The author presents for the Florida Supreme Court Justices’ consideration a request for adjustments to the Florida Rules of Civil Procedure with respect to Mortgage Foreclosure complaints, and clarification to the trial courts of the importance of heeding the evidence code requirement of admitting originals, but not copies, of negotiable instruments, and therefore of requiring reestablishment of lost notes in lieu of allowing enforcement of lost notes.
Please forward this to the justices.
Adjusting the Rules for Foreclosure Complaints
The Florida Rules of Civil Procedure, crafted by Florida’s Supreme Court, contains a model foreclosure complaint form with the following words:
FORM 1.944. MORTGAGE FORECLOSURE
Plaintiff, A. B., sues defendant, C. D., and alleges:
1. This is an action to foreclose a mortgage on real property in ……………… County, Florida.
2. On …..(date)….., defendant executed and delivered a promissory note and a mortgage securing payment of the note to plaintiff. The mortgage was recorded on …..(date)….., in Official Records Book ………. at page ………. of the public records of ……………….. County, Florida, and mortgaged the property described in the mortgage then owned by and in possession of the mortgagor, a copy of the mortgage containing a copy of the note being attached.
3. Plaintiff owns and holds the note and mortgage.
The language of point 3, requiring the words “Plaintiff owns and holds the note and mortgage,” violates both the Uniform Commercial Code adopted by Florida’s Legislature, AND controlling case law.
Florida UCC Enforcing
673.3011 Person entitled to enforce instrument.—The term “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 s.673.3091 or s. 673.4181(4).
A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
And yet, any Circuit court hearing a foreclosure case might dismiss the complaint for failing to plead as required in the above form. In One West Bank v Bauer, One West held a note indorsed in blank, but failed to prove it owned the note. About this the Florida 2nd DCA wrote as follows:
Case law is clear that the proper party with standing to foreclose a note and/or mortgage is the holder of the note and mortgage or the holder’s representative. See Stone v. BankUnited, 115 So. 3d 411, 413 (Fla. 2d DCA 2013) (” ‘Because a promissory note is a negotiable instrument and because a mortgage provides the security for the repayment of the note, the person having standing to foreclose a note secured by a mortgage may be either the holder of the note or a nonholder in possession of the note who has the rights of a holder.’ ” (quoting Mazine v. M & I Bank, 67 So. 3d 1129, 1131 (Fla. 1st DCA 2011))); Mortg. Elec. Registration Sys., Inc. v. Azize, 965 So. 2d 151, 153 (Fla. 2d DCA 2007); Troupe v. Redner, 652 So. 2d 394, 395-96 (Fla. 2d DCA 1995). Because One West Bank possessed the original note, endorsed in blank, it was the lawful holder of the note entitled to enforce its terms. See Taylor v. Bayview Loan Servicing, LLC, 74 So. 3d 1115, 1117 (Fla. 2d DCA 2011); BAC Funding Consortium, Inc. ISAOA/ATIMA v. Jean-Jacques, 28 So. 3d 936, 938 (Fla. 2d DCA 2010); Azize, 965 So. 2d at 153.
Although One West Bank incorrectly pleaded that it held and owned the Bauers’ note and mortgage, there is no dispute that One West Bank was in possession of the note at the time the foreclosure complaint was filed. In requiring One West Bank to prove ownership of the loan documents to establish its standing to foreclose, we conclude the trial court departed from the essential requirements of law by imposing a condition that is not required resulting in irreparable harm. See Deutsche Bank Nat’l Trust Co. v. Prevratil, 120 So. 3d 573, 575-76 (Fla. 2d DCA 2013) (granting petition for writ of certiorari from a trial court’s order imposing a verification requirement for foreclosure complaint that was not required by law).
My case citations above deal with the note, but similar opinions deal with rights to enforce the mortgage. The SCOTUS opined as follows in Carpenter v Longan (1872), cited countless times across the land and never overturned,
“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”
Obviously whoever possesses a mortgage note indorsed in blank, or that holder’s agent, may enforce it. Just as obviously, the mortgage gets its power from the note and the mortgage holder may enforce it if authorized by the note holder, under the above UCC statute.
Thus, the statute and case law makes it obvious that the Florida Supreme Court justices grievously erred in their requirement that foreclosure plaintiffs claim they own and hold the note. That forces many of them to commit perjury or file a sham pleading in order to exercise their enforcement rights.
The Justices should change that requirement to make it comport with the law and common sense.
Re-Establish Lost Note for Admission into Evidence
It seems axiomatic that one cannot enforce what does not exist. The evidence code prohibits admission of a copy of a negotiable instrument into evidence. Therefore, plaintiffs should re-establish a lost note first and foremost.
The Justices should provide clarification of the dichotomy presented by the Florida Statute 673.3091, 71.011, and 90.953. These have caused intense confusion in foreclosures, mainly because so many plaintiffs blatantly lie to the court about having lost or destroyed the mortgage note, then, miraculously, manage to find it well into the proceeding.
Incidentally, the Supreme Court seem incapable of imposing discipline on foreclosure mill law firm attorneys who in turn impose no discipline on their clients. Following that example the trial courts let foreclosure plaintiffs and their attorneys get away with rampant perjury. I personally think the Supreme Court should counsel the trial courts to file criminal complaints against such plaintiffs and their attorneys for conspiracy to defraud the court and for perjury.
of lost, destroyed, or stolen instrument.— (1) A person not in possession of an instrument is entitled to enforce the instrument if: (a) The person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred;
(b) The loss of possession was not the result of a transfer by the person or a lawful seizure; and
(c) The person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
(2) A person seeking enforcement of an instrument under subsection (1) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, s. 673.3081 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.
71.011 Reestablishment of papers, records, and files.—All papers, written or printed, of any kind whatsoever, and the records and files of any official, court or public office, may be reestablished in the manner hereinafter provided. (1) WHO MAY REESTABLISH.—Any person interested in the paper, file or record to be reestablished may reestablish it.
(2) VENUE.—If reestablishment is sought of a record or file, venue is in the county where the record or file existed before its loss or destruction. If it is a private paper, venue is in the county where any person affected thereby lives or if such persons are nonresidents of the state, then in any county in which the person seeking the reestablishment desires.
(3) REMEDY CONCURRENT.—Nothing herein shall prevent the reestablishment of lost papers, records and files at common law or in equity in the usual manner.
(4) EFFECT.— (a) Any paper, record or file reestablished has the effect of the original. A private paper has such effect immediately on recording the judgment reestablishing it, but a reestablished record does not have that effect until recorded and a reestablished paper or file of any official, court or public officer does not have that effect until a certified copy is filed with the official or in the court or public office where the original belonged. A certified copy of any reestablished paper, the original of which is required or authorized by law to be recorded, may be recorded.
(b) When any deed forming a link in a chain of title to land in this state has been placed on the proper record without having been acknowledged or proven for record and has thereafter been lost or destroyed, certified copies of the record of the deed as so recorded may be received as evidence to reestablish the deed if the deed has been so recorded for 20 years.
(5) COMPLAINT.—A person desiring to establish any paper, record or file, except when otherwise provided, shall file a complaint in chancery setting forth that the paper, record or file has been lost or destroyed and is not in the custody or control of the petitioner, the time and manner of loss or destruction, that a copy attached is a substantial copy of that lost or destroyed, that the persons named in the complaint are the only persons known to plaintiff who are interested for or against such reestablishment.
Furthermore, only Florida, from what I can tell so far, has an element of its evidence code (90.953) forbidding admission of a copy of a mortgage note (a form of negotiable instrument) into evidence. This flies in the face of the Florida Statute 673.3091, enforcement of a lost, destroyed, or stolen note. The Supreme Court should recommend to the Legislature an adjustment to 90.953 to accommodate 673.3091 OR encourage the trial courts to direct plaintiffs to reestablish their “lost” notes under Florida Statute 71.011 before proceeding to foreclose on the re-established note. In my opinion, owners of beneficial interest in the note should not need a separate proceeding to accomplish this. It should become a standard part of any foreclosure proceeding.
Furthermore, the trial courts should not punish mortgagors for failing to make payments on a note that does not exist (in other words, until after reestablishment). Loan servicers routinely refuse to show the original note when mortgagors demand to see strict proof that they owe the debt, and that seems like a blatant violation of the Fair Debt Collection Practices Act. The note IS the debt, after all. Without it, no debt exists, AND the mortgage security instrument has zero validity. If trial courts did their duty, they would not allow foreclosure without a valid note and would not punish nonpayment by borrowers for whom the servicer refused to show the original note as proof of claim.