While lenders are infamous for forcing homeowners to clear all sorts of hurdles, they have become equally notorious for their own failure to locate original loan documents in foreclosure actions. In some cases, the lender filing suit never possessed these records in the first place.

Courts have made it clear that the burden of establishing standing in a foreclosure case rests with the plaintiff, i.e., the lender. Still, it’s usually the defendant who ends up arguing this point on appeal of a summary judgment in favor of the lender.

Foreclosure defense attorneys in Miami know that many cases in Florida have been either dismissed, or had summary judgments reversed, because the defendant successfully argued the plaintiff had failed to provide adequate proof of standing.

Secure Foreclosures Florida – Lender Must Prove Standing

“Standing,” which is the right to be a party to the case and to file a complaint, has to exist from the date the complaint is filed throughout the course of litigation. Lenders aren’t allowed to receive an assignment of a mortgage and promissory note after the filing of a foreclosure action and call it valid. There is also no allowance for “supplemental standing,” which means just because a lender has standing to assert one claim doesn’t necessarily mean it has standing to bring other claims arising from the same basic operative facts.

The reason foreclosure defendants have been able to assert a “lack of standing” with such success has to do with the fact that, particularly throughout the housing boom, most mortgages were sold and re-sold, often sloppily with regard to formal paperwork. Usually, the original bank or lender isn’t the entity named on the foreclosure action. When a homeowner defaults on a mortgage loan, triggering a foreclosure action, the bank may have trouble offering clear proof of ownership.

One recent case that saw a foreclosure summary judgment reversal was Olivera v. Bank of America, weighed by Florida’s Second District Court of Appeal.

Here, plaintiff was the personal representative for the estate of a deceased woman who was being sued for foreclosure by Bank of America at the time of her death.

According to court records, the loan originated in 2006, when the woman executed a note in favor of Ocwen Loan Servicing and a mortgage in favor of the Mortgage Electronic Registration Systems, Inc, as the lender’s nominee.

Less than three years later, Bank of America Home Loans Servicing unit, on behalf of Countrywide Home Loans Servicing, filed a foreclosure complaint against the homeowner on both the note and the mortgage, alleging the homeowner fell into default three months earlier. BOA asserted it was the servicer for the owner, and was acting as the designated holder for both the note and the mortgage. The bank insisted it had been assigned the mortgage, and that the assignment had yet to be recorded.

The homeowner responded by generally denying the bank’s assertions that it was the servicer for the owner, was acting on behalf of the owner or was the current holder of the note and mortgage. Basically, she asserted the bank lacked standing to file the complaint because it could not establish a reasonable chain of ownership for the promissory note.

Further, she indicated the bank had not complied with its obligations under state foreclosure law, as well as the terms of the mortgage. Specifically, she alleged the bank hadn’t served her with a notice of acceleration.

Eighteen months after filing the original complaint, the bank submitted the original note, as well as a copy of the mortgage. The note’s endorsement indicated it was payable to countrywide (which was later purchased by BOA), as an agent for Ocwen. Also, the bank produced a document indicating the mortgage was transferred from MERS to BOA’s home loan servicing department in June 2011. Based on this, the bank filed a motion for summary judgment, which was granted over the homeowner’s opposition.

However, that ruling was later reversed by Florida’s 2^nd DCA. The biggest issue was that the assignment of the mortgage from MERS to BOA post-dated the date the foreclosure was filed. The appellate court found this created a genuine issue of material fact about whether the bank indeed had standing to bring the claim. There was nothing in the record, the appellate panel ruled, that offered a clear chain of transfer of interest in the note from the original note from Ocwen to BOA before the original foreclosure complaint was filed.

Further, the bank failed to refute the plaintiff’s assertion that it failed to provide notice of acceleration. For this reason, summary judgment was reversed and the case was remanded for further proceedings.

The Neustein Law Group PA, Miami foreclosure attorneys, can be reached at (305) 531-2525.