As Halloween approaches, it seems as though some Florida courts have finally begun to apply the rules of law, civil procedure and evidence in foreclosure cases, thereby stopping the “trick the homeowner and treat the bank” system of procedure and evidence that have haunted Florida homeowners for nearly a decade.
Banks Dressed in Costume Lack Standing
In order for a bank to foreclose on a homeowner, it must prove standing to collect on the subject Note and Mortgage. A bank (or servicer) has standing to foreclose if they can prove that they are the “holder in due course” of the note and mortgage. In the past, banks have desperately attempted to prove standing to collect on countless mortgages and notes that have been bundled, transferred, traded, and sold to numerous different banks, servicers, and entities of the like. These efforts often times included the procuring of forged assignments and other documents in order to prove standing to bring suit on notes and mortgages. After a slap on the wrist from the attorney general in 2010 for their exposed fraud on the court, the banks then turned to unqualified witnesses to attempt to establish standing.
In thousands of foreclosure cases across the state, banks are producing witnesses to help prove their cases. In theory these witnesses are supposed to testify and lay the proper foundation for the admittance of evidence that is imperative for each individual foreclosure case across the state. Each witness should have particular knowledge about whether the evidence (various documents and system entries) presented by the bank was made at the time of the event; by a person with knowledge; kept in the ordinary course of business; and done as a regular business practice. If the witness does not meet the qualifications set out in Florida’s Evidence Code, then they are deemed unqualified and the bank’s evidence dies.
Problems arise when a homeowner who creates a note and mortgage with Bank A (which is then sold to Bank B, then assigned to Bank C, who in-turn sells it to Bank D) is foreclosed upon by Bank E. How is Bank E to prove standing to foreclose when they don’t have all the required documentation?
Without going into boring detail, the bank will produce a robo-witness (or for festive purposes, a “Zombie Witness”) from their loan servicing department to testify that at every step along the way each bank or servicer met the requirements for handling the loan and transferring or selling it to others. It doesn’t take a whole lot of common sense to see that a witness employed by Bank E does not have the requisite knowledge or foundation to testify about the happenings in Bank A, B, C, & D.
Houses No Longer Haunted?
Until recently, foreclosure defense attorneys had been working rigorously and zealously to prove the banks’ witnesses as unqualified to testify at trial – only to have judges blatantly overlook the rules of the court and allow robo-witnesses to validate the banks’ case.
This past month, several appellate courts across the state have changed their tune, realized their mistakes, and have begun to find banks’ witnesses to be unqualified to testify about vital documents to the case. As a result, there seems to be a growing trend of foreclosure cases being involuntarily dismissed by judges. If the trend continues, we may finally see the double-standard in foreclosure courts come crumbling down, ending the “trick-and-treat” era.
This Halloween will be marked by scary lore finally giving way to the law.