September 28th, 2015

“A crucial element in any mortgage foreclosure proceeding is that the party seeking foreclosure must demonstrate that it has standing to foreclose” [the subject note and subject mortgage when the complaint is filed]. McLean v. JPMorgan Chase Bank Nat’l Ass’n, 79 So.3d 170, 173 (Fla. 4th DCA 2012). If Plaintiff fails to establish standing, the case is subject to dismissal. “Standing may be established by either an assignment or an equitable transfer of the mortgage prior to the filing of the complaint.” Id (emphasis added). Standing may also be established from a Plaintiff’s “status as the note holder, regardless of any recorded assignments.” Id. Florida Statute § 671.201(21) defines “holder” as:

(a) The person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession;

(b) The person in possession of a negotiable tangible document of title of the goods are deliverable either to bearer or to the order of the person in possession; or

(c) The person in control of a negotiable electronic document of title.

See Florida Statute § 671.201(21).

In addition, “[i]f the note does not name the [P]laintiff as the payee, the note must bear a special endorsement in favor of the [P]laintiff or a blank endorsement. Alternatively, the [P]laintiff may submit evidence of an assignment from the payee to the [P]laintiff or an affidavit of ownership to prove its status as holder of the note.” Id. Moreover, Florida Statute § 673.3011 identifies persons entitled to enforce a negotiable instrument. Specifically, “person entitled to enforce” an instrument means:

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a holder; or

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to § 673.3091 or § 673.4184(4). See Florida Statute § 673.3011.

Courts have found that a copy of the original note which contains an undated blank endorsement, attached to a Plaintiff’s Foreclosure Complaint, is sufficient to establish, as a matter of law, that Plaintiff had standing to bring the foreclosure action. See Clay County Trust #08-04-25-0078-014-27 Orange Park Trust Services, LLC as Trustee Only v. JPMorgan Chase Bank, Nat’l Ass’n, Case No. 1D14-1125 (Fla. 1st DCA 2014) (“[w]hen appellee filed the foreclosure complaint, it attached a copy of the note and an undated allonge to the note containing a blank endorsement. This was sufficient to establish as a matter of law that appellee had standing to bring the foreclosure action.”).

Often times, Plaintiff is able to establish standing several ways. One of the most common ways is through an assignment of mortgage. An assignment of mortgage that assigns the note, as well as the mortgage, to the Plaintiff prior to filing date can establish Plaintiff’s standing. Section 701.01 of the Florida Statutes also gives an assignee of a mortgage the authority to “take and pursue the same means and remedies which the mortgagee may lawfully have, take or pursue for the foreclosure of a mortgage . . . .” § 701.011, Fla. Stat. (2014). In Taylor v. Deutsche Bank Nat’l Trust Co., 44 So.3d 618, 623 (Fla. 5th DCA 2010), the Court affirmed the final judgment in which the trial court concluded that the assignee of MERS had standing to foreclose the mortgage. Specifically, the Court held that:

[T]he written assignment of the note and mortgage from MERS to Deutsche Bank properly transferred the note and mortgage to Deutsche Bank. The transfer, moreover, was not defective by reason of the fact that MERS lacked a beneficial ownership interest in the note at the time of the assignment, because MERS was lawfully acting in the place of the holder and was given explicit and agreed upon authority to make just such an assignment. Id.

Sometimes, however, the assignment of mortgage transfers the mortgage only. “[A]n assignment of mortgage, even if executed before the foreclosure action commenced, is insufficient to prove standing where the assignment reflects a transfer of only the mortgage, not the note. Tilus v. Michai LLC, Case No. 4D13-3616 (Fla. 4th DCA April 8, 2015). See also Bristol v. Wells Fargo Bank, Nat’l Ass’n, 137 So.3d 1130, 1132 (Fla. 4th DCA 2014). “The mortgage follows the assignment of the promissory note, but an assignment of the mortgage without an assignment of the debt creates no rights in the assignee.” Tilus, Case No. 4D13-3616. However, federal case law has found that “unless there is a plain and clear agreement to the contrary, both the mortgage and note are assigned as one.” Wane v. The Loan Corporation, Case No. 13-11597 (11th Cir. 2014).

Cases in which Plaintiff is a Trust

If the Plaintiff is a trust, and if the assignment of mortgage was executed after the Complaint was filed, or if there is an issue with the endorsements on the original note, a pooling and servicing agreement with master loan schedule may be introduced into evidence to show that the subject loan was placed into the trust prior to the filing of the Complaint, to show Plaintiff’s status as note holder. However, some defendants attempt to attack the validity of the trust by alleging that Plaintiff failed to comply with the pooling and servicing agreement. It is well established that “[a] person not a party to nor in privity with a contract has no right to enforce it.” Gallagher v. Dupont, 918 So.2d 342, 347 (Fla. 5th DCA 2005) (emphasis added). See also White v. Exchange Corp., 167 So.2d 325, 326 (Fla. 3d DCA 1964); Castillo v. Deutsche Bank Nat’l Trust Co., 89 So.3d 1069 (Fla. 3d DCA 2012). “When a contract is designed solely for the benefit of the contracting parties, a third party cannot enforce its provisions even though the third party may derive some incidental or consequential benefit from the enforcement.” Gallagher, 918 So.2d at 347 (emphasis added). See also K-Mart Corp v. State Dept. of Transp., 636 So.2d 131, 133 (Fla. 2d DCA 1994) (Lazzara, J., concurring). A defendant cannot allege noncompliance with a trust or pooling and servicing agreement since the defendant is not a party to same.

Owner v. Holder

In many contested cases, Defendants attempt to attack Plaintiff’s standing by alleging that Plaintiff has not proven that it is the owner and holder of the subject note, and thus Plaintiff’s Complaint should be dismissed. However, Florida law does not require Plaintiff to be both the holder and the owner of the subject note in order to foreclose. “[U]nder the Uniform Commercial Code, a [P]laintiff is not required to be both the owner and holder of the note in order to have standing to foreclose.” Tilus, Case No. 4D13-3616.

How we prove standing

In a contested case, Plaintiff must attempt to prove standing as many ways as possible in order to prevent dismissal and/or a subsequent reversal on appeal. The following are ways to establish standing in a contested trial: the admission of a screen shot to show that Plaintiff was in possession of the original endorsed note prior to the date on which the Complaint was filed (filing date); and/or the admission of an assignment of mortgage (in which also assigns the note) executed prior to the filing date; and/or the admission of a pooling and servicing agreement with master loan schedule to show that the blank endorsed note was placed into the trust prior to the filing date; and/or the admission of the collateral routing history to show that Plaintiff’s Counsel was in possession of the original endorsed note prior to filing date; and/or the admission of a bailee letter to show that Plaintiff’s Counsel received the original endorsed note prior to filing date; and/or admission of the note certification to show that Plaintiff’s Counsel was in possession of the original endorsed note prior to the filing date; and/or the admission of the original endorsed note, along with another method.