Banks No Longer Above the Law: Inadmissible Hearsay Stays Out of Court

Florida homeowners scored a huge win last week when a Florida Appellate Court ruled that banks could no longer continue to break the rules in almost every foreclosure action. Following advice I gave in my letter to the editor of the Florida Bar Journal months ago, the Fourth District Court finally recognized that affidavits being submitted as “evidence” by banks were inadmissible hearsay that judges had been admitting against homeowners for years.

Friend and fellow , Thomas Ice, took his argument to the Fourth District on behalf of two homeowners. In their case, the bank employee who signed the affidavit against them admitted in his deposition that his only knowledge of the amount due to the bank was based on the bank’s computer system, and more incredibly, the computer system of another bank who had been the previous servicer of the loan. The Court noted in its opinion that the affidavit used by the bank “constituted inadmissible hearsay, and as such, could not support [the bank’s] motion for summary judgment.” And hearsay is exactly that: not actual firsthand knowledge of evidence. Ironically, such affidavits would have been laughed out of any court in the county except for new “lore” instead of “law” that has been taking shape in foreclosure courts in Florida and elsewhere.

In order to bring a motion for summary judgment, a bank must show that there is no “issue of material fact and the movement is entitled to judgment as a matter.” If the bank cannot establish down to the penny how much is owed on the loan, then by default there is a question of material fact and the bank would have to go to trial and prove the amount that is due, putting on witnesses from their own bank as well as from any other servicer of the loan who collected and applied payments before them.

To get around this, for years banks have been filing an “affidavit of indebtedness” in each foreclosure action, signed by a low-level employee who reviews a computer system and reports what it says as “personal knowledge” of the amount owed. Yet, as admitted by the bank employee in this case, the employee has no idea whether what the system reports is correct, or even how it computes that number. And, the employee knows even less about the system of previous servicers, yet still claims “personal knowledge” of those amounts as well.

The Court finally accepted the argument that defense attorneys have been making for years, potentially invalidating the affidavits in thousands of foreclosures. In fact, I have repeatedly written about the violations of Civil Procedure that are swept under the rug in foreclosures, violations that have been helping the courts act as private collection agencies for the banks. Now, it seems at least some judges are finally listening to the little guy. The purpose of our court system is to ensure a fair playing field for both sides of litigation, and until now in foreclosures the banks have had the home field advantage. I have said it before and I will say it again, affidavits without knowledge are simply inadmissible. To win the game in a foreclosure suit, the bank must simply prove through decided rules of evidence how much the homeowner owes. And now, thanks to the Fourth District Court, the playing field has finally been leveled. I hope judges take heed.

Roy Oppenheim

From the Trenches