"Lost Note" Must Be Proven Along With Ownership and Servicing Rights

see 5th DCA http://www.lexology.com/library/detail.aspx?g=40d8d5b1-fdc1-4cf4-b713-6edca9f786f1&l=7QBAHBN

see 4th DCA http://www.lexology.com/library/detail.aspx?g=afffe174-d398-45d4-91ac-d9ac1d9160d5&l=7Q4M9K0

These are interesting cases because we find the Florida 5th DCA and the 4th DCA drilling down to the truth. It seems increasingly apparent that the courts are growing increasingly skeptical of the claims asserted by the ever-changing servicers, Trustees and alleged “holders” of the note and mortgage.

Both Courts reversed with instruction to enter involuntary dismissal or Judgment for the Defendant homeowner. We are seeing more of those orders from appellate courts these days. The 4th DCA added that business records are not automatically received into evidence without proof that they are in fact qualified records under the hearsay exception.

The 4th DCA opinion shows how far the courts have moved. The glib recital of various things about the business records is no substitute to swearing on ACTUAL personal knowledge that the entries in those records were made at or near the time of each transaction. In the case of robo-witnesses, it is difficult to imagine how they will get out of that one, to wit: the witness has nothing to do with actual servicing, does not make entries and is only given records that some unknown person made available to him — under which he/she presumed good faith — that the unknown person who made the decision about what entries should be shown and what transactions would not be shown had personal knowledge and should be believed even though we don’t know who they are or what they did or even if they were employed by the company whose “business records” are being introduced as “evidence.”

Those records are not business records. Or at least they are not the full business records. The servicer is giving the court only one side of the alleged transaction. The robo witness for the servicer is telling the court when the homeowner stopped making payments. That witness cannot testify as to why the homeowner stopped making payments.

In fact it could often be that the servicer encouraged the alleged borrower to go into default in order to qualify for a modification that would never be approved. Or more simply, it could simply be that the homeowner realized, after some digging, that he was not paying anyone entitled to collect or enforce the apparent note and mortgage which might well be void because it names as payee and mortgagee a party who is not the lender, was never the holder of the instruments and never the owner of the debt.

If they were, the allegation would be that the servicer is representing a holder in due course (HDC)— the only situation under the UCC where the risk of loss falls on the maker of instruments even if they were procured under false pretenses. The problem of courts giving HDC status (without anyone asking them to do that) to the alleged holder (by virtue of self serving fabrications of records and documents) is coming to an end.

The walls are closing in. Here is what Mr. Wutscher writes:

On appeal, the Fifth District first agreed with the borrower’s argument that the plaintiff mortgagee failed to reestablish the lost note, noting that “[o]n direct examination, not a single question was asked … about the lost note.”

The Court further noted that, on cross examination, the witness “was unable to confirm that loss of possession was not the result of a transfer or lawful seizure, nor did he have the requisite personal knowledge to testify regarding how the note was lost while in the possession of [the lender].” The witness could only confirm that when servicing was transferred, the note was not in the file, that the prior servicer searched for it but could not find it and completed a lost note affidavit.  Although the lost note affidavit was attached to the servicer’s verified amended complaint, “it was not offered or received into evidence.”

The Court noted that, even if a copy of the note had been received into evidence, the blank endorsement attached to one copy of the note placed in the court file would be insufficient to establish standing at the commencement of suit because the endorsement is undated and cannot be used to prove that original plaintiff “had standing to sue when this suit was initially filed.” (e.s.)

 

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