge(s) `were affixed to the Note'”, as Riquelme stated in his affidavit.[7] Id. at ¶ ¶ 11-12. Plaintiff contends that it has met the requirements of both MacKenzie and Masri by attaching a copy of the Note with the allonge to its Complaint and by Mr. Riquelme’s attestation that the allonge is affixed to the Note.

Attorney Affirmation

The Court will first address the issue whether Plaintiff’s compliance with UCC § 3-202(2) can be presented by an attorney affirmation rather than a party affidavit.

Defense counsel attempts to raise the legal issue whether the Note complies with the UCC, based on her contention that the allonge does not appear to be “permanently” affixed to the Note. Defendant borrower has no personal knowledge of whether the allonge is affixed to the Note, as he certainly would not have seen the Note after it was transferred to Plaintiff. Defendant could only have acquired personal knowledge about the allonge if Plaintiff complied with Defendant’s Demand for Discovery and Inspection, which requested Plaintiff’s production of the original Note and any allonge or endorsement page for inspection. Demand for Discovery and Inspection at ¶ h (NYSCEF Doc. 28). Although defense counsel stated that the parties exchanged discovery, there is no evidence that Plaintiff complied with the Demand for production of the original Note and allonge.[8]Nevertheless, the legal issue defense counsel raises in her affirmation does not require testimony from Defendant. Defense counsel’s assertion is based upon her personal observation of the copy of the Note which is attached to the Complaint and to the motion papers, which she claims shows that the allonge is not firmly affixed to the Note.

The issue is properly raised by an attorney affirmation. “The affidavit or affirmation of an attorney, even if he has no personal knowledge of the facts, may, of course, serve as the vehicle for the submission of acceptable attachments which do provide `evidentiary proof in admissible form’, e. g., documents, transcripts.” Zuckerman v City of New York, 49 NY2d 557, 563 [1980]. Moreover, “an affidavit based on documentary evidence in an attorney’s possession is probative and sufficient, notwithstanding his lack of personal knowledge.” Id. at 564 (Meyer, J., concurring) (citing Getlan v Hofstra Univ., 41 AD2d 830, 831 [2nd Dept 1973], app dsmd 33 NY2d 646 [1973]). Such an “affidavit of an attorney on a motion for summary judgment based on documentary evidence in the attorney’s possession may have probative value and should be evaluated by the court.” Getlan, supra at 831 (citing Glynn v Glynn, 30 AD2d 697Lindner v Eichel, 34 Misc 2d 840, 845). Defense counsel’s affirmation properly raises a question as to whether the allonge is firmly affixed to the Note and, if so, by what means.

UCC § 3-202(2)

Turning to the substantive issue involving UCC § 3-202(2), Defendant contends that the provision requires that an allonge must be “permanently” affixed to the underlying note for the note to be negotiated by delivery. UCC § 3-202(1) states, in pertinent part, that if, as is the case here, “the instrument is payable to order it is negotiated by delivery with any necessary indorsement”. UCC § 3-202(1) (emphasis added). The pertinent language of UCC § 3-202(2) provides that when an indorsement is written on a separate piece of paper from a note, the paper must be “so firmly affixed thereto as to become a part thereof.” UCC § 3-202(2) (emphasis added); Bayview Loan Servicing, LLC v Kelly, 166 AD3d 843 [2nd Dept 2018]; HSBC Bank USA, N.A. v Roumiantseva, supra at 985see also One Westbank FSB v Rodriguez, 161 AD3d 715, 716 [1st Dept 2018]; Slutsky v Blooming Grove Inn, 147 AD2d 208, 212 [2nd Dept 1989] (“The note secured by the mortgage is a negotiable instrument (see, UCC 3-104) which requires indorsement on the instrument itself `or on a paper so firmly affixed thereto as to become a part thereof’ (UCC 3-202[2]) in order to effectuate a valid `assignment’ of the entire instrument (cf., UCC 3-202 [3], [4])”).

It is, of course, apparent that the statute does not contain the word “permanently”. Therefore, the requirement that an allonge be “permanently affixed” would have to be read into the statute. Defendant cited no decision of any court which has done so. Nor has Defendant cited any decision that has adopted the language “permanently affixed” as being equivalent to the stated language: “so firmly affixed thereto as to become a part thereof.” While substituting “permanently affixed” in place of “so firmly affixed thereto as to become a part thereof” may not be unreasonable,[9] this Court declines to impose that standard or to use the term as a shorthand for the statutory language, which is very clear. In this Court’s view, permanence has the connotation that the two documents, note and allonge, which were created at separate times, must become one, never to be separated upon being affixed. Indeed, if the need arose to separate the documents, as frequently occurs when a note is transferred to a new holder, an affidavit from someone with personal knowledge would be required to attest that the documents were firmly affixed—enter the trusty staple—separated for photocopying and immediately reaffixed, perhaps even by ensuring that the staples, if used, enter the pages through the very same holes created from the prior stapling.[10] While that may work for a document that generally remains static after it is created, perhaps such as a last will and testament,[11] a negotiable instrument is not a document in repose. A negotiable instrument, by its very nature, is intended to be handled, inspected and transferred to different entities, perhaps multiple times. In fact, throughout the life of a note, as Plaintiff’s counsel explains in his Reply Affirmation, “[l]enders/servicers may ordinarily inspect, move, store or transfer notes…”. Reply Affirmation of Peter R. Bonchonsky, Esq. at ¶ 15. While the lifestyle and purpose of a note certainly require some measure of fixity, since the holder’s rights and obligations derive from its form, its nature requires a lesser standard than permanence.[12] Thus, to the extent that Defendant attempts, by use of the term “permanently affixed”, to apply a higher standard than that expressed in the statute, Defendant’s contention is rejected. The plain wording of the statute can be readily interpreted and applied without substituting different terminology and falling into the trap of applying a different standard.

In contrast to Defendant’s strong language regarding permanence, Plaintiff dilutes the UCC § 3-202(2) requirement, arguing that it is enough that the allonge “is affixed” to the Note, as Riquelme attested. Plaintiff argues that Riquelme’s statement is sufficient because it is the same wording used by the Second Department in both MacKenzie, supra at 1041 (“the underlying Note, to which was annexed an allonge [t]hus, the Plaintiffs established, prima facie that it had standing”) and Masri, supra at 662 (“the plaintiff established, prima facie, its standing to commence the action by submitting the affidavit of Lynn Benedict, an attorney-in-fact for the plaintiff stat[ing] that the original note was delivered to JPMorgan Chase prior to the commencement of the action, that JPMorgan Chase held the original note on behalf of the plaintiff, and that two allonges were affixed to the note, one containing an endorsement from the original lender and the other containing an endorsement in blank [from the prior lender].”). Tellingly, however, neither MacKenzie nor Masri addressed the UCC § 3-202(2) requirement that the allonge must be firmly affixed to the note as to become a part of it. As a result, the statement in MacKenzie about an allonge being “annexed” and the statement in Masri about an allonge being “affixed” are of limited usefulness here.

In fact, both parties misstate the standard explicitly expressed in UCC § 3-202(2); Defendant does so by overstating the requirement and Plaintiff does so by understating it. Therefore, the Court rejects both purported standards advanced by the parties. In any event, questions remain as to what means of attaching an allonge to a note satisfies the statutory requirement that the allonge must be “firmly affixed” and, in effect, “become a part of” the note and whether the allonge in this case meets that requirement.

The Appellate Division Departments which have addressed the New York UCC § 3-202(2) standard, have adhered to the standard clearly laid out in the statute. Where the issue has been raised in the summary judgment context, the appellate courts have either found a triable question of fact as to the manner of affixation of the allonge to the note or that the method of affixation that was utilized was insufficient to satisfy the standard. For example, in Bayview Loan Servicing, LLC v Kelly, 166 AD3d 843, 846 [2nd Dept 2018], the Second Department found “a triable issue of fact as to whether the note was properly endorsed in blank by an allonge `so firmly affixed thereto as to become a part thereof’ when it came into the possession of Wells Fargo, which later endorsed the note to the plaintiff.” (citations omitted). The factors in the case which raised a triable issue of fact were: (1) in a prior action on the same note, the copy of the note that was attached to the complaint did not contain any endorsements or allonges. In the case before it, by contrast, the note contained an allonge with a blank endorsement that was not produced in the earlier action, despite the defendant having raised the issue of an endorsement in the prior action; (2) the allonge had certain physical attributes, which are not described in the opinion, but the court stated that those attributes were not consistent with the copy of the note to which the allonge was purportedly firmly affixed; and (3) an affidavit from the plaintiff’s vice president did not clarify the issue, because his statements related only to a later endorsement to the plaintiff which was directly on the note, and he did not say anything about the blank endorsement from the original lender contained on the allonge. Based upon these factors, the Appellate Division held that the Supreme Court’s grant of summary judgment was improper.

In One Westbank FSB v Rodriguez, 161 AD3d 715, 716 [1st Dept 2018], the First Department similarly found “a triable issue as to whether the purported indorsement [in blank, which was contained on an allonge that did not reference the note,] constituted a valid transfer of the underlying note to plaintiff.” The court affirmed the Supreme Court’s denial of summary judgment, because “there [was] no indication in the record that the blank indorsement was ever attached to the note, much less `so firmly affixed thereto as to become a part thereof,’ as required under NY UCC § 3-202(2).” Id. (citation omitted)).

HSBC Bank USA, N.A. v Roumiantseva, supra, 130 AD3d 983, which is cited by nearly every court to address the issue since the case was decided in 2015, considered a particular method of attachment or affixation of an allonge to the note. On a motion to dismiss, the Supreme Court directed the plaintiff to produce the original note and allonge pursuant to CPLR §3212(c). Upon production of the note and allonge, the court found the allonge affixed to the note by a paperclip. Finding that this method of affixing the allonge to the note did not satisfy the standard under UCC § 3-202(2), the court granted defendants’ motion to dismiss for lack of standing. On appeal, the Second Department affirmed the trial court, holding that “the purported endorsement, attached by a paperclip, was not so firmly affixed to the note as to become a part thereof’, as required by UCC § 3-202(2).” Id. at 985 (citing UCC § 3-202[2], Comment 3; Slutsky v Blooming Grove Inn, supra at 212cf. U.S. Bank N.A. v Guy, 125 AD3d 845, 847 [1st Dept 2013]; Deutsche Bank Trust Co. Ams. v Codio, 94 AD3d 1040, 1041 [2nd Dept 2012]).[13]The Second Department further held that “the purported endorsement did not constitute a valid transfer of the underlying note to the plaintiff.” Id. Consequently, the plaintiff lacking standing to foreclose.

In Deutsche Bank Nat. Trust Co. v Barnett, 88 AD3d 636 [2nd Dept 2011], the Second Department held that the plaintiff’s submission of “copies of two different versions of an undated allonge which was purportedly affixed to the original note pursuant to UCC 3-202(2)” raised a triable issue of fact. Id. at 638 (citing Slutsky, supra at 212). The endorsement on the allonge which purportedly assigned the note from First Franklin, a division of Franklin of Indiana, to the plaintiff conflicted with the copy of the note submitted by the plaintiff, “which contain[ed] undated endorsements from Franklin of Indiana to First Franklin Financial Corporation (hereinafter Franklin Financial), then from Franklin Financial in blank.” Id. Thus, the court held that summary judgment should have been denied.

There are several unreported decisions from various Supreme Courts which address UCC § 3-202(2) in varying degrees of depth. Federal Natl. Mtge. Assn. v Ersoy, 61 Misc 3d 1208(A) [Sup Ct, Suffolk County 2018] (finding a failure of proof, such as an affidavit or affirmation of someone with personal knowledge, showing that the allonge was attached to the note); U.S. Bank Nat. Ass’n v Steinberg, 42 Misc 3d 1201(A), * 5 [Sup Ct, Kings County 2013] (merely cites UCC § 3-202(2) but focuses on whether there was physical delivery); CIT Group/Consumer Finance v Platt, 33 Misc 3d 1231(A), *4 [Sup Ct, Queens County 2011] (involved an allonge that principally had an issue with the signatory lacking authority to endorse the note, as well as noting that the allonge was not firmly affixed to the note); IndyMac Bank F.S.B. v Garcia, 28 Misc 3d 1202(A), *2 [Sup Ct, Suffolk County 2010] (parrots the standard and cites the UCC provision, but does not discuss whether the allonge is affixed); LaSalle Bank Natl. Assn. v Lamy, 12 Misc 3d 1191(A), * 3 [Sup Ct, Suffolk County 2006] (held that the “undated [allonge] d[id] not appear to be part of the note itself nor d[id] it appear to be affixed thereto so firmly as to become a part thereof.” (citation omitted)).

Ersoy, the most recent of these decisions, contains the fullest treatment of the issue. The court there stated that the allonge would have established standing, but for a failure of proof: “if there had been proof provided either on that allonge, or through the affidavit of the employee of [the loan servicer], or an affidavit or affirmation of someone else with personal knowledge, that the allonge was attached to the note.” Ersoy, supra at *7. The court held that “[f]ailure to provide proof that the allonge was firmly affixed to the original note as to be part thereof makes the endorsement invalid and fails to provide the necessary proof of standing through attachment of the note to the complaint.” Id.

It is unmistakably clear from these appellate and trial court decisions that Plaintiff’s position must be rejected. Simply “annexing” or “affixing” an allonge to a note or statements to that effect in an affidavit do not comport with the language of UCC § 3-202(2) or satisfy the standard of that provision. Indeed, the Official Comment to UCC § 3-202(2) explains that “[s]ubsection (2) follows decisions holding that a purported indorsement on a mortgage or other separate paper pinned or clipped to an instrument is not sufficient for negotiation. The indorsement must be on the instrument itself or on a paper intended for the purpose which is so firmly affixed to the instrument as to become an extension or part of it. Such a paper is called an allonge.”

Two justifications for the requirement that an allonge must be firmly affixed to a note have been advanced by various courts throughout the United States, as all states have adopted the UCC. One justification that has been presented is that the requirement serves to prevent fraud, making it much less likely that “a signature innocently placed upon an innocuous sheet of paper could be fraudulently attached to a negotiable instrument in order to simulate an indorsement.” Adams v Madison Realty & Development, Inc., 853 F2d 163, 167 [3rd Cir 1988] (citing Pribus v Bush, 173 Cal Rptr 747, 751 [1981]). The second rationale is the usefulness of a firmly affixed allonge in tracing the “chain of title, thus furthering the [UCC’s] goal of free and unimpeded negotiability of instruments.” Id. (citing Haug v Riley, 101 Ga 372 [1897]see also Crosby v Roub, 16 Wis 616, 626-27 [1863]; 4 W. Hawkland & L. Lawrence, Uniform Commercial Code Series § 3-202:05 (1984)). “The prime characteristic of a negotiable instrument is that it can be negotiated based on physical delivery and endorsement, and a buyer of the note can rely on its enforcement without resort to additional documentation.” HSBC Bank USA, N.A. v Thomas, 46 Misc 3d 429, 433 [Sup Ct, Kings County 2014]. “[T]he rights and obligations connected to a negotiable instrument derive from its form, and are inextricably dependent on it.” Id.

Where an “allonge has certain physical attributes inconsistent with the copy of the note to which it was purportedly firmly affixed”, a triable issue of fact may be raised which precludes granting summary judgment. Bayview Loan Servicing, LLC v Kelly, supra at 846see also HSBC Bank USA, N.A. v Thomas, supra at 433 (A discrepancy between the loan number referenced on the allonge and the number of the note was “sufficient to raise a question of fact as to whether the purported allonge was firmly affixed to the 2006 note”).

Here, Defendant has identified a discrepancy in the way in which the pages of the Note are attached to one another, as opposed to the indeterminate way that the allonge is affixed to the Note. Defendant’s contention appears to be well-founded, based on the fact that the pages of the original Note have two round holes punched at the top of each page, indicating that the pages are likely affixed at the top of each page with an Acco binder or equivalent device and the absence of the same holes at the top of the allonge. The Note and the allonge both contain tiny black marks that appear in the same location in the upper left-hand corner of the photocopied pages which likely signify staple holes.

In a very recent unreported decision by the Supreme Court in Suffolk County, Nationstar Mortgage LLC v Corrao, 63 Misc 3d 1203(A) [Sup Ct, Suffolk County March 18, 2019], the court stated, without any fanfare, that an “allonge was firmly affixed to the note by a staple.” Id. at *2. The court’s focus in Corrao was not on the allonge stapled to the note, which the plaintiff established through an affidavit of its employee. Instead, the issue for the court was whether a different “page” which was also submitted with the copy of the note was part of the original note or a second allonge. The employee did not establish that the “page”, which bore “an undated indorsement from the original lender to Amalgamated Bank, [a subsequent assignee],[14] was a copy of the reverse side of the last page of the note or a separate document.” Id. As the court stated, “[w]ithout such proof, the `page’ appear[ed] to be an allonge and with no proof that it was firmly attached to the note, it would be an invalid indorsement.” Id. (citing UCC 3-202 [2]; see Slutsky v Blooming Grove Inn, supraHSBC Bank USA, N.A. v Roumiantseva, supra). The required proof was proffered by plaintiff’s counsel, who had personally reviewed the original note and allonge while the firm had them in their possession at commencement of the action. Plaintiff’s counsel attested “that the `page’ was actually the reverse side of the signatory page of the note, not a separate document, and [also] that the undated allonge in blank from Amalgamated Bank was firmly attached to the note by a staple”, thereby establishing the plaintiff’s standing.[15] Id.

There is no appellate decisional law in New York which finds staples to be a proper method of firmly affixing an allonge to a note. Other jurisdictions have found stapling an allonge to the note to be a sufficient means of firmly affixing the two documents. See, e.g., Southwestern Resolution Corp. v Watson, 964 SW2d 262[Texas 1997], rehearing overruled [1998]; Lamson v Commercial Credit Corp., 531 P2d 966 [Colo 1975] (“the Bank executed a special two-page indorsement of the two checks to the plaintiff Lamson”).[16] In Watson, the Texas Supreme Court reviewed the history of allonges under various revisions of the UCC, including the change from the requirement that it be `attached thereto’ to `so firmly affixed thereto as to become a part thereof’, noting that “the drafters of the new provision specifically contemplated that an allonge could be attached to a note by staples.” Watson, supra at 263-264 (citing American Law Institute, Comments & Notes to Tentative Draft No. 1-Article III 114 (1946), reprinted in 2 Elizabeth Slusser Kelly, Uniform Commercial Code Drafts 311, 424 (1984) (“The indorsement must be written on the instrument itself or on an allonge, which, as defined in Section ____, is a strip of paper so firmly pasted, stapled or otherwise affixed to the instrument as to become part of it.”)). In Lamson, supra, the Supreme Court of Colorado determined that the equivalent Colorado UCC provision, Section 4-3-202(2), “does permit stapling as an adequate method of firmly affixing the indorsement [as] [s]tapling is the modern equivalent of gluing or pasting.” 531 P2d at 968. That court held “that under the circumstances described, stapling an indorsement to a negotiable instrument is a permanent attachment so that it becomes `a part thereof.'” Id.[17]

Much closer to home than Texas and Colorado, in Adams v Madison Realty & Development, Inc., supra, 853 F2d 163, a federal appellate court from the Third Circuit “assume[d], without actually deciding, that the loose indorsement sheets accompanying [the] notes would have been valid allonges had they been stapled or glued to the notes themselves.” Id. at 165 (Cf. All American Finance Co. v Pugh Shows, Inc., 30 Ohio St.3d 130, 132-133 n. 3 [1987] (collecting cases showing disagreement among courts on how firmly indorsements must be affixed)). The court nonetheless undertook a lengthy analysis because the district court had determined that the “[f]ailure to properly attach the indorsements was `hypertechnical.'” The court held “the indorsement sheets were not physically attached to the instruments in any way, and thus patently fail[ed] to comply with the explicit Code prerequisite.” Id. The court therefore vacated and remanded to the district court.

At this juncture, where it is unclear how the allonge is affixed to the Note, it would be speculative to conclude that the marks on the Note and allonge are staple holes. Riquelme has stated only that the allonge is “affixed to the Note”; he did not state how. Indeed, without any proof as to how the allonge is affixed, Riquelme’s tepid statement falls far short of proof that the allonge is “firmly affixed.” It is possible that the allonge is pinned to the Note or affixed with a paper clip, both methods which have been rejected. While it is more plausible that the allonge and Note are affixed by staples, the Court cannot make such a conclusion, which would be only a guess. What is evident from simple observation, however, and thus is not “speculation and guesswork” as Plaintiff contends,[18] is that the allonge plainly is not affixed in the same manner that the pages of the Note are themselves affixed to each other. Thus, it is unclear whether the affixing is firm enough to satisfy UCC § 3-202(2). The manner of affixing the allonge to the Note determines whether the Note itself was negotiable and thereby capable of being transferred to Plaintiff. See Roumiantseva, supra at 985Adams, supra at 166(“The instrument must be obtained through a process the Code terms `negotiation,’ defined as `the transfer of an instrument in such form that the transferee becomes a holder.’ U.C.C. § 3-202(1). If the instrument is payable to order negotiation is accomplished `by delivery with any necessary indorsement’.”).

Specific Allonge

Attempting to maneuver around the strictures of UCC § 3-202(2), Plaintiff argues that the specificity of the allonge was sufficient to effectuate the transfer of the Note, because it is particular to the subject Note. Plaintiff asserts that the allonge “contains very specific language stating that the Allonge pertains to the ROCCO CANNELLA $488,000 Note dated May 22, 2007, in favor of JPMorgan Chase Bank, N.A., with loan number XXXXXXXXXX and relating to the property address of 15 Spruce Court, Nanuet, New York 10954. It is endorsed in blank by an authorized officer (vice president) of JPMorgan Chase Bank, N.A.” Reply Affirmation of Peter R. Bonchonsky at ¶ 10. Plaintiff contrasts the subject allonge with an allonge that does not contain specific references to a particular note, asserting that “there is no question that this Allonge directly pertains to the subject Note.” Id.

Plaintiff cites no authority which states that a specifically worded allonge can substitute for UCC § 3-202(2)’s explicit requirement that an allonge must be firmly affixed to the note, and indeed, so firmly affixed as to become a part of the note. While, admittedly, the allonge contains clear evidence that it pertains to the subject Note,[19] UCC § 3-202(2) must still be met, as that determines whether the Note is negotiable and may be transferred by physical delivery. Moreover, the mere fact that the allonge is specific to the Note says nothing about whether the allonge is affixed to the Note, let alone, whether it is “firmly affixed” to the Note.

Accordingly, although superficially appealing, the Court rejects Plaintiff’s argument that the specificity of the allonge can replace UCC § 3-202(2)’s explicit requirement.

Assignment of Mortgage

Plaintiff further attempts to sidestep the issue of UCC § 3-202 by arguing that the New York Assignment of Mortgage (“Assignment”), which assigned the subject Mortgage, also assigned the Note to Plaintiff. Plaintiff relies on the language in the Assignment which stated that Chase “does hereby grant, sell, assign, transfer and convey” to Plaintiff “all beneficial interest under a certain Mortgage dated May 22, 2007 made and executed by [Defendant] to and in favor of [Chase] upon property situated [at] 15 SPRUCE CT, NANUET, NY 10954.” Riquelme Affidavit, Exhibit E, New York Assignment of Mortgage at 1 of 2. While Plaintiff contends that this language also assigned the Note, Plaintiff also cites NY Jur 2d Mortgages § 283 and Chase Home Finance, LLC v Micotta, 101 AD3d 1307 [3rd Dept 2012] (citing Bank of NY v Silverberg, 86 AD3d 274 [2nd Dept 2011]) in support of its further contention that no special language is needed to effectuate assignment of a note and mortgage.

A plaintiff can establish its standing through an assignment of a mortgage which includes language also assigning the note. See Emigrant Bank v Larizza, 129 AD3d 904 [2nd Dept 2015]; U.S. Bank N.A. v Akande, 136 AD3d 887 [2nd Dept 2016]; Wells Fargo Bank. N.A. v Archibald, 150 AD3d 937 [2nd Dept 2017]. As the Second Department stated in Silverberg, “`[n]o special form or language is necessary to effect an assignment as long as the language shows the intention of the owner of a right to transfer it‘”. Silverberg, supra, 86 AD3d at 280-281(emphasis added) (citing Suraleb, Inc. v International Trade Club, Inc., 13 AD3d 612, 612 [2004], quoting Tawil v Finkelstein Bruckman Wohl Most & Rothman, 223 AD2d 52, 55 [1996]).[20]In addition, “[a]n assignor’s failure to indorse the note will not render an assignment of mortgage invalid where said assignment was made in a writing and therein transferred the assignor’s interests in both the note and the mortgage to the assignee.” LaSalle Bank Nat. Ass’n v Lamy, 12 Misc 3d 1191(A) at *2 [Sup Ct, Suffolk County 2006] (citing Matter of Stralem, supra, 303 AD2d 120).

Plaintiff relies on three decisions of the Supreme Court, Suffolk County, which held the same language used in the Assignment—”all beneficial interest under a certain Mortgage”— sufficient to also transfer the subject note. Reply Affirmation at 8 (citing Deutsche Bank National Trust Co. v Francis, (2017 WL 2304042, Supreme Ct, Suffolk County); HSBC Bank v. Serafin, (2017 WL 1401364 Supreme Ct, Suffolk County); and Deutsche Bank National Trust Co. v Williams (2015 WL 7008076 Supreme Ct, Suffolk County)).

This Court declines to follow its sister courts in Suffolk County on this point. The Assignment in this case, while using the same language as the assignments in those cases, specifically referred to the Note elsewhere in the Assignment without using any language which can be construed as assigning the Note. Riquelme Affidavit, Exhibit D at 1 of 2. Immediately following the Section, Block and Lot numbers of the subject property, the Assignment states that “such Mortgage having been given to secure payment of Four Hundred Eighty Eight Thousand and 00/100ths ($488,000.00), which Mortgage is of record in the Office of the County Clerk or Register of ROCKLAND County, State of New York.” Id. The Assignment did not go on to state that the referenced debt was simultaneously being assigned to Plaintiff. Assignment of the Note should have clearly followed the reference to the Note. It did not. Finally, the Assignment provides: “TO HAVE AND TO HOLD, the same unto Assignee, its successors and assigns forever, subject only to the terms and conditions of the above-described Mortgage.” Id. Again, there is no mention of the Note.

Plaintiff’s entire argument rests on the words “all beneficial interest under a certain Mortgage”, without any specific reference to the Note or any language that can reasonably be construed as including the Note in the assignment. The drafter should have added the words “together with the note described in the Mortgage”, or comparable language. See Matter of Stralem, 303 AD2d 120, 123 [2nd Dept 2003] (“The language of the assignment executed by the decedent could not have been more clear. [T]he decedent assigned the mortgage on the property, `together with the note or obligation described in or secured by said mortgage'”); HSBC Bank USA, Nat. Ass’n v Miller, 26 Misc 3d 407, 412 [Sup Ct, Sullivan County 2009] (“nor did the language of the assignment explicitly assign `the note or obligation described and secured by said mortgage’.”) (citing Stralem, supra). In this Court’s view, a written assignment of a note must be clear and unequivocal, or, at any rate, clearer than the language used in the Assignment.

RPAPL § 258, which provides the statutory form for a written assignment of a mortgage and note, utilizes very clear language. While use of the language in this section is not mandatory, it offers a guidepost by which to evaluate the efficacy of an assignment. Section 258 reads as follows:

SCHEDULE O.

Assignment of Mortgage.

Statutory Form I. Without Covenant.

Know that_____, assignor, in consideration of_____ dollars, paid by_____, assignee, hereby assigns unto the assignee, a certain mortgage made by_____, given to secure payment of the sum of_____ dollars and interest, dated the_____ day of_____, recorded on the_____ day of_____, in the office of the_____ of the county of_____, in liber_____ of mortgages, at page_____, covering premises_____, together with the bond or obligation described in said mortgage, and the moneys due and to grow due thereon with the interest (emphasis added)

The language in RPAPL § 258, which this Court emphasized—”together with the bond or obligation described in said mortgage“—stands in sharp contrast to the language used here in the Assignment—”all beneficial interest under a certain Mortgage”. If such language is mere surplusage, as Plaintiff seems to believe, the drafters of RPAPL § 258 would not have included it in a statutory form promulgated for general use as best practice.

In any event, the Assignment does not comport with Silverberg‘s requirement that “the language must [show] the intention of the owner of a right to transfer it.” Silverberg, supra at 280-281 (citations and internal quotation marks omitted). This Court will not read meaning into the words “all beneficial interest under a certain Mortgage” which is not there. In this Court’s view, this language generally does not support piggybacking an assignment of a note onto an assignment of a mortgage. In this case, where the Note is specifically referenced in the Assignment with no language that the Note is being assigned, no such assignment of the Note was effectuated. Only the Mortgage was assigned by the Assignment and all beneficial interest under the Mortgage, without inclusion of the Note. To hold otherwise would seem to turn the general rule, that the mortgage follows the note, completely on its head.

Indeed, the principle is so well established in New York that it cannot “be questioned that a mortgage given to secure [a] note[] is an incident to the latter and stands or falls with [the note].” Weaver Hardware Co. v Solomovitz, 235 NY 321, 331-332 [1923]. The Second Department has repeatedly and consistently held that “[a]n assignment of a mortgage without assignment of the underlying note or bond is a nullity, and no interest is acquired by it.” Deutsche Bank Nat. Trust Co. v Spanos, 102 AD3d 909, 911-912 [2nd Dept 2013]; HSBC Bank USA v Hernandez, 92 AD3d 843, 843 [2nd Dept 2012]; Bank of NY v Silverberg, supra at 280U.S. Bank, NA v Collymore, 68 AD3d 752, 754 [2nd Dept 2009]; see also Merritt v Bartholick, 36 NY 44 [1867]. Because the Assignment here did not assign the Note, it does not constitute evidence of Plaintiff’s prima facie standing to foreclose, as a matter of law.

The Court rejects Plaintiff’s argument that the Assignment effectuated a transfer of the Note, by which Plaintiff need not satisfy UCC § 3-202(2)’s explicit requirement for the allonge to be firmly affixed to the Note. Plaintiff having failed to successfully circumvent UCC § 3-202(2), a triable issue of fact remains as to whether the purported endorsement on the allonge was firmly affixed to the Note as to constitute a valid transfer of the Note to Plaintiff, thereby conferring standing to foreclose.

Plaintiff has not established its prima face entitlement to judgment as a matter of law on the issue of standing. As a result, the Court need not consider any of the other requests for relief contained in Plaintiff’s motion. See, e.g., Bank of New York v Willis, 150 AD3d 652, 654 [2nd Dept 2017]; New York Comm’l Bank v J Realty F. Rockaway Ltd., 108 AD3d 756, 757 [2nd Dept 2013]; Starkman v City of Long Beach, 106 AD3d 1076, 1078 [2nd Dept 2013]. Accordingly, Plaintiff’s motion for summary judgment is denied in its entirety.

This action has been transferred to the Court’s newly formed Mandatory Appearance Part for all further proceedings. The parties will receive notice from that Part of the next scheduled appearance.

The foregoing constitutes the Decision and Order of this Court.

[1] The Agreement appears to reference a prior foreclosure action, or “foreclosure activities” of some sort, against Defendant. It mentions Defendant’s financial hardship and states, for example, that “[t]he Lender agrees to suspend any foreclosure activities so long as I comply with the terms of the Loan Documents, as modified by this Agreement.” Affidavit of Patrick Riquelme, Exhibit C, Loan Modification Agreement at ¶ 1. A search of the Court’s records did not uncover a prior foreclosure action having been filed against Defendant.

[2] Although the Agreement changed the principal amount of the Loan from $488,000.00 to a new principal balance of $506,676.03, it appears that Chase did not issue a new note.

[3] The date of Defendant’s default coincided with the increased interest rate, when the Agreement called for the mortgage payment to be raised from $1,850.51 to $2,090.95.

[4] Although assignments of mortgage are not always done at the same time a note is transferred to an assignee, Plaintiff argues that the New York Assignment of Mortgage from Chase to Plaintiff simultaneously transferred the Note.

[5] Because Defendants Citibank and HSBC are in default, the reference to Defendant throughout the decision refers only to Rocco Cannella, unless otherwise indicated.

[6] The Appellate Division has stated that, because “standing is not an essential element of the cause of action” in a mortgage foreclosure action, “under CPLR 3018(b) a defendant must affirmatively plead lack of standing as an affirmative defense in the answer in order to properly raise the issue in its responsive pleading”. Bank of New York Mellon v Gordon, 2019 NY Slip Op. 02306, 2019 WL 1372075, at *3 [2nd Dept March 27, 2019] (citations omitted).

[7] Plaintiff’s assertion that “the Riquelme affidavit, alone, is also enough for Plaintiff to meet its burden” is incorrect. As the Appellate Division stated in Bank of New York Mellon v Gordon, supra at *5, “it is the business record itself, not the foundational affidavit, that serves as proof of the matter asserted.” (citations omitted) “`Evidence of the contents of business records is admissible only where the records themselves are introduced'”. (citations omitted). Without the records, “`a witness’s testimony as to the contents of the records is inadmissible hearsay’.” (citations omitted).

[8] Presumably, defense counsel would have referred to her inspection of the original Note and allonge in her affirmation.

[9] In Lamson v Commercial Credit Corp., 531 P2d 966 [Colo 1975], discussed infra, the Supreme Court of Colorado used the term “permanent attachment” to describe a two-page indorsement of two checks which a bank stapled to the checks. The court determined that “stapling an indorsement to a negotiable instrument is a permanent attachment so that it becomes `a part thereof.'” Id. at 968 (emphasis added).

[10] Much may depend on the specificity of the allonge and whether it clearly references the note to which it purports to be firmly affixed, as in this case. The less specific the allonge, perhaps the greater the proof needed to ensure that it is firmly affixed to the note. An affidavit describing the separation and reattachment might well be needed. The issue must, of course, be raised by a defendant challenging a plaintiff’s standing to foreclose.

[11] The Court recognizes that this characterization may be a gross overstatement as it pertains to wills, which themselves may have a document annexed to it, known as a codicil. The analogy is offered merely to give some broad frame of reference to the point that is being made here.

[12] Indeed, as noted infra, some states have amended their UCC provision to change the language of the comparable section from “firmly affixed” to “affixed”, thereby lowering the standard.

[13] While Slutsky supports the general principle that an allonge must be firmly affixed to a note, there was no indorsement in that case. As a result, although the defendant claimed that the note had been transferred from the plaintiff, there was no evidence that it had; thus, the plaintiff had standing to foreclose. 147 AD2d at 212.

Neither U.S. Bank N.A. v Guy, supra, nor Deutsche Bank Trust Co. Ams. v Codio, supra, specifically addressed UCC § 3-202(2). In Guy, the court stated that the plaintiff “by producing the underlying adjustable rate note with an affixed undated allonge endorsed in blank made a showing sufficient to deny” the defendant’s CPLR §3211 (a) (3) motion to dismiss. Guy, supra at 846. In Codio, the plaintiff produced “a document designated as an `allonge to note,’ which established that the plaintiff is the transferee of the subject mortgage”, with no discussion of whether the allonge was firmly affixed to the note. Codio, supra at 1041.

[14] The assignee, Amalgamated Bank, who obtained the note from the original lender, subsequently endorsed the note in blank on the undated allonge (firmly affixed by a staple). The issue of the endorsement on “the page” was significant to determine whether Amalgamated Bank was a prior holder of the note, thereby making the endorsement on the allonge, by which the note was transferred to the plaintiff, a valid transfer.

[15] Where a plaintiff’s counsel’s firm was in possession of the original note at commencement, counsel’s affirmation, or an employee of counsel’s firm, may be used to establish possession of the note and the physical characteristics of the note. See Bank of New York v Gordon, supra at *3; PennyMac Corp. v Chavez, 144 AD3d 1006 [2nd Dept 2016]; US Bank, NA v Cruz, 147 AD3d 1103[2nd Dept 2017]; US Bank, NA v Ellis, 154 AD3d710 [2nd Dept 2017]; US Bank, NA v Cardenas, 160 AD3d 784 [2nd Dept 2018]).

[16] It should be noted that both Texas and Colorado changed the language in their UCC provisions from “firmly affixed” to simply “affixed”.

[17] Defense counsel could have cited Lamson for her use of the term “permanently affixed”; instead, she provided no authority for her use of the term.

[18] See Reply Affirmation of Peter R. Bonchonsky, Esq. at ¶ 15 (“Defendant attempts to raise a triable issue of fact by no more than an attorney’s speculation and guesswork that some of the pages of the Note appear to contain various marks or hole punches and others do not.”).

[19] A specific allonge may easily find its way to the note to which it relates should the two be separated. The opposite, however, is not true. A note without the allonge being firmly affixed contains no reference to the endorsement on the allonge and thus, the note could not similarly find its way to the respective allonge.

[20] None of the decisions cited in Silverberg involved assignment of a note and mortgage. Silverbergwas able to gloss over the specific issue, because MERS did not have the right to assign notes: “although the consolidation agreement gave MERS the right to assign the mortgages themselves, it did not specifically give MERS the right to assign the underlying notes, and the assignment of the notes was thus beyond MERS’s authority as nominee or agent of the lender.” Silverberg, supra at 281.

 

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in STOP FORECLOSURE FRAUD0 Comments

GARY DUBIN LAW OFFICES FORECLOSURE DEFENSE HAWAII and CALIFORNIA
Advertise your business on StopForeclosureFraud.com

Archives