Monday, December 19, 2011

Add One More To List Of Florida Appeals Court Reversals Of Trial Judge Screw-Ups In F'closure Litigation; Lender Must Own Note At Time Of Case Filing

In West Palm Beach, Florida, The Palm Beach Post reports:

  • Home­owners in foreclosure may have a better chance of getting a true trial, instead of a quickie judgment, following a 4th District Court of Appeal decision that requires banks to prove ownership of the note at the time they file for repossession.

  • The ruling Wednesday in Palm Beach County was heralded by foreclosure defense attorneys who said it may even force banks to dismiss some cases and start over with new paperwork.

  • Tom Ice, founder of the Royal Palm Beach-based foreclosure defense firm Ice Legal, called the decision a "sea change" in the way courts are looking at foreclosure cases and the importance of assignments of mortgage.

  • "No longer can banks just walk in and have their attorney wave around a piece of paper saying this is the note," Ice said. "The good news for homeowners is now they have an opportunity to prove their case and get a trial on its merits."

  • The 4th DCA ruling follows a rare Florida Supreme Court decision last week to take up an already settled Greenacres foreclosure case that involved an allegedly backdated assignment of mortgage that the bank used to show ownership. The court said it wanted to rule on the case, in which the homeowner was defended by Ice's firm, because its opinion could have an impact on the "mortgage foreclosure crisis throughout the state."

  • Wednesday's ruling was on the case of Robert McLean vs. JPMorgan Chase, and involved a 2009 Broward County foreclosure. According to the decision, which reversed a lower court's verdict in favor of the bank, Chase originally filed the foreclosure claiming the note - basically the IOU from the borrower - was "lost, stolen or destroyed."

  • The claim has been made thousands of times as lenders rushed without the proper documentation to take back homes tangled up in the real estate boom's securitization frenzy.

  • Although most notes are found before a final foreclosure judgment is entered, the 4th DCA said the note also must be correctly dated and endorsed to show ownership before the foreclosure was initially filed - something that Chase didn't have, according to the ruling. The court also questioned a mortgage assignment made to Chase that was dated three days after the foreclosure was initially filed.

  • If there is substantial doubt about the note, the bank should dismiss and refile the case or the home­owner should be entitled to an evidentiary hearing instead of a more hasty "summary judgment," the ruling said. Chase did not respond to a request for comment.

  • Summary judgments, although rare in traditional court cases, have become a norm for foreclosures, Ice said. They are supposed to be used only when there is no genuine argument as to the facts in a case.

  • One leading West Palm Beach attorney downplayed the significance of the 4th DCA decision, calling it a technicality that doesn't impact the legitimacy of the foreclosure. Gerald Richman, who represents the Boca Raton-based foreclosure firm Shapiro & Fishman, also said the ruling could force an unnecessary expense on lenders if they have to refile a complaint. "It doesn't mean there wasn't merit to foreclose," Richman said. "Why should you have to file a whole new complaint?" Richman said he couldn't measure the impact the ruling will have on Florida's already overwhelmed courts because he doesn't know how many similar cases are out there.

  • But Tampa-area foreclosure defense attorney Mark Stopa said the ruling will apply to the majority of his cases. "In my view, this is the biggest foreclosure case in Florida, ever," he said of Wednesday's ruling.

Source: Struggling homeowners gain favor in key ruling.

For the court ruling, see McLean v. JP Morgan Chase Bank National Association, 4D10-3429 (Fla. App. 4th DCA, December 14, 2011)

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