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Editor’s Note: I would add that if the PSA was required to be placed in evidence and to be attached as an exhibit to the would-be forecloser’s pleadings, it would put facts in issue that the forecloser would never be able maintain. Amongst others, the facts would not support that the transfer into the pool ever occurred nor was it accepted by the trustee nor could it be accepted by the pool trustee — thus depriving the alleged servicer of any legal contract relationship with the investor lender or the homeowner borrower.
By leaving it out and dancing around the subject, the banks convince the Judge to improperly put the burden of pleading and the burden of proof on the borrower rather than the party making the claim for collection or foreclosure. And the accounting from the”servicer” carries with it a presumption of accuracy that is unwarranted, leaving out all the financial transactions that are NOT reported by the loan servicer starting with the initial funding of the loan all the way through the payment of the debt by parties who are not in privity with the borrower.
Looking at the transaction from the standpoint of where money exchanged hands it is easy to see that the lenders were the investors whose purchase of a mortgage bond was a ruse and the homeowner whose purchase of an exotic guaranteed to fail loan (or loan in a pool that was guaranteed to fail) was a fraud (both investor and homeowner being fooled by fraudulent appraisals and fine print conflicting with the rest of the documentation), it is all too easy to see how the closing documents with the investor are not complete without the closing documents from the borrower and vica versa. Had this simple rule been followed, nearly all of the foreclosures would have been withdrawn or settled leaving both the housing market and the economy in far better shape than current circumstances.
by Patrick Downey
In order to have a colorable claim, the mortgage servicer plaintiff must be entitled via separate agreement with its principal to enforce the debt owner’s property rights and interests provided to the debt owner by the note and lien instrument. A mortgage servicer may have possession of the genuine note, but it is never an owner of the property rights and interests the note is supposed to evidence and represent. The note was stripped and denuded of those property rights and interests when they were irrevocably assigned to a pool in order to capitalize a securities offering.
Revised UCC Article 9 contains a series of provisions that broadly expand the property rights and interests that may be assigned, regardless of anti-assignment language in contracts or other state statutes. These rules are not limited merely to restrictions prohibiting an assignment. They also override restrictions that permit assignment only with the consent of a third-party obligor or with restrictions that simply declare that assignment will constitute a default. The party that takes the right to collect via a distinct assignment of the lender’s inherent collection right in lieu of a negotiation and conveyance of the whole and inseparable loan contract is not a successor to the lender under the terms of the mortgage instrument. Likewise, the party that takes the lender’s inherent right to payment via a distinct assignment of the lender’s beneficial interests in lieu of a negotiation and transfer of the whole and inseparable loan contract is not a successor to the lender under the terms of the mortgage instrument. Both parties are considered partial assignees provided for in UCC article 3-203(a). A partial assignee is never a mortgagee and this is the real reason why MERS was created. MERS acts as a lien holder strawman, or bailee, whereas otherwise the lien would be vanquished due to these distinct property assignments. MERS allows the lien to survive these intangible property assignments and it placated the ratings agencies whereby they granted AAA status to the MBS offerings.
The servicing agreement is never attached as an exhibit to the complaint because if it ever saw the light day, it would reveal that the defendant’s payments were being remitted by the servicer for the benefit of a party lacking contract privity with the defendant and that the contract holder is not an aggrieved party nor did it suffer default. Neither the servicer or its principal have contract privity with the defendant.
The contract holder has executed UCC article 9 assignments of its property rights and interests for the benefit of strangers to the loan contract whereby the note it possesses is a carcass or relic of the property rights and interests it used to evidence. Proof of this is contained within the notice of servicing transfer whereby it should state that the “right to collect” has been sold, assigned or transferred. The “right to collect” is a property right of the lender provided by debt ownership, it doesn’t just appear out of thin air. That property right is required to be reported as a distinct loan asset on the mortgage servicers balance sheet. Ask yourself how the servicer can report the “right to collect” as a distinct loan asset and also claim to report the note as a distinct loan asset.
Blank endorsements act as a smoke screen for these distinct article 9 assignments and any endorsement exhibited on the note in favor of a mortgage servicer is bogus because all the property rights and interests of the debt owner were not transferred with the conveyance of a whole and inseparable loan contract. The “right to collect” was stripped and assigned to the servicer separate and independent from the loan contract. Section 20 of the lien instrument provides that these property rights and interests can be assigned independent and separate from each other. Section 13 grants the lien binds and benefits the lender’s successors and assigns (except under the circumstances provided for in section 20). Taken together, the mortgage instrument grants the lien only transfers with a conveyance of the real property and not an assignment of the lender’s intangible property rights and interests. Under Florida law, contracts are construed in accordance with their plain language, as bargained for by the parties. see Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34 (Fla. 2000).
The foreclosure complaint filed by the mortgage servicer plaintiff is an in rem action in equity to enforce a mortgage instrument not an in personam action at law for enforcement of a note for money damages see, Sun Trust Mortgage v Fullerton FLWSUPP,1612, (6th Circuit Court, Pinellas County, Oct 2009). Be advised only the mortgagee or anyone authorized in writing by the mortgagee may accelerate the debt and file a lawsuit to foreclose on the mortgage because of the Florida Statute of Frauds Title XLI.
The servicer doesn’t qualify as an entity entitled to enforce the note and mortgage because it doesn’t have contract privity with the defendant. An entity lacking contract privity with the defendant is not the mortgagee nor can it grant or convey a higher status to another than what it possesses. A simple pre foreclosure QWR asking for the name of loan investor will reveal the servicer’s principal but not substantiate the principal is the note owner and holder. Thereby, a written agreement with a substantiated note owning principal granting the servicer administrative authority to enforce the lien instrument must be attached to the complaint. FL R Civ P 1.130(a) provides in pertinent part “All bonds, notes, bills of exchange, contracts accounts or documents upon which action must be brought or defense made, a copy thereof or a copy of the portions thereof material to the pleadings must be incorporated in or attached as an exhibit to the complaint.”
#1 The defendant is prejudiced in its ability to raise certain defenses without attachment of the written servicing agreement as an exhibit to the complaint.
#2 When provisions contained within exhibits are inconsistent with the plaintiff’s allegations of material fact as to whom the real party at interest is, such allegations cancel each other out. Fladell v Palm Beach County Canvassing Board 772 So 2d 1240 (FL 2000), Greenwald v Triple D Properties, Inc. 424 So 2d 185, 187 (FL 4th DCA 1983)
#3 In Florida, prosecution of a foreclosure action is by the owner and holder of the note see Your Construction Center Inc. v Gross 316 So 2d 596 (FL 4th DCA 1975) Florida is a fact pleading State and plaintiff’s failure to plead and show competent evidence it or its principal is both owner and holder of the note renders the complaint fatally defective on its face.
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